Bolling: A House of Cards on Solid Ground

The second level of the house of cards? Fast-forward to Wall Street. These geniuses were busy doing what they do -- trading. They were trading products based on the same principles that Main Street was "investing" on. The Wall Street banks and hedge funds were so intent on developing new and more exotic products to trade, they too lost sight of the fact that a home can and will go up and down in value. People have short memories. For homeowners -- subprime and not -- appraisers, lenders and Wall Street honchos, it had been years since a home actually went down in value. (When was the last time one of these investment bankers saw an acre in Greenwich, Conn., sell below $2 million?)

The irony of this tragedy is that the Wall Street bankers are the ones caught without a chair when the music ended. The smartest minds in investing got caught with the toxic waste at the end of the party.

The bookies (lenders) were thrilled that they had someone who would take the risk off their hands. They were happy to make the vig -- the fees -- on a loan to Main Street. The gamblers were seeing everyone hitting the daily double, so they were easy targets for the bookies of all flavors. But the casino got caught. Wall Street was so intent on competition between casinos that they let down their guard. They kept extending credit to the bookies even as the house of cards began to tumble -- all in the name of being the biggest, the fastest-growing casino on the Street.