It's a large part of it.I wonder Is this why Burry shorted back in Aug? Did he see the signs again?
All Wall Street does is the same thing over and over again under a different guise. The Banks and credit rating systems are in on it. You sell loans to people that can't afford them. It looks great on the books as money you'll eventually be paid. Then you put those loans in a "package" along with other bullshit loans as investments.
Then they sell those "investments" to people, largely in 401K options, under the premise that they are good, solid, AAA rated loans (thanks to their buddies at the credit ratings organizations that rubber stamp it all) that WILL be paid off over time. If those loans are at, say, 12% interest, you can jump on that bandwagon with your money and get 4% to 6% of that by investing in them.
But the problem is they're worthless. After enough people who could never afford the loans to begin with walk away from them, the investment banks, which are now the exact same as any bank thanks to D.C., can't come up with the money to pay the people that invested in them.
So the bank fails.
Then the investors want their money back but there is no money. It's gone. It has literally vanished back into the thin air whence it came.
The entire banking system in the United States is designed to be a giant Ponzi scheme. It is only a matter of time before the music stops and everybody wants their cash. By then, of course, it's too late. There is no cash.