Unqualified borrowers: A cause for financial calamity? maybe not

This is a response I had to someone stating that it was unqualified buyers over the past 10 years that were now causing financial ruin around the world.

I think our meltdown is has more to do with the issues around cds and mbs markets then with the small percentage of unqualified buyers. They were plenty of well capitalized and well qualified buyers purchasing things over the past 10 years. The system itself should be able to handle a 3 or 4 % default rate without melting down the world economy in my opinion. I don't know how we can ever expect 0% default rate or function with a financial system that will start a complete meltdown with a 2 or 3 % default rate. I see so many other factors that have contributed to the meltdown on top of the unqualified borrowers and if the unqualified borrowers are the only issue addressed rather than creating a system that can deal with defaults, we will be in for long long recession. I agree with you that many people were pushed through that had no business getting a mortgage, some stories so ridiculous, but I also think we need to have a mortgage and lending system this is better able to handle a higher than average wave of default at any given time.