Barry Ritholtz: What caused the financial crisis? The Big Lie goes viral.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

The Earth isn't warming, natural systems creating order from disorder violate a basic premise underpinning all of science, and the government did cause the financial crisis via social engineering through the mortgage system. Nobody is calling banks victims, but they were certainly goaded into subprime mortgages by liberals in Fannie and Freddie that demanded people that couldn't afford a home get a home.