Zeev's Turnips Patch-No Politics (ZEEV)

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Why should there be a "subprime industry" at all? Lending money to people who have blemished loan service history even during 20+ years of economic boom, collaterized on some bubble asset, at interest rates that are mostly single-digit, doesn't make much sense at all. They should be charging credit cards rates as they are effective unsecured loans; that would actually be a vialble "subprime industry": few would be borrowing at rate to buy a house, hence no bubble. Don't you see, the house was being used as a vehicle to lower creditcard interest rate? Why should such an industry be kept in existence and subsidized at all?