I rather like the title "voodoo priest of free market economics" so I am happy to take the blame for the sub-prime mortgage defaults and at the same time stick a few pins in Nouriel Roubini. Roubini and others generating hysteria about defaults in the mortgage market are credit snobs - they think credit is something that only the rich can handle. Just look at the language that Roubini uses to analogize borrowers - they are "reckless patients" who "spent the last few years on a diet of booze, drugs and artery clogging junk food." Similarly, the Washington Post tells us that it's the end of the "borrowing binge."
Check out this comment from "DK":
The critical question for me is how much pain the subprime loans really cause their borrowers. Yes, some people will end up homeless and with their savings wiped out, and their suffering will be severe. But many people will end up in rental housing (i.e. where they would have been all along if subprime lending was not available), and not all will lose their houses. And many people with ARMS and low initial rates are significantly better off than they would be if they had chosen traditional fixed-rate loans, especially young families who intended from the beginning to move when their 5 year locked rate expired.