That's the first sentence of a WSJ article on the problems facing the two giants of the secondary mortgage market. This is yet another one that cries out "expected by whom?" Were the expectors surprised that a record run-up in house prices led to near record rates of construction? Were they surprised that near record rates of construction over four years led to an oversupply of housing? Were they surprised that an oversupply of housing led to downward pressure on prices? Were they surprised that falling house prices led to higher default rates? Or were they surprised that higher default rates caused problems for Fannie and Freddie?
Maybe the WSJ should broaden its sources to include people who are not surprised by this sequence of events.
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