With Barclay's Bank, Britain's third biggest bank, joining the growing list of banks taking multi-billion hits on subprime and with Goldman Sachs warning that leveraged investors may need to scale back lending by up to a staggering $2 trillion, the subprime story is going from bad to worse.

How did we get into this mess? Diane Francis at the National Post says it's about corruption and that it's actually a crime story. "At the bottom was a corrupt system that handed out mortgage broker licences like driver's licences, and then handed out mortgages like candy at Halloween. In between were crooked appraisers and organized crime ... Miami police have uncovered a massive foreclosure fraud scheme involving appraisers, brokers and accountants who recruited straw buyers, inflated condo prices, drew up fake tax returns, got huge mortgages, paid developers less than the mortgage raised and pocketed the difference. The straw buyer was paid off and abandoned the property to foreclosure.

"In the subprime mess, there seems little political will to do much of anything south of the border. Foreclosures dot the urban landscape, mostly affecting speculators or disenfranchised people. Wall Streeters get tossed from jobs, write down fortunes and collect obscene severance. It's all business and usual.

Salon's Andrew Leonard makes the excellent point in How the World Works that subprime didn't come out of nowhere and that it's part of a broader problem with the system.

"Unscrupulous mortgage lenders didn't screw up the fun for everybody else. Instead, exactly the same mistakes that were made in the subprime lending sector were being made at every level in the game: Money was being lent willy-nilly without a proper appreciation of the underlying risk. This was just as true for the lenders pouring cash into commercial real estate like malls and factory buildings as it was for residential homes. And just as true for the big Wall Street players selling each other all those fancy derivatives. The mortgage brokers who offered no-money-down loans to customers with no documentation of income were offering the same kind of deals as the banks who lent billions to private equity funds to pay for their leveraged buyouts."

What all that means is that the entire system needs to be looked at. Anything else might well be a band-aid solution.