Anyway, it’s striking that the worst of the crisis is hitting states that largely didn’t experience a housing bubble.
I would actually consider this to be one of the more intuitive artifacts of the current economic crisis. America has places where people want to live, and places where people don’t want to live. Which of those places will have a housing bubble? Which will be worst-hit by a major recession?
Alternatively, you could consider this to be prima facie evidence that mortgage securitization did indeed manage to spread risk; it just managed to spread it to those who could least afford it.