I remember the first time that I received a letter from Countrywide, the huge Los Angeles bank that helped to cause last week’s stock market crash. The letter was the first monthly repayment slip for the mortgage I had just taken out to buy a house, and it offered me three options.

I could pay: (a) the interest due, (b) the interest due plus some “principal”, or (c) a ludicrously small amount of money that bore absolutely no relation whatsoever to the enormous sum of money that I had borrowed in the first place.

Naturally, I went for (c). It didn’t come as a shock, therefore, when the chief operating officer of Countrywide cleared his throat last Thursday, tapped on a microphone, and said something on the lines of “whoops”.

Yes, the bank that for years let me pay even less than the minimum amount of interest due on my mortgage (a phenomenon known darkly as “negative amortisation”) had reached what even amateur economists might have considered the bloody inevitable: it had ran out of money. Or, to use the correct euphemism, it had been forced to “supplement its funding liquidity position” with a $11.5 billion (£5.75 billion) mortgage of its very own.

I mention all this not only because it’s incredible for how long this Ponzi scheme was allowed to continue, but also because it advances the theory that the LA housing boom of the past five years has been primarily responsible for the global financial apocalypse.

Take Countrywide. There is really only one thing anyone has ever needed to know about Countrywide: that it is based in LA suburb of Calabasas, a mountain paradise so absurdly rich, so helplessly adrift in an ocean of other people’s cash, that its population of 23,000 is able to sustain its very own Ferrari dealership.

And we’re not talking about any old Ferrari dealership. We’re talking a massive glass-walled emporium, visible from the freeway, visible probably from near-Earth orbit, stacked wall to wall with the $1,000,000 playthings of Countrywide mortgage salesmen. It was once said that if you went into Calabasas at night, and sat very still for a while, you could actually hear the laughter of the negative-amortisation specialists bouncing off the gated marble driveways.

But LA’s culpability goes deeper than that, thanks to the number of TV shows it has produced on the subject of “flipping” houses for a quick profit. It is now alleged that the star of one such show, Flip This House, never owned any of the houses he was supposed to be flipping, and that his licence had been revoked a year before the series was filmed. Not that it matters, given the popularity of the latest get-rich-quick show, Flipping Out.

Meanwhile, I am pleased to report that my own story has a happy ending: I sold my house three months ago, and paid off my never-never Countrywide loan. Happy for the time being, at least. Because now I have a new home, with a new loan, at a new bank.

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