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Depressingly, when the Chinese housing market pops, it won't be investors taking the loss, it'll be Chinese citizens losing their life savings.

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Umm after 2008, the investors in mortgage backed securities didn't take a loss. Their securities were purchased en masse by the Fed via Quantitative Easing programs - about 4 Trillion worth.

Edit: it might be interesting to see if there is a recession in China (or globally), how the central bank there might respond in contrast to QE schemes that the US and European central banks used.

Many investors in mortgage backed securities lost quite a lot in 07-09. Your statement is false. The fed bailed out the big banks but smaller players wrote down many positions to 0.

Sure, not every dollar of every mortgage backed security was rescued in that way. But the imbalance you reference was yet another way that the rescue really didn't set up the economy for a healthier future - especially larger sophisticated investors were rescued, and both smaller players as well as many people bore the hardest hits.

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