Wall Street and Main Street's common foe

NEW YORK, Sept. 16 (UPI) -- The common link between foreclosures on Main Street and failures on Wall Street is denial, a financial analyst wrote Tuesday.

Similar to a homeowner staying with an overvalued home, hoping for appreciation to raise equity and catch up to overextended debt, financial firms have been in denial that their complicated derivatives have lost value, wrote analyst Joe Nocera in The New York Times.

"Just as homeowners took out big loans and stretched themselves on the assumption that their chief asset -- their home -- could only go up, so did Wall Street firms borrow tens of billions of dollars to make subprime mortgage bets on the assumption that they were a sure thing," Nocera wrote.

"Big mistake."

Since the financial crisis began a year ago, financial experts attempted to find the bottom of the mess, pointing to the moment home values begin to revive.

Government interventions, including those for homeowners and financial firms, have sought to soften the blows but seem to forestall the inevitable, Nocera wrote.

Now, "with the government refusing to prop up Wall Street … mortgage-backed derivatives will find their natural bottom," Nocera wrote in the Times.