Enjoy.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
My only issue with this presentation is how it doesn't do enough to explain the devious acts of the Federal Reserve Bank, which printed the blizzard of paper money that directly led to the crisis...
Thanks to Captain Patrick Pitt for turning me on to this...
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2 comments:
Well done.
This video only tells the story of how mortgages affect CDOs. It doesn't talk about the illegal rating of CDOs as AAA when they weren't that at all (a fact that has now been documentd through internal email conversations within the rating agencies). No one would have bought the CDOs if they knew they weren't truly AAA.
Next it misses the completely unregulated/over the counter "Credit Default Swap" that emerged as a way to insure the CDOs that were misrepresented in the first place. That's a whole video in itself...enter the collapse of AIG.
Next it misses the biggest key - it relates to how banks operate on a daily basis. Banks borrow money from each other every day in order to settle their books. Basically they extend each other lines of credit so each of them can pay their bills. As the defaults within CDOs began to rise, the banks stopped lending each other money. The result was that the banks didn't have a way to settle their accounts (pay their bills) so they had to start selling assets to generate income...enter the full scale selling of every liquid asset class that we saw beginning in Summer '08...enter the bank bailout bill (TARP) that was meant to inject money into banks that they could use to instigate new loans into the marketplace. The only problem was, there were no rules regarding how the money borrowed from the TARP was used by the banks that borrowed it. Instead of using it as a basis to instigate new loans, they used it to buy up smaller banks to consolidate power...great for them - bad for the credit crisis. In addition to buying up smaller banks, they also used it to settle their books/pay their bills. That slowed down the massive selling of every asset class in the world - but it didn't free up the credit crisis.
So here we are. The banks borrowed our money - used it to pad their balance sheets and pay bills - but didn't use it to stimulate lending.
And now they are bellying uo to the trough again for an additional $700 billion on top of the $700 billion they already recieved.
Total Cluster Fuck!
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