Credit Crisis Explained

March 1, 2009 at 10:04 pm (Economics)

Hands down, this is the video that explains the crisis in laymans terms best. Keeps it short and to the point while somehow managing to leave the esoteric parts out (though, quite evidently, it doesn’t cover the whole breadth of the sordid affair). So, without further ado, here’s the link, believe me, it’ll be 10 minutes of your life well spent:

Part 1

Part 2

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3 Comments

  1. Maucar said,

    Nicely explained. Though I think he fails to adress one aspect with I beleive to be fundamental to this crisis: the fact that increasing your money (like it’s explained in the video) without having anything to back it up is just fake money moved around to make profits. It’s like slicing a pie into more pieces, the pie is just the same, but it gives the illusion of being more than it is. That’s what credits and most financial systems do: tamper and move money that doesn’t really exist to give the idea of profit backed on absolutely nothing. Anyway, that’s my humble opinion.
    Nice post though, I guess something as complex as this can’t be explained easily in a video, so we should acknowledge the effort on the guy that did it.

  2. DMI said,

    Quite.

    The whole ordeal was rooted in the illusion that home prices would continue their inexorable ascent. All that money you mention was actually backed by said ever-rising house prices. Once the bubble popped (as all bubbles do) then bankers and investors found themselves holding new wealth that had to be backed by something else. When they realized there was nothing, well, things got ugly. And things continue to get ugly.

  3. MEF.Sophie said,

    Wow. It was a really good video… All I heard before was that there was finantial crisis, and crisis, and crisis… and “Don’t get credit cards, don’t use credit cards…” bla bla bla but I didn’t understand it, quite.. I guess this is just a piece of the whole problem, but it is a hell of a piece though, so, it helps us understand why things are getting worse by the minute…
    Very good post DMI, A+!!!! 😉

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