Meltdown Visualized

By Wednesday February 25, 2009



49 Comments
  1. Carcarius says:
    2/25/2009 at 11:03 am

    I still stand by my idea that in order for this crisis to get fixed we need to allow the mortgage lenders and banks who caused this fiasco to take the hit. The responsible homeowners who may have gotten sub-prime loans but are sticking it out and paying off their mortgage on time should have their mortgage adjusted such that not only do they get favorable interest rates they get the principal adjusted to current market valuation.

    You have to protect the base, the average American who constitutes the population of our country, not these asshat organizations who perpetuated this mess. Sure, the sub-prime homeowner didn’t have to sign on the dotted line, but it didn’t have to be made so easy either.

    Reply
  2. Carcarius says:
    2/25/2009 at 11:08 am

    One thing that bothered me about Obama’s speech last night was that he actually said that his plan would allow for housing construction to be resumed. I think that is a horrible idea. That’s like printing more money and causing inflation.

    We have a surplus of housing out there – STOP NEW HOME CONSTRUCTION! Unless you can afford to pay for it as in custom homes and such, discontinue housing development.

    Reply
  3. Mr. Fusion says:
    2/25/2009 at 11:16 am

    A very good presentation.

    I do feel so bad for those Leibertarians that are constantly blaming Fanny Mae and Freddie Mac and the Federal Reserve. I guess they really like to forget that it was the Bush White House that made them take many of those “toxic” loans.

    Reply
  4. Ron Larson says:
    2/25/2009 at 12:10 pm

    Not bad… it does a good job of explaining a CDO and why they work. But CDO’s are not to blame. There is nothing wrong with a CDO.

    The problem is that the ratings were skewed. The rating agencies were more concerned about keeping their large clients happy than doing their job. The exact same thing happened to AA when they blessed Enron’s books. Conflict of interest.

    The second problem is that there was a disconnect between mortgage makers and reality. CountryWide was the king of this. They knew they could make bad loans because they knew they could find some other sucker to take them off their hands. The rating agencies enabled this fraud by not labeling the product what it was, pure toxic crap.

    Bottom line: If you are leveraged then your results, good or bad, are amplified. So a little fraud becomes a big, big problem.

    Reply
  5. chris says:
    2/25/2009 at 12:15 pm

    I was going to post that this was very well done, but that everyone already knows this stuff. Seeing the wide variety of views in this topic makes me think it is still salient.

    My view is that everyone involved: homeowners, brokers, banks, financial companies, and investors was partially responsible. The big difference between the homeowners and the rest is that the rest are professionals.

    It is hard to argue that the government is a horrible manager when most of the financial sector just blew itself up.

    Reply
  6. Travis says:
    2/25/2009 at 12:22 pm

    I think its important to realize that “Finance, insurance, real estate, rental, and leasing” is 20% of the US GDP. That seems a little too undiversified to me.

    http://bea.gov/industry/gpotables/gpo_action.cfm?anon=89300&table_id=23975&format_type=0

    Its also interesting to look at historical data, and see how things have changed over the years.

    Reply
  7. Dallas says:
    2/25/2009 at 12:46 pm

    Excellent! .

    How interesting the video cites the massive house of cards started in 2001 by greedy investors with no government oversight to worry about. The perfect storm.

    I really liked the ‘rubble’ shown on the last scene as it illustrates the phrase I’ve been using here often. Cool

    Reply
  8. J says:
    2/25/2009 at 1:19 pm

    It is called Free Market and all the Republicans love the Free Market!!!

    Reply
  9. LibertyLover says:
    2/25/2009 at 1:20 pm

    #23,

    A very good presentation.

    Agreed.

    I do feel so bad for those Leibertarians that are constantly blaming Fanny Mae and Freddie Mac and the Federal Reserve. I guess they really like to forget that it was the Bush White House that made them take many of those “toxic” loans.

    BWAHAHAHAHA!!!

    Question: If was a pure Republican problem, why was this predicted decades ago, by Libertarians?

    Reply
  10. Paddy-O says:
    2/25/2009 at 1:23 pm

    # 23 Mr. Fusion said, “I do feel so bad for those Leibertarians that are constantly blaming Fanny Mae and Freddie Mac and the Federal Reserve.”

    Where do you think the banks got the cash from to make these loans and cause the chaos?

    God, some people are amazingly stupid.

    Reply
  11. joaoPT says:
    2/25/2009 at 2:02 pm

    So, if I got this straight:

    Alan Greenspan is the one to blame. Right?

    Reply
  12. LibertyLover says:
    2/25/2009 at 3:29 pm

    #31, You get partial credit.

    Reply
  13. FRAGaLOT says:
    2/25/2009 at 4:26 pm

    If everyone went bankrupt on this, how can anyone be seen as “evil” in this fiasco? It seems to me it’s due to incompetence, and that’s not what being evil is about.

    Reply
  14. GF says:
    2/25/2009 at 5:14 pm

    I’m a bit surprised that no one ever mentions the fractional reserve banking system. Creating credit money is really at the heart of the problem.

    If real money isn’t expanded to pay back credit money a collapse will eventually take place no matter what.

    To understand fractional reserve banking : http://tinyurl.com/745tl

    Reply
  15. Paddy-O says:
    2/25/2009 at 5:20 pm

    # 34 GF said, “I’m a bit surprised that no one ever mentions the fractional reserve banking system.”

    You need to follow these discussions more. I mentioned the ratio problem a few days ago…

    Reply
  16. LibertyLover says:
    2/25/2009 at 7:38 pm

    #35, One little tidbit — the Fall quarter StimPack had a single little clause in it, something like “banks no longer have to maintain at least 3% of deposits in cash. They only have to maintain up to 3%.”

    What this means is they don’t have to keep ANY money on hand anymore.

    Reply
  17. GetSmart says:
    2/25/2009 at 7:51 pm

    It’s a hard rain,
    gonna fall…

    Reply
  18. Mr. Fusion says:
    2/25/2009 at 8:21 pm

    #30, Cow-Patty,

    Where do you think the banks got the cash from to make these loans and cause the chaos?

    God, some people are amazingly stupid.

    When you weren’t looking they raided your shoe box at your poopcycle stand.

    Reply
  19. Uncle Patso says:
    2/25/2009 at 11:55 pm

    #12 Winston’s URL still has a residual “w” in it, and doesn’t work unless you take it out.
    [Fixed -- ed.]

    But everyone should read the Wired article in Winston’s #10 post. Here it is again:

    http://wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all

    I had been seeing the word “copula” and wondered what it meant, and whether it was just a misspelling of cupola.

    The article says that by the end of 2007 there were $62 TRILLION in credit default swaps outstanding. Isn’t that close to the total economic output of the entire country for, like, half a decade? Shouldn’t someone have quoted Gabriel Garcia Marquez and shouted “Cease, cows! Life is short!” Oh wait. Apparently several people tried to point out that this was all very unsustainable, but they were all universally ignored.

    We need more grown-ups.

    Reply
  20. JoaoPT says:
    2/26/2009 at 1:58 am

    #39
    “Oh wait. Apparently several people tried to point out that this was all very unsustainable, but they were all universally ignored.”

    As if one would be able to stop this train wreck of hedonism just by telling the truth…

    Reply

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