PBS Newshour explains the 2008 credit bubble

[johndcqr]

When one has a financial system that encourages both creditor and debtor alike to be irresponsible, what would one expect? If one believes that one believes in fairy tales that one can prosper by borrowing then they deserve to be slaves. In fact financial institutions were encouraged to be in the welfare busines since at least the 1970's. Think of credit cards and loans as the new welfare.

[ImAud1]

also, i love how there is NO MENTION of the government backed guarantees for the Fannie Mae / Freddie Mac debt and the moral hazard in the real-estate market caused by those two GSE's

[ImAud1]

wow, no wonder so many people are confused to what happened in 2008-2009 with the real estate bubble. this broadcast is pure propaganda to support regulation and big government. THE TERM FRACTIONAL RESERVE BANKING didnt even come up one time in the whole video, thats how you know this whole thing is a farce.

[XpEAnUTBuTtERsUckSX]

@ImAud1 The funny thing is we need fractional reserve banking to fuel our modern day hyper-capitalism.

[bdsco777]

the best and clearest explanation for the crisis I've heard. 

[ananiasacts]

@bdsco777, exactly what I wanted to say! So clear.

[rad4life1]

oh shit! I have been spelling mortgage wrong...and I just discovered what it accually means! hehe check it out MORT = DEATH GAGE = CAGE! HAHAHAHAHA!

[MyFreeCredit]

Nice vid. Thanks for sharing.

[bntyhuntress]

Would love to see more from Mr. Solman I get it now Thanks to this story

[jbryant13]

"So the debt chain just kept growing and growing"

A great analogy - it's basically a global "chain letter"

[whaler3232]

4 words....Buy Gold and Silver

[Livingfishguy]

It's just like when the banks started giving out loans to buy stocks.

[louiswi]

This is excellent. What is missing is a discussion of the responsibile parties. This administration has had a habit of appointing incompetent administrators to a very wide variety of positions. Examples being the horsey guy in charge of FEMA or attempting to put persons of no competency on the supreme court. The question is what are the competencies of the people who were in charge of this fiasco? Where are the investigations and the indictments? Will there be any?

[scorchedearthdj]

Excellent explanation. Corporate socialism will kill us all.

[theblackBay]

I'm glad they finally touched on the Fractional reserve nature of the system at the heart of the Problem, and Gearing.

this provides the natural human incentive to proliferate credit.

[jokertim777]

I don't recall Mr. Solman mentioning Fractional Reserve practices as a problem, nor did his "experts." He did say that people borrowed the money, not that the money was created out of thin air by a fraudulent system. In fact, in the beginning of his explanation, he implied that the money "didn't come from local banks, but foreign investors." Which is a completely erroneous and misleading explanation of what happened. If he can get this part wrong, then what about the rest...

[choqueras]

More than $2.1 trillion of outstanding mortgages have been bundled into securities by private banks,house loans may be sold several times before they land in a security. Mortgage servicers,who collect monthly payments and distribute them to securities investors, can buy and sell the home loans many times.

[choqueras]

Bloomberg search under:

Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

...Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities

[choqueras]

search for this a Bloomberg site under:Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.

That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

[ShadesOfKnight]

bakwas1,

There is something backing it... The ability of the US Government to take the money away from the taxpayers. It happened with the S&Ls in the 80s, and will happen again with this group of bankers. Search for "how the market really works" here and watch the Bird and Fortune mock-interview. Makes it pretty clear at the last sentence.

[bakwas1]

Excellent - but has anybody ever given thought to the fact that the 30 Billion the Feds are guaranteeing of the Bear's debt acquired by JP, what is the Fed basing this guarantee on? Oil? No. Gold? No. So what is it that the Feds have that is worth 30 Billion? Its called Bull Shit!! The Feds are printing money when there is nothing to back it up. Watch the dollar go the way of the Turkish Lira. You will need a wheelbarrow to cart your money just to pay for that pack of gum.

[ReactionShot]

another name for it is fraud.