Crisis explainer

I like this guy a lot, and would like to find more of him/his work. What is "Marketplace"? Is it a magazine... a blog/website? Does this guy do videos elsewhere?

Outstanding presentation. Really enlightening and simple. Congratulations!

It all began when the Fed prevented the harsh recession that should have occurred after the internet bubble. Lowering interest rate to a 46 years low created an incentive for all sorts of people to borrow and invest in then lucrative activities. People were drunk on the easy money and thought they were creating wealth when in fact they were just building a pyramid of sand. Those who foresaw this bubble bet against it and made billions ( John Paulson comes to mind). Remember the Say's Law.

thats nice, wonder how long it took to think up this wonderful system.. im sure they are alot smarter than i. but i dont think it looks right to me oh well good luck peoples

That was awesome. I heard so much of about this stuff and now I finally understand it. So is this related to derivatives? How about leveraging. I heard of we need to unwind derivatives and deleverage? I also heard that once the unwinding of derivatives and the deleveraging is done, the dollar will collapse, is that true?

in other words a cdo is a group of potentially worthless group of/ homes,credit cards,or any other over priced ,high intrest crap that they paid too much 4 .now there crying 4 a bailout

CDO's in themselves aren't that dangerous and can be "good" investments (e.g. a bond backed by a mortgage). But if you split a CDO into traunches and let's say start rating them AAA, AA, etc. while they all came from a BBB bond then the stuff gets messy.

How is it possible to split BBB bond into groups containing AAA and AA ratings if they're inherently high-risk?

That's what is so confounding. These CDO derivatives (i.e. CDO's of CDO's) are divided into sections reflecting risk. So even though the BBB bonds have inherent risk, once divided they were allowed to be chopped up into different traunches (so that the least risky of the BBB bonds get rated AAA, AA and so on - these would be the last traunches in the original BBB bonds to default). You're right that this makes no sense and ratings agencies are to blame for allowing this practice.