The Economic Crisis of 2008: Simply Explained In Under 10 Minutes

The Blog Entry that Accompanies this Vlog is at: http://investorandtrader.blogspot.com/2008/09/why-is-economy-faultering-simpl...

My Daily Blog is at: http://investorandtrader.blogspot.com/

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My Podcast is at: http://airelon.podbean.com/ and embedded in the daily blog.

There are many facets that I have tried to simplify in the following video. In essence, it's a broad, macro-economic view of what the current economic crisis is all about. I do not discuss bonds. I don't get into treasuries. I simplify the concept of leverage quite a bit. I don't even discuss the problem that the value of the debt obligations isn't understood by anyone. But for an macro-economic view? The following illustrates what is going on ...

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and risk tolerance. Included Music is by Paul Young. A personal friend and is not a part of any music license, recording label, etc.

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[alan933]

why shouldn't they have gotten loans?????? you left out a MAJOR piece there, waste of time video for explanation

[AirelonTrading]

@alan933 You're asking for the 'why' and a 'redress to the problem'. That's not the point of the video. The video simply explains the mechanics

[idally89]

Good explanation. Yet, do you agree about what some market commentators argue that unless there is a strict control of these credit derivatives what happened few years ago in 2007 may happen again?

[AirelonTrading]

@idally89 Depends on the derivatives. Some derivatives are nothing more than stock options. Others ... are outright dangerous. Derivative is sort of a broad term.

[kulan2]

It was bascially the Shadow banking system, Underground economy, the black market that was tapped in order provide vast amounts of wealth.

[shandcunt]

@XCyclonusX Actually I jst re-read my comment and I think you are right if a company is forced to over-extend itself by bad governance then the problem lies with the governance who forced the company into a bad position.

[shandcunt]

@XCyclonusX "arent the real culprits the ones who might have forced banks to lend?"

I think it should be balanced between the bad regulations and guidelines (Government) and the over-extension of a finance company (Banks), Companies only have one obligation which is to make profit for shareholders. They failed to run their companies successfully (They went bankrupt) and the government failed to regulate - ie. A company will not act responsibly unless some governing agency forces it to

[WinterXL]

@alan933 if you mean the citizens, it's because they weren't qualified, or more accurately, were far too high risk... loans were given out like mad to people who were highly likely to default. certain companies even encouraged this environment using derivatives as a "betting" measure and collecting the "insurance" when things started going south (which they hoped it would). of course the greedy folks didn't anticipate the magnitude of the damage they would cause...at least i hope so...

[XCyclonusX]

But isnt it true that no matter how much leverage a lender has they want money, not houses. Their objective is to have a reliable, consistent stream of incoming money. So would it have been in their interest to lower requirements on people borrowing for mortgages? I don't see why when their requirements stongly suggest that in a short time those people will default. Since everyone want, but cant necessarily afford a house, arent the real culprits the ones who might have forced banks to lend?

[doctorw2]

i can explain the economic crisis in under 3 minuets ok this was the real cause brace yourself for this one GREED AND INCOMPETANCE!