Economics Explained

This video is discussing the basic analysis behind the economics housing crisis. I hope that it is informative. If anyone has any questions don't hesitate

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[TheTruthCommonSense]

(cont) ...they are not the source of the problem. they (like any other human, subjected to corruption) are only mere pawns guided by greater forces at work, and those forces are what economists and the greatest intellectuals of the world are trying to understand ever since 'markets' or 'trading and selling' existed.

[ThegoodEconomist]

@TheTruthCommonSense That is the common perception. But it is false. The sub-prime crisis was the root cause, the reason is that they had the idea to lump the mortgages into larger single investments with a higher interest rate, called derivatives. On paper its a good idea because they figured not enough mortgages would fail to make the derivative "toxic" but they did not take into account the incentives it gave to people and the fact that sub-prime loans are not ideal for the concept.

[ThegoodEconomist]

@TheTruthCommonSense Finally, the ultimate reason they made the choice was becuase the government compelled them to, in hopes of raising the wealth base of the lower class. The government's people figured that housing is a very durable market.

[Americaisgreat123]

I take issue with your odd definition of a sub-prime loan. It is a loan that is less prime than a prime loan meaning that it is a risky one. We know that they are risky and there is nothing wrong with a sub-prime loan so long as it is priced correctly. The major problem with the sub-prime mortgage crisis is that the loans were mis-priced and all that risk got spread out into the system. We have a problem of toxic assets that nobody can really do anything about except endure the painful recovery.

[ThegoodEconomist]

You are 100% correct. If they are used properly they make for a good loan package. That is why I asked at the end if anyone knew what sub-prime lending was for.

[savvides24]

this music during this video sucks, and its distracting.

[Americaisgreat123]

Well, to answer the question, the purpose or intentions of the increase in sub-prime lending (though largely forced by the federal government) was to increase home ownership for minorities among blacks and Hispanics.

Though economists are usually too smart to give a damn about intentions. Rather, they care about long-term consequences. They are interested in reality and therefor are not wildly popular.

[205seeme]

Sub Prime lending was used to as an intergration program.Plain and Simple.It killed off the middle class that pride themselves on paying their bills on time.In the end.Those foreclosed houses turned into HUD houses and section 8 and plagued middle class nbrhoods.We are now riddled with high crime rates and are forced to live among sorry ass,lazy ass welfare frauds because our houses arent worth what we paid for them 10,20 or even 30 years ago.

[TheSummeroflove1967]

@MrCoolbeans23 If you choose to use this in a public school classroom, please be sure to correct the poor spellings. A simple proofreading job would have made this presentation way more credible.

[savvides24]

@savvides24 i agree!



[MrCoolbeans23]

Thanks for sharing this. I am a teacher in Ptld, OR and may use this in my Econ. class.

[SgtTheFink]

This video was very helpful. Thank you for posting.

[kahika84]

@manfromtheearth no noob you look again, 2nd term money was used!!!

[manfromtheearth]

@kahika84 noob.. look again..

[kahika84]

0.43 money spelt incorrect