The Crisis of Credit Visualized - Part 1

Watch the full version here: http://www.youtube.com/watch?v=bx_LWm6_6tA

The Short and Simple Story of the Credit Crisis.

By Jonathan Jarvis.

Crisisofcredit.com

JonathanJarvis.com

Category:

News & Politics

Tags:

• credit
• crisis
• money
• finance
• news
• explain
• how
• simple
• easy
• motion
• graphic
• mortgage
• CDO
• securities
• documentary
• animation
• financial
• graphics
• economy

[asuwish0000]

The only thing missing in the video- which is most important -is due to Greenspan's low rates a borrower could get a 4% mortgage loan which will adjust - go up to the market rate- after 3, 5, or 10 years. This is called an adjustable rate mortgage.Greenspan increased the interest rate by more than DOUBLE in under 2 years to 8.25%.This caused even responsible borrowers to default before they could refinance their loans to a decent fixed rate.Also the banks are required by the govt to lend to poor

[AWesome61696]

When watching this video, everyone should also understand that the Glass-Stegall Act (which regulated banking from 1933 to 1999) made it illegal to intertwine investment with commercial banking. So at 4:18, take note, the Glass-Steagall Act would have prevented the mortgage lender from selling the mortgage to the investment banker. That would have prevented the whole crisis right there.

What the US should do now:

1.) raise interest rates to 7%

2.) put the glass-steagall act back into effect.

[Saml3838]

6:25

[noprofitmaximierung]

So the REAL question here is: Why did the ruling class (not only in the usa) feel the need to de-regulate (as they certainly know this has caused problems in the past and is highly risky and has an exponential risk effect for the system)? Is it just "Greed"?No, there is something more material, something more pressing that makes them consciously write further (systemically)risky laws for the senators and congressmen to sign. This mystic thing is "The Falling Rate of Profit" and globalcompetition

[noprofitmaximierung]

Well, what are you missing? I can tell you what you are missing: you seem to associate certain "political figures" as CAUSES to the deregulation etc. But in fact, they were rather doing what every politician's job is: manage class pressures. In fact, the minority of owning and ruling class, those who spend billions a year on "lobbying" to the political system, are basically in control of the political system.ALL laws are written by lobbyists for example, why is war fought(?), because it means $.

[lym3n]

What they meant was that these people should have never given loans. I mean, the mortgage issuer didn't care because he would just pass on the risk of the loan to whoever bought it from them. All they cared about was the volume of loans they were making, because the higher the volume the more money they'd make.

It's not like the mortgage borrower had malicious intent in all this; all they wanted was a home. They're saying they made loans to people who never should have gotten them.

[lym3n]

This was all part of a trend of general economic de-regulation that started in the Reagan years and was then carried on by Clinton and both the Bushes. You can't really say that this one act caused the recession, but was rather part of a slew of over deregulation that should have never happened.

[lym3n]

There's a lot missing in the video like synthetic CDO's and the stupidity/greed of the rating agencies, but the bottom line is that it does a good job explaining the gist what happened.

[oldickeastman]

"not surprisingly the homeowner defaults on his payments" - this is the "explanation " for the collapse -- he blames the borrowers for being "sub-prime trash" -- never once mentioning deflation or total debt and the interest burden that cannot be paid because not enough money is in circulation. The collapse really came because loans were called and new loans were not extended (for whatever reason) - not because all borrowers suddenly decided to mismanage their family budgets! see R9VUWsTJMrE

[mchatrie1]

why would you want to increase the interest rate?

[SP3CUL4710N]

nex is coming