Leveraging and deleveraging

Leveraging or borrowing has been cited as one of the contributors to the financial crisis. Senior Editor Paddy Hirsch explains how the move to deleverage or reduce debt is prompting wild market swings and concerns about deflation.

Category:

Education

Tags:

• Marketplace
• business
• money
• shortselling
• financialCrisis
• creditCrisis
• PaddyHirsch

[SoFallsWichitaFalls]

Why did I go to Harvard when I could have just watched this video series? What was I thinking?

[copplemeister]

I think i need a drink! :)

[bdgrey]

I'll take the flaccid balloon over the tumescent one any day! At least you can blow it back up. If you burst it, well, you probably can't even afford that drink you so desperately want.

[genesistwoeighteen]

Borrowing is a curse that destroys a nation.

[wjestick]

Leverage is a bad thing. Example:

Without leverage, houses would have to be bought with cash. House prices could never rise beyond what savers and cash buyers could afford.

When you allow banks to lend money, people can afford to pay more for a house than they actually have, pushing up prices.

Eventually cash buyers are priced out of the market. TRAP!

Now banks control the market since buyers must go through banks.

Result, banks can make house prices go up or down at will.

Leverage = theft

[gulllars]

Great video. It's the second i've watched from this channel, the first one was on derivatives. If the others are as good, i'll subscribe.

I found one thing lacking here, and that's a description of WHO buys the stuff overleveraged companies sell, and exactly what is it financial institutions sell? You know, the companies that doesn't produce any physical or intellectual goods.

If anyone has a link to a clip where Hrisch deals with this, pleese respond with the youtube ID :)

[zurriagazo71]

That baloon is Greece, for example.

[xwgrace]

thanks for making this really clear.

[dinamo4889]

@SoFallsWichitaFalls Yeah Ivy league is a scam. I went to a State School and most of my professors either went or teach to Ivy league schools. Why pay like 40,000 grand a year when you can pay 6,000 for the same thing. Ivy league is just a brand. Generic drugs are just as good as the real deal education is no different.

[TehCommentMaster]

@SoFallsWichitaFalls Sick brag about going to Harvard. Don't believe you though ^^ Talk more plz

[rustyscrapper]

not raising the debt ceiling in august is the pin prick. I give it a 99% chance they will raise the debt ceiling and squeeze just a little more air in the baloon and hope it doesnt pop for a bit longer.

[kapil1ly4u]

Dear the Fed is filling more air in the balloon. It will be Hyperballoon,