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- Peekman, on 11/14/2008, -2/+25How can all those people in charge be so wrong?....... and how can Bush be the only one who's right.... :(
- Trekhawk, on 11/14/2008, -4/+18This is now my second favorite flow chart right after this one...http://incredimazing.com/page/Bacon_Flowchart
- EpicSelekta, on 11/14/2008, -2/+14Wow... George Bush's quote is the only quote on here that turned out to be correct.
Seriously... GEORGE BUSH. - clarkd, on 11/14/2008, -3/+15Oh come on. Bush's comment was akin to staring into the sun on a clear day and saying, "The sun is very bright."
- betona, on 11/14/2008, -2/+12Conveniently left off that chart is Congress's role in forcing Fannie Mae and Freddie Mac to give loans to people with poor credit who were unlikely to stay current paying their loans.
I'm not a Bush defender, but the facts are that the Executive branch began sounding alarms as early as 2001 (I remember it--don't you?), but Congress brushed it aside time after time under both Republican and Democratic leadership.
It's very easy to find the independent news reports from each time or even CSPAN video of congressmen chewing out non-political auditors who presented them with dire warnings, but whitehouse.gov lists them here:
http://www.whitehouse.gov/news/releases/2008/09/20 ...
So those of you who are all caught up in your single-focus hate laying blame on one single person who "was right only too late" need to turn your attention to the 535 members of Congress, two of which just ran for the Presidency and one of which won. - xanadu2113, on 11/14/2008, -2/+12the fundamentals of our economy are strong
- jmpeagle, on 11/14/2008, -1/+9you saw a housing bubble and the subprime crisis before the creation of CDOs, the fed funds rate of 1% in 2003, the growth of subprimes loans under Bush's "ownership society".....and all before any of this happened. While people started talking about this academically around 2002-2004, no one saw this coming 10 years ago involving the specifics of what actualluy collapsed. While anyone can talk generally about a coming economic collapse with no mention of what actually calls it, that's not really "seeing this coming".
- maelp, on 11/14/2008, -0/+7Only he said it *AFTER* the facts
- Jacolyte, on 11/14/2008, -5/+11They forgot legislation signed by Bill Clinton that requires more sub prime and adjustable rate mortgages.
- dlbough, on 11/14/2008, -0/+6Reminds me of a Warren Buffet quote: "The economy is like a bathtub. You can't have cold water at the front and warm water at the back."
- gaqua, on 11/14/2008, -0/+6Haha - what?
When in the 80s and 90s were we ever "debt free"?
Reagan's military spending spree and George H.W. Bush's complete ignorance of economic matters left us pretty well in debt. Yeah, we killed off the USSR but only because they ran out of cash before we did.
We're still suffering from the after-effects of the cold war, economically. - sportbikepilot, on 11/14/2008, -0/+4a big piece of that picture is missing, look up credit derivatives. made illegal after the great depression because of their role in that collapse, they were made legal again 8 years ago with ZERO regulation... the housing market bubble was the spark, but paying off these "side bets" is the jet fuel feeding this fire.....
- inactive, on 11/14/2008, -1/+5dsmx: no, just no.
Fractional Reserve Banking is designed to fail. They know all about how the economy works. - Spinducky08, on 11/14/2008, -0/+4Dugg for just including those stupid "house-flipping" shows somewhere in that chart.
- inactive, on 11/14/2008, -0/+4The only thing missing is how the Federal Reserve fits into this debacle.
- fattony89, on 11/14/2008, -3/+7It was Bill Clinton's system that forced banks to loan money to consumers who could never repay it. Bush is still at fault for not getting rid of it.
- pjsmike, on 11/14/2008, -0/+4Wow, cause of the economic crisis in a nut shell. Great flow chart.
Protip in life: Never trust someone's advice if the advisor makes money off of that advice. Many of them were bankers and realtors. I say hell with the bailouts. Billions of dollars from bail outs are spent on giving out bonus salaries to CEOs, when clearly they have ***** us over big time. I don't care if it causes 20 years to recoup. There is no point in trying to save a tree when the root is rotten (e.g. GM Ford). Plant a seed and let it grow. - ronaldst, on 11/14/2008, -0/+4Ain't central planning great!
*sarcasm* - rrijke, on 11/14/2008, -0/+4Oooooooooooh
Now I understand! - poogy21, on 11/14/2008, -0/+4Beautiful and accurate illustration.
Only I would add a few items illustrating how bailouts are saturating the dollar value and when it drops, prices of imports (consumer goods, gas, energy, and gold) will go up. Production will drop due to high costs of gas and materials. Exports will halt. Unemployment will sky-rocket... etc. etc. etc.
Someone kill me now! - GuacamoleSan, on 11/14/2008, -0/+4Thats after the fact in 2008, by the time he says this we're all already panicking.
- Metasquares, on 11/14/2008, -0/+4It's a pity they didn't continue that second chart. Because the bailouts have huge implications which have yet to occur.
- rdwinder, on 11/14/2008, -2/+6"We got a big problem." George W. Bush (Sept, 26. 2008)
- marcabminion, on 11/14/2008, -0/+4Great flowchart, although Bear Sterns fail where?
That and "historically low interest rates" should be magnified 10 times, and you need to add idiots like Philip Gramm, and changes in banking leverage rules in 2004 too. - geddon, on 11/14/2008, -1/+5In other words: the rich are getting richer, while the poor are getting poorer.
- shrewduser, on 11/14/2008, -0/+3credit where credit is due, bush has been recently talking sense, i don't know who's been giving him these words, but lets not taint the message with the reputation of the person saying it.
- Takteek, on 11/14/2008, -0/+3More?! But I've learned everything I need from this flowchart!
- ByteMeAHole, on 11/14/2008, -1/+4A friend in real estate who did loan certification couldn't, by law, explain to people they would default on a home. All she could do was to certify that the information they gave was correct, never mind trying to explain that next year their payment would skyrocket - she had mostly the zero percent, and escalating loans. She said it was sad seeing how happy these people were, and she knew they would default - this was back in 2002 or so. So she opted to turn it to her advantage - keep track of the best homes, and the worst people - financially, then contact them about 3 months after she figured they'd be in trouble to see if they wanted to negotiate. She had enough contacts to make money on it, and did. She's well over a millionaire. Some could fault her - but it was the laws passed by Congress that tied her hands. She legally couldn't explain why things would happen - all she could legally do was watch people be victimized by mortgage lenders and banks - all with the blessing of Congress. She's now battened down the hatches (stopped doing real-estate back in 2006 when she saw the turn coming) and is waiting things out. But she's living quite nicely - it worked well if you were in the right place. And all of those presently being "bailed out" were in the right place. It's the people who were lied to, that got scammed - of course, they will end up on the streets, and you and I will continue to pay for those "profits", which anyone with a brain could see would fail... The biggest scam, at least in this area was mortgage lenders loaning money to people that could barely speak English and didn't understand what was happening and obviously couldn't afford the payments next year. Now - sadly, they understand all too well...
- AdmiralAcbar, on 11/14/2008, -0/+3We're fine up in canada!
- mibi, on 11/14/2008, -1/+4In hindsight, i saw this coming too.
- matthekc, on 11/14/2008, -2/+5George Bush isn't an idiot he just plays one on tv.
Bush and Dick have made money hand over fist the last 8 years through their policies. - Y0tsuya, on 11/14/2008, -1/+4That's why I don't blindly trust "experts" anymore, especially the so-called economists. The herd mentality among them borders on the delusional sometimes. Nowadays I always seek out both mainstream and non-mainstream opinions when deciding on something important.
- relativeLogic, on 11/14/2008, -0/+3CDO Tranche protection is not inherently bad, it is just difficult to price. Most of these large investment banks, and even the ratings agencies don't really understand how to quantitatively evaluate the correlation between individual underlying defaults. This gives both parties "bartering" room when it comes to the actual rating. It seems to me that without the equity Tranche protection, banks would never have been able to assume the risk associated with sub prime borrowers. The lending institution has to cover it's ass in some way, since it is strong armed by the government into lending to those with undesirable credit. Fortunately for them there were those who didn't mind buying this risk. The investment banks holding these instruments should have been allowed to fail. They all knew how the stuff is priced (ie via Copula methods) and just as in any investment, you have to be willing to assume the maximum possible loss. This flow chart is interesting, but a bit simplistic as far as I am concerned.
- motters, on 11/14/2008, -0/+3I entirely agree that the media were a critical part of the feedback loop which caused both house price inflation and sub-prime lending.
- Spor, on 11/14/2008, -0/+3This does a pretty good job of summing it up if you are someone who really doesn't have a clue why we are in this mess.
- poogy21, on 11/14/2008, -0/+3Funny thing about the Federal Reserve.. Aside from having the power to fluctuate our economy at will, they also do not grantee the value of our dollar. If tomorrow the dollar will be worth nothing. They owe us nothing.
Our currency used to say "redeemable by gold", then by "Federal Bonds". Now it's "In God we trust"
Clever move, considering that no one has contested or complained about "In God we trust"
But I'll tell you one thing.. God ain't paying my rent! - dsmx, on 11/14/2008, -2/+5It was government regulation that caused this problem in the first place by giving lower interest rates to companies that gave mortgages to people who couldn't afford homes.
- aZoo, on 11/14/2008, -1/+4Government has nothing to do with this. For proof : The Fed is independent from this government of yours. American people has no control whatsoever on the Fed, period.
- korvan504521, on 11/14/2008, -0/+3well, we still have pretty low unemployment. Its mostly the rich and elderly that are in a pinch right now. Or anyone who was investing for their retirement.
if you're already poor you probably haven't noticed anything different. - theloofa, on 11/14/2008, -0/+3Why couldn't they just represent it with copious amounts of McDonald's Pie?!
So much simpler... - mibi, on 11/14/2008, -1/+4The worst part is that this is what the experts were saying. Not your uncle Leo, but the guy whos job it is to analyze the data, they were saying it too.
Experts suck. - Amnesia10, on 11/14/2008, -0/+3I am no Bush supporter. In fact I think he is the worst President in America's history. Though the comments about Wall Street getting drunk were accurate, and about the most accurate thing he said in eight years. He is not to blame for the crisis. I blame Phil Gramm more than any other single person and the banks.
- StarSirius, on 11/17/2008, -0/+2*Reads the visual guide*
- geddon, on 11/14/2008, -0/+2If you're already poor you didn't have a Presidential Candidate talking about you in the recent election. The battle was between the upper and middle classes. The lower classes who depend on Socialized Education and Health Care were completely ignored.
- inactive, on 11/14/2008, -0/+2we were not debt free, but as of the end of clinton's terms, we had no annual budget deficit. in fact, we had a surplus and could have started to pay down the debt, but bush thought it was smarter to "give the money back" to the taxpayers. then he went and created the larger budget deficit we've ever had in our country. welcome to the bastardization of "conservatism."
- Y0tsuya, on 11/14/2008, -0/+2I started noticing that houses (in SF Bay Area) were becoming unaffordable back in 2003. Didn't think much of it until I though about buying another house in 2005. Then the absurdity of bubble prices hit me and I just had to find out the what, how and why. It wasn't hard to figure out. And in early 2006 I became a bubblehead and sold all my non-401K stocks. For 401K and IRA I shifted 1/2 to bond funds. These days I sit on a pile of cash, trading in and out of the market. At least for the next few years I don't see myself buying and holding any stocks long-term.
Those who knew prices were too high but bought anyway, well, sucks to be them. - thespiff, on 11/14/2008, -0/+2If I didn't already know all of that, the chart would have confused the ***** out of me. That wasn't very good.
- andrewcsfan, on 11/14/2008, -0/+2Not sure the objective of the page, but I think simplify it a little bit may be better. In addition, it assume the crisis ending at bail out. Have it consider the possibility of failure of the government action
- catbeller, on 11/14/2008, -1/+3Missing a critical box - the amplifier. In 1999, the derivatives market was deregulated. The major factor in this crash was, in Warren Buffet's term, those economic weapons of mass destruction. The Carlyle Group was leveraged by a factor of SEVENTY. The economic miracle that was the unregulated free market was based on the completely untransparent trading of derivatives. The value of those "funds" went from around 7 trillion in 2000 to over 70 trillion before the crash. That value was smoke and mirrors, and was heavily intertwined with the actually uninsured load of debt that was inevitably to explode when the housing bubble finally burst. The real estate market did it's thing and crashed, and that triggered the collapse of the derivatives markets. Those markets were endless vaults of air; all the bubble collapse did was expose the rot. The defaulters did us a favor and killed the derivatives market before the investors manufactured enough fake money to buy the whole damned planet - no joke.
Another missing box: AIG. The reinsurance industry was also deregulated in 1999, so they faked the ability to pay out on all those mortgage insurance papers they had sold. THAT was the real killer; when the wave of defaulters hit, there was no insurance... - atsmith, on 11/14/2008, -2/+4That chart was the not taking into consideration that the EX-CEO of Goldman Sachs is directly funneling billions of dollars into his old Company, which in turn is going directly to Bonuses. Not to mention the parroting calls for a One World Currency, an International Currency.
So while small companies fail, the big banks are being saved and allowed to buy up smaller companies. Sounds like a planned consolidation of Wealth, like the Great Depression.
But the TV keeps telling me it's the Poor People fault who wanted a nicer home. I wonder what the true is? -
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