What is Digg?270 Comments
- Rosey108, on 02/18/2009, -2/+279So clear and concise. Thanks for making this terrible topic a pleasure to watch!
- tacojohn, on 02/20/2009, -0/+165Incase the site goes down– it's on Vimeo
http://www.vimeo.com/3261363
And YouTube
http://www.youtube.com/watch?v=Q0zEXdDO5JU - bouche, on 02/20/2009, -1/+165haha.... love the "less responsible home-owner" slide. Fat smokers with too many kids.
- Bloodwine, on 02/20/2009, -0/+96In the end, the people who played by the rules get skewered and the government addresses this by saying, "This mess is too big to be petty and point fingers at those who caused the mess. We all need to band together to get through this"
Doesn't change the fact that the people who played by the rules and colored within the lines end up watching all the people who are responsible for the mess get rewards for their bad behavior. - sknygrydg07, on 02/19/2009, -1/+76fantastic explanation for those of us in the 'real world'
- awfulgrace, on 02/20/2009, -3/+61Wow - this was able to communicate in 10-minutes what has taken some of my professors hours to explain at a top-10 graduate business school...
Granted, it's a bit simplified at points - but it's an absolutely fantastic way for the uninitiated to comprehend the root of what's going on. - thentro, on 02/20/2009, -2/+55What a great video. It completely destroys the idea that the subprime crisis was caused by home buyers. Sure they participated, but the whole reason those people were offered such crazy deals on house was the bankers and investors were making an insane amount of money off the deal. Because they said over and over that housing was the "risk free" investment. So much so that they made a bubble, and now we are living in the aftermath.
- shifty327, on 02/20/2009, -9/+60OH GOD HE TWITTERED IT LOOK OUT
- atomicartist, on 02/19/2009, -1/+48Very nice depiction of the greatest illusion.
- inactive, on 02/20/2009, -1/+44Very comprehensive. Most people oversimplify it and tend to blame a single class, i.e. the homeowners or mortgage brokers. It's everyone's problem.
- Games4Life, on 02/20/2009, -6/+46I don't care if Kevin Rose tweeted this it's still awesome.
- reeldigitalpro, on 02/20/2009, -0/+39So what do we do now?
- Insightful, on 02/20/2009, -3/+37Missed the role the credit rating agency took - they polished the turds by giving AAA rating to sub prime mortgages.
- m3arvk, on 02/20/2009, -5/+38Missing from this are two things:
1. How the Federal Reserve failed utterly to raise rates to slow this thing down.
2. The effect of fractional reserve lending on the money supply and the cycle discussed in the video.
Source: http://en.wikipedia.org/wiki/Fractional-reserve_ba ... - ch28kid, on 02/20/2009, -10/+41The author should make one showing how government injecting money into the system doesn't work.
- Mikey706, on 02/20/2009, -15/+46***** Greenspan.
- AbsurdParadox, on 02/20/2009, -1/+29So, the site is redirecting to 127.0.0.1... AM I THE CREDIT CRISIS PROBLEM?!? :(
- MCJackhammer, on 02/20/2009, -2/+25I knew it! Fat people are the bane of America!
- MasonZombie, on 02/20/2009, -3/+25Spelled Crysis wrong.
- jessehadden, on 02/20/2009, -5/+25I see a lot of comments suggesting that this illustrates how everyone is at fault. I must say, I disagree. This clearly shows how predatory practices and greed, primarily in Wall Street, have perpetrated this crisis. I mean, for a while, it was easier to get a house than it was to get an apartment. I know that if I engaged in this kind of predatory behavior in my industry, I would face jail time for fraud... I wouldn't be rewarded with billions from the government (i.e., the taxpayers, who I might add are also struggling to pay their mortgages).
A bottom-up stimulus, with re-regulation of the predators on Wall Street, would genuinely avert this crisis. This top-down bail-out, however, seems pretty much designed to concentrate power & money, and to ram a lot of social change down our throat in the wake of desperation that is sure to follow.
Crisis accomplished, Washington. - willdad, on 02/20/2009, -3/+23The way out is not sexy, but it works -- we have to live like your grandpa did: buy what we can afford, live within our means, use debt sparingly. Anything short of this is another dose of what got us into this mess, specifically "loose money" (inflation). And that, along with the very similar impact of fractional reserve banking, is the concept missing from the otherwise good video.
It takes time to undo the bad that has been done, but if we are willing to be frugal and hard working, we can prosper again. Or... if we insist on a quick fix and a magic solution from a great leader who can guide us and make it all feel good again... we are asking for more of the same poison that got us into this mess. - WoollyMittens, on 02/20/2009, -2/+22That is simple. We give unlimited tax-payer's money to the irresponsible investors and bankers for free. What? That doesn't make sense? Well, it does to the ones receiving it. Piles and piles of delicious free money.
- gllopc, on 02/20/2009, -2/+20That slide unfortunately described the majority of America. I have some ex-in-law pictures that look unsurprisingly just like that. And yup, they defaulted on their loans.
- scarz99, on 02/20/2009, -2/+18This is such a great video.
- Sprules04, on 02/20/2009, -1/+16Nice video. Even though it's simplified I still found it difficult to keep up with. With that being said, now how do we reverse the cycle?
- badenglishihave, on 02/20/2009, -0/+14No, if that was true the video would not have run on my computer.
- SteeleyDan, on 02/20/2009, -7/+21Seems like one of the major problems was the belief that just anyone deserves to be a homeowner, which led to sub-prime mortgages which were defaulted on and started the snowball effect. Sorry to say, but just because you're a human doesn't give you a natural right to a type of housing you cannot afford. People need to make better life choices, financially plan better, and live within their means. And someone should have had the foresight to curtail the greed of lenders when they were deciding to allow so many sub-prime mortgages at once
- LongShlong, on 02/20/2009, -2/+16This is also a good tie-in with this video:
http://www.youtube.com/watch?v=ThXpjmfyiMQ - SillyRabbits, on 02/20/2009, -9/+22I love how Greenspan warned about this for years, in hearing after hearing, and congress and everybody else repeatedly ignored those warnings. Now we have Mikey saying "***** Greenspan" and all of congress pretending like they are shocked this has happened.
- chaosatom, on 02/20/2009, -0/+13The website is so well-made. Just wow. It's appealing to the eyes and so effective. I wish that they make more kinds of these videos.
Kudos to the person who made the site. - DirtPile, on 02/20/2009, -5/+18STAY IN SCHOOL FOREVER
- axiomata, on 02/20/2009, -0/+12The video seemed to leave Congress out of the blame. The one fault in the video, otherwise it was great.
[Congress passed the Community Reinvestment Act which further encourage subprime lending. They also created the GSEs Fannie Mae and Freddie Mac which began to purchase subprime securities at a high rate, and because investors figured (correctly, it turns out) that the government would not let them fail (moral hazard) their securities had an implied AAA rating.] - maz2331, on 02/20/2009, -2/+14Money != Value.
It is that simple, really. - akula89, on 02/20/2009, -0/+11they rent, live with relatives, live in cheaper homes, or live on the streets, basically.
- NHeerDesign, on 02/20/2009, -3/+14This is well done. Thanks for sharing.
- ahussain1986, on 02/20/2009, -0/+11I used to work for Bank of America as a teller when I was in college a couple of years ago. I would see Personal Bankers give out loans to people who were clearly illegal. They would have no passport, not even a social security number. I asked one of our PBs why they were giving out the loan, and his response was, "Bank of America keeps on raising our mortgage 'goals' so we are giving out loans to everyone. We know they are illegal, but all BoA cares about is if we meet the goal." The problem here is if someone has no papers, when they default, how do you track them down?
I work for a financial regulator and was a finance major in college. Trust me, the regulation of real estate brokers is a joke. The regulation of individual financial advisers and investment bankers is a joke too. We can go after the firms, but have almost no regulation of the actual individuals. It's ridiculous the amount of money that the large financial firms have given to Congress to prevent this from happening.
Furthermore, we can't even regulate hedge funds. I know the lack of regulation is the appeal of hedge funds, but they played a crucial role in the crisis as well. And after working in regulation, you quickly learn that lots of hedge fund managers are crooks. - NJank, on 02/20/2009, -0/+10correction:
1. How the Federal Reserve deliberately avoided raising rates to slow this thing down, in the name of "not wanting to stifle financial innovation".
A Hands-Off Policy on Mortgage Loans -- New York Times, 7/15/2005:
"We don't want to stifle financial innovation," said Steve Fritts, associate director for risk management policy at the Federal Deposit Insurance Corporation. "We have the most vibrant housing and housing-finance market in the world, and there is a lot of innovation. Normally, we think that if consumers have a lot of choice, that's a good thing." - inactive, on 02/20/2009, -0/+9I still can't believe that flipping houses actually works. Are the buyers of these houses incapable of going to their county tax appraiser's web site to see how much the house sold for previously?
$100,000 house + $5,000 for linoleum wood floors and pseudogranite counter top = a steal at $250,000?
Idiots. - blogginginc, on 02/20/2009, -0/+9Works much better
http://www.youtube.com/watch?v=Q0zEXdDO5JU (Part 1)
http://www.youtube.com/watch?v=iYhDkZjKBEw&fea ... (Part 2) - maz2331, on 02/20/2009, -1/+10Blame Congress + lawyers + banks + everyone else.
But blame the first for opening the door, the second for stepping through, the third for saying "Thank you GOD!". - aletoledo, on 02/20/2009, -3/+12He leaves out the part about how bankers personally profited, while it was only their publicly owned caompany that was holding a bomb. Thats the number one rule of being rich today, you control money, but let the risk be held by someone else. So he's correct that there is a cycle, but the bankers are outside of the entire cycle siphoning off bits and pieces.
Because of this little omission, I suspect this is propaganda funded by the rich in order to make it appear that everyone is to blame and they're not guilty. - swiftheart, on 02/20/2009, -0/+9The solution starts with the poor banker at the end is stuck with a box of mortgages that aren't paying money. He owes people he borrowed money from to buy those crap mortgages and is panicking.
So the government comes in and buys those crap mortgages off of him. The banker gets money to pay off creditors, and starts (hopefully) making loans again. The government gets a box with bad mortgages and the titles to the houses their attached to. The government then tries to make those bad mortgages go good in some way.
The technical name of this is TARP--the Troubled Assets Relief Program, though it was commonly referred to as the "bank bailout."
Whether it works or not is another story, but that basically is the idea. - yunus, on 02/20/2009, -1/+10I guess so because that was a very clear explanation and they explained all the big words.
- Insightful, on 02/20/2009, -0/+8Incorrect. It is a right wing talking point that the banks were forced to issue sub-prime mortgages. Many point to CRA which apparently worked fine under Carter, Reagan, Bush I, and Clinton. Why did you suddenly blew up under Bush II?
Seriously, you think the money grubbing bankers would let the government tell them to take on additional risks? - scarz99, on 02/20/2009, -1/+9Yes, in-fact a good 160,000 do.
- Risingashes, on 02/20/2009, -0/+8The problem, as explained in the video, is that the majority of Wall St requires leveraged borrowing to function. Such a system cannot suffer hickups or everything falls apart very quickly.
The investments themselves aren't actually that bad. Over the long term an entity that holds these instruments would stand to make a reasonable return. However investment firms simple don't have the capital to support long term locked in investments. This is why a government is ideally suited to take on these investments- governments are eternal and are able to wait a long time for a return on investment.
You can of course make the argument that Wall St 'deserves' this. But it's hardly appropriate to force the economy to implode out of spite. It isn't actually throwing money away- you're buying something that is currently worthless due to zero short term liquidity. But in the longer term what you are really buying are properties which will eventually and inevitably be demanded. - PimNL, on 02/20/2009, -0/+8"..Years ago.."
The clock went forward instead of backwards :'( - GovernmentsGun, on 02/20/2009, -1/+8It does sound familiar. Government sets up the conditions for failure. Things fail. Government plays the hero.
- Insightful, on 02/20/2009, -1/+8Actually, I disagree with you here. It is true that many of us, if not most, want to own a home sometimes in our lives. Bush certainly encouraged it throughout his Presidency (http://www.iht.com/articles/2008/12/21/business/ad ... However, it is up to the mortgage providers who holds the power to say, no, we will not lend to you no matter how much you want it or think you deserve it because you cannot afford it.
Here's another example: many of us may want a Mercedes/BMW/Tesla/Mac Pro/iphone/whatever - let's use Mercedes for the sake of argument. Let's say Mercedes got greedy and started to offer all its cars with no money down, super low adjustable rates to people who cannot afford it and people took Mercedes up on the offer. A year or two later, Mercedes realize it's ***** because the majority of the new owners cannot make payments and declares insolvency, asks for bailout, fires its workers, etc.
Sound familiar?
Who do you think deserves more of the blames? Mercedes for giving its cars to people who cannot afford it or people who took up Mercedes' offer? Both deserve the blame but I think Mercedes more because it decided it can profit by giving away its cars to people who cannot afford them.
Me? I have a 30 year mortgage and drive a Toyota. - pacerx, on 02/20/2009, -2/+9What if that money is used to invest in infrastructure and provide real actual value to the people of the country?
Building new roads and repairing bridges and other infrastructure is not simply "injecting money". -
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