Daring Fireball pointed to a wonderful video and site explaining the credit crisis in nice visual terms. The Crisis of Credit Visualized offers a very clear, simple explanation of the origins of the current credit crisis. The explanation focuses on the investment side of the mortgage debacle, so no HELOC/MEW side of the cycle.
The one thing it explains clearly, though, is explaining why bankers would encourage subprime and Alt-A mortgages. While Republicans and others would have us all believe that Fannie/Freddie were to blame, or that things like the CRA are to blame, the reality is that bankers, investors, and mortgage brokers all were incentivized to make riskier bets.
It’s becoming clearer that the banks have borrowed themselves into bankruptcy. Nationalization is going to be the only way out, I think.
The video is worth watching all the way through. It’s the first one that really points out the problems with low interest rates, easy credit (for bankers as well as mortgage borrowers), and the assumption that “house prices always go up.”
Now, why isn’t a video like this coming out of a traditional news outlet? That says something as well, doesn’t it?
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