The credit crisis explained

What I don’t like about this succint explanation is how it basically lays all the blame on a caricature Simpsons type family and not so much on the cronyism and greed of the financial institutions (Who are basically doing fine because they got trillion dollar bailouts)

5 thoughts on “The credit crisis explained”

  1. I fail to see how any significant blame was laid on any of the two represented types of families. They barely did anything, while all those bankers were knowingly playing hot potato with the time bombs they had created. And this video was clearly about explaining the mechanics and motivations of the crisis, not judging the morality of the various parties.

    But I’d have to say that it is irresponsible to take a loan and not pay it back. And that’s why banks shouldn’t lend money to certain people. Not because those people don’t deserve a break, but because it’s the bank’s job to weigh risks versus rewards and invest wisely. It’s irresponsible of the banks to lend money that they don’t get back. I have read that it was Clinton who encouraged banks to lend money to poor people so that everyone could buy their own home, and that sure worked well in the short run. Not sure if it really was Clinton, but whoever it was should probably be blamed for the housing bubble.

    And speaking of housing bubbles, it looks as if China’s housing bubble is bursting now. Whole cities filled with empty apartments, bought while the prices were going up, paid for by black market loans when the government tried to restrict lending. And now prices have apparently begun to go down. Sure, China is full of people who need somewhere to live, but I’m pretty sure that those people are poor and can’t afford to pay the prices that would be needed to sustain the bubble. They probably have even less money than the people living in cages. (I did some math, and get 15 times more floorspace in my apartment for the money those people pay for cages, and I can stand straight up in all that space. Sure seems like a bum deal to me, but I can understand how it might be the best option they have.)

  2. What about those trillion dollar bailouts? (Not a rhetorical question.)

    I’d agree with anyone who says that those shouldn’t have been paid, and that the banks should have been allowed to fall, even at the cost of the whole economy grinding to a halt, causing deaths and destruction of people and wealth. Because the sooner it happens, the less destructive it will be, and the sooner people can start climbing up again. But apparently the politicians and others in power didn’t want the big crash to happen on their watch. Kick the can down the road!

    And I can understand that. Before I looked closer at how the economy functioned, I judged politicians by how well their countries were doing during their reign, completely ignoring the inevitable consequences of their irresponsible decisions. But the video isn’t about how the politicians chose to react to the credit crisis, or how they’re basically bought and paid for by the bankers. It’s about how the credit crisis came about to be.

    If they could actually get a lot of virtually free energy with those Thorium reactors, I suppose that it’s possible that the world could experience another growth boom like the one started with oil. But I don’t think the economy is going to make it until they get that going. If it does, then perhaps it was the right decision to avoid the big crash by handing out trillion dollar bailouts. Just like it might be the right decision to pay a mugger instead of fighting to one’s death over the contents of one’s wallet.

    So, that’s my take on the trillion dollar bailouts. Would you mind giving a similarly detailed account of your own?

  3. Oh, OK. I guess that is a valid distinction. But I don’t see how that puts the blame on the caricature Simpsons type family. The video didn’t even mention the bailouts. For all I know it may have been made before anyone knew about the bailouts.

    “The Money Masters” explains how the international bankers created the Fed, and thus obtained the literal license to print money. I linked it in the forum a few years ago, but apparently I didn’t mentioned that part of the story. Though now that I reread what I posted, I notice that I did mention how the central banks gain wealth by printing money. Which is what they do when they give bailout ‘loans’. It’s not taxpayer’s money, it’s completely new money. Which reduces the real value of everyone’s money, taxpayer or not. The only people gaining anything from this new money would be the people who receive it, which in this case would be the banks who own the Fed (as far as I understand it). So what they really did was to just print more money to fill in the holes in their balance sheets. Problem? 😀

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