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credit_crisis_visualized.jpg
Highly recommended: "The Credit of Crisis - Visualized" [crisisofcredit.com] by Jonathan Jarvis does exactly what it says. It might well be the most educational ten minutes you have experienced in days.

The goal of giving form to a complex situation like the subprime mortgage crisis is to quickly supply the essence of the situation to those unfamiliar and uninitiated.

Watch it below.

Thnkx Julien!

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11 COMMENTS

Cool! Definitely the clearest explanation I've seen so far!

Thu 19 Feb 2009 at 4:24 PM
w

Nice. Clear. I like the risk time-bomb. Nassim Taleb uses that term too. A bit long, but the subject matter probably deserves it.

This covers the relationship between the individuals and the private sector well, but tell us how this story relates to the public sector too! There is a really large part missing regarding the what role public policy incentives played in this.

There have been government policies in place incentivizing many of these actions in the risky slice for some time now. Greenspan is only a small part of the story. Where are Fannie and Freddie (they could use a few time-bombs aside their names too)? There whole existence is to buy risk from the private sector to encourage home ownership for individuals who fall in your way-too-risky category.

Thu 19 Feb 2009 at 6:22 PM

Really great, but, like bdp says, it cuts out the part gov't played in encouraging, even mandating, subprime loans.

Fri 20 Feb 2009 at 1:24 AM
Greg

A good video but it misses the real sleight of hand by wall street and the ratings agencies that sub prime mortgages were packaged and repackaged until they were in derivatives (CDO, RMBS's etc) that were rated AAA. This was done by making, fairly aggressive assumptions, on historical default rates. That is also a very big part of why this crisis got so out of hand.

Fri 20 Feb 2009 at 3:02 AM

As far as Fannie and Freddie go, they avoided buying subprime mortgages for a long time, until they first starting losing stock value because they weren't participating in the boom as much as others, and second when the government started mandating that they purchase the loans so the time bomb could keep ticking a while longer. But both of those happened really recently - late 2007 through 2008. Since they got in so late in the game, they wound up with some of the worst quality mortgages, and got stuck holding the bag. So while Fannie and Freddie certainly aren't blameless, it's inaccurate to try and paint them as the main bad guys, regardless of how convenient.

Sun 22 Feb 2009 at 8:29 AM
Berkeley

I think it's a great video. For just over 10 minutes, I think it's pretty detailed. The above comments are good ones, but I think they would have detracted from the "overview" of the issue. Perhaps if he makes an interactive version there could be little jump-off points where one could explore Freddie/Fannie, the gov, or other aspects. I don't think those are essential to get across the main ideas.

Tue 24 Feb 2009 at 9:10 AM
kim rees

As someone who knew nothing more than what the headlines had to say, this video is incredible. I have been looking to understand this crisis, but the wealth of information available makes it hard to find a starting point. For me this was it! Thank you!

Sat 14 Mar 2009 at 3:25 PM
Nadine

how this all situation can change?

Wed 18 Mar 2009 at 6:34 AM
Nuno

It would be good if there were captions for everything that is being sad. Deaf people like me are unable to understand everything just by watching the sprites popping around.

Sat 21 Mar 2009 at 5:58 AM
Rui

very informative. nice to see someone who can explain what is going on... maybe even might be related.

Tue 21 Apr 2009 at 1:31 PM
steven Jarvis

What I find a bit unnerving is that many such resources treat the crisis as a thing either of the past and look at "how we got there" or of something we're in the middle of but do not consider that we might not even have seen the worst by far. What about the next big default tsunami, the adjustable rate mortgages or ARMs, likely bigger than original sbprime, yet hitting a much more depressed market o boot? What about worthless second lien mortgages still in the books as if they'd ever be paid back? What about the commercial property markets? What about the multifamily houses starting to default? What about the sovereign debt of failing states such as Greece on the books? The last Great Depression, as we're told by the Keynesian pundits, took a war to get out of. A string of more bestsellers to come, I'm sure.

Mon 15 Mar 2010 at 11:21 PM
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