Understanding the Credit Crisis
I found this great video developed by Jonathan Jarvis that describes in 11 minutes current credit crisis. I hope you find this as enlightening as I did.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
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Only thing missing here is the explanation of why creditors and lenders started lending to high risk people at an increasing rate. Because GSE’s were buying up high risk assets and giving incentives for lenders to make high risk loans. Lenders did not make bad loans in increasing amounts just because they believe that they will wipe their hands clean by passing the risk on to the next guy. The next guy was being told by the government that it had to create incentives to lend to high risk people and it had to lend to those high risk people themselves. The next guy, taking on all the high risk and incentivizing what the government demanded of them were the GSE’s, Sallie Mae and Freddie Mac.
Nice link. Thx.