Understand The Financial Crisis In 3 Minutes

If you or someone you know still scratches their head when trying to understand how the financial crisis began and played out, the Washington Post has a 3-minute slideshow with voiceover by business reporter Frank Ahrens that clearly and succinctly explains how it all happened. The pictures are pretty, too.

Anatomy of a Crisis [Washington Post]


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  1. panzerschreck1 says:

    this was great.

  2. LastVigilante says:

    This was very helpful in understanding this. There seemed to be a “The Titanic is unsinkable!” mindset of these mortgage-backed securities, even as the last lifeboats were launched.

    The “turning point” they provide in the slideshow is that “…in 2006 home values began to do something that few saw coming, they began to fall.” Is there any explanation as to why, all of a sudden, home values dropped (mostly) across the board?

  3. Anonymous says:

    how can you begin a dicussion of the credit/housing crisis without mentioning the community reinvestment act.it was the democreatic congress and their social engineering designed to put non-qulified buyers into homes that was the genesis of this disaster.banks were forced by congress to make loans they wouldn’t have otherwise made with the asurance that fannie and freddie would take them out.it was the “implied” government guarentee behind fannie and freddie that lent validity to the loans. wiyhout this implied guarentee the loans never would have been securitized. had barney, Chris and the socialist dems not forced banks to make these non qualified loans there wouldn’t have been loans to securitize.get the facts .

  4. tailstoo says:

    Simple math – Houses go up 20% a year, wages go up at best 3% a year. You didn’t need to be a rocket scientist to see that the house of cards would one day fall.

  5. Red_Flag says:

    I think we generally get the gist by now, if nothing but by osmosis.

  6. markio says:

    Why do we need this video? I thought it was all George Bush’s fault? Oh right, this started quite some time ago.

  7. sam-i-am says:

    I’m gonna be honest – I’m a bit tired of all these “financial crisis explained” videos and stuff. Is it really that hard to figure out? I see a new one of these every day or two. Americans are not that stupid.

    • BeerFox says:

      @sam-i-am: Me too. Fortunately, I think we’re looking at an ‘Explain the Financial Crisis’ bubble, which should burst fairly soon!

      • ELC says:

        @BeerFox: Apparently a lot of Americans are/were. It was they who took that crappy mortgages. They couldnl’t have been loaned if no one was there to take them.

  8. Truth-Teller says:

    Any student who has taken Finance 101 should know that the method of calculating the Annual Percentage Rate in the Truth in Lending Act (TILA) of 1968 is an antiquated, untrue, Nominal APR … the rate for a payment period multiplied by the number of payment period in a year. The mathematically-true, Effective APR is the rate for a period compounded for the number of payment periods in a year. TILA allows a 1/8% (0.125%) tolerance of accuracy in the lender expression of the Nominal APR.
    In monthly payments the Effective APR is over 1/8% from the Nominal APR beginning at 6% (Nominal) APR.
    On a Pay Day Loan, where a 14-day posted-dated check is given to receive a loan of $100 then, the Nominal APR(as if alway reported accurately by consumer groups) is 391% (15/100)*(365/14). The mathematically-true, Effective APR is 3724% ((15/100)+1)^(365-14)-1.
    The number of 1/8 percents that the Effective APR is different than the Nominal APR is 26,664 (3724-391)/0.125. Is 26,664 less than 1??? According to the current method of calculation … the answer is “Yes”!
    Congress could change to calculation by merely changing the word “Nominal” to “Effective” and the words ” … multiplied by …” to “compounded for”.

  9. Tigerman_McCool says:

    Glad we got that cleared up…