bostonbubble.com

[melonrightcoast]

This is a great explainer for all those less obsessed about the housing market and the economy than I am (or boston bubble readers are).

http://vimeo.com/3261363?pg=embed&sec=&hd=1
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melonrightcoast ... are you?

[balor123]

Very well done. Lots of money sounds. Until the end. I won't spoil it for the rest of you who haven't seen it though

[GenXer]

Don't let the media design person fool you. His degree is in media design, not in mathematical finance (even then I'd be very skeptical, unless the person was intimately familiar with bank risk models as well as with fannie/freddie history). There are infinite number of details one can spin in any story they wish. The facts of the matter are:
1) Government forced banks to lend to people who could never repay while guaranteeing the loans
2) Mortgage brokers helped fuel the fire by making borrowers qualify with phony salary reports and other tricks
3) Government ignored calls to regulate Fannie and Freddie when many people called into question their accounting and activities as they continued to back risky loans
4) Banks underestimated the risk of the securities they created by using models which do not take into account high variance events (by pretending these events do not exist)
5) Government created such an event by continuing to back risky mortgages, and when securities containing these mortgages became worthless, a general panic ensued, which triggered the crash of '08

So while banks bear responsibility, the government bears most of the responsibility by interfering too much with the markets (lowering the interest rate by Greenspan also qualifies as needless meddling).

Thus, in a nutshell, the government planted the seeds, and the banks did not anticipate the fallout. As always, when the 'experts' get too arrogant, we get a big financial mess as a result. Do not let your life be ruled (and ruined) by 'experts.'

[Guest]

Greedy Bankers are far more responsible for what happened
than they government or Barney Frank

convenient to blame the government for all our woes thou
.

.

[melonrightcoast]