Understanding the Financial Crisis – very good explanation!

Understanding the Financial Crisis – very good explanation!
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How Recessions Work!

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So would gold standard currency solve this?

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Mohammad Alrubaie says:

When money stop cycling, economic crisis happen.

Alice Hagan-Brown says:

wake up 11:11 

Zerly NAZAR says:

stay away from USURY God forbid this.

tinox12 says:

yeeeaaaa and depts are money sooo whaaaaat ? the system is all about crashs and depts ^^ tell me moooore

sindle36 says:

Thank you! I’m glad to see someone around here can see deeper than the outer-most, visible shell of the problem. Frederic Bastiat to the rescue again.

Goon Industries says:

What, no mention of Glass Stegall act?!

astronomylover09 says:

excellent explanation 

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Matthew Petersen says:

The Fed turns over it’s profits to the US treasury so it comes right back. The government agreed it’d be best for the Fed to buy government bonds to get money into the system, rather than dumping free cash into someone’s pockets. Buying government bonds also allows the Fed to control interest rates better. Also the Fed is only quasi-private.. it’s not so different from Fannie Mae and Freddie Mac

Other governments have non-private central banks, and the monetary policy is run by mob vote- no thx

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Rah Lam says:

1:29-1:33

Those 4 seconds explains why the concept of capitalism, the idea of fiat money, and the game we call the free market is SYSTEMICALLY corrupt. If you borrow money from the very people who print the fucking thing at ANY interest rate you are NOT paying it back ever. hence, debt is built in. E.G. Im the fed and print the money your borrowing from me. $100/10%. Where is the 10% coming from? Helloo? anybody listening??? every $’s borrowed with interest! It costs 11cent to make a nickel!

hydra evans says:

every time there is a good explanation, showing things for what they really are, there is no doubt that some republican will jump in and attempt to cover up the truth.

bweazel says:

So again, government, and only government, creates moral hazard in a market. Enron could never have done what it did without the help of the federal government. Without government loans and grants, Enron would not have gone into those countries it went into unless it could have afforded to do so, and unless it would have been a profitable move for their company. So as I said earlier, when someone removes your risk, you take on more…. that is moral hazard.

bweazel says:

And after just a few google searches I see that Enron benefited from a federal government program called OPIC that funded multiple failed Enron projects to the tune of one billion dollars.

You can also find that Enron also did not pay a single penny in income tax the 15 years before they went bankrupt.

Apparently Enron also used the federal government to bully competing energy companies and also to bully foreign governments in places where they set up these fraud projects.

bweazel says:

And if you want to mention Enron…. who enabled them to behave that way? It was the federal government. Enron could not have done most of what they did without the authority of the federal government behind them. You understand that the government gave Enron the 600 million dollar loan to construct the power plant in India? Enron later used that to report nonexistent income that couldn’t be easily verified.

Would Enron have built the power plant without the government loan? Hell no.

bweazel says:

No…. why would they be? Are you trying to tell me it is inherently immoral to drill for oil? Do you realize how much energy you use throughout the day? If they’re being immoral (by simply practicing their business) then you are being immoral when you drive a car, flip a light switch, fly an airplane.

Sorry, I just don’t go along with the whole hippy mentality of energy being immoral and evil. If you do, good on you, I don’t though.

How come none of you understand what a moral hazard is? Ugh.

Christina Chapman says:

So Enron wasn’t a moral hazard, then..or BP..

bweazel says:

Then please point out to me where he mentioned government a single time, where he mentioned GSEs, where he mentioned anything concerning the two trillion dollars of CDOs that Fannie and Freddie created before Wall Street even started to make these in any real numbers. They are very much hidden from the video, and their guilt is replaced with Wall Street.

Bottom line, Fannie and Freddie should have never been allowed to grow to the size they did. It was criminal.

Blake Yerian says:

Although I agree that governments are a source of moral hazard, it’s well established that the CMO (they call it CDO in the video) rating is largely responsible for the misplaced faith of its buyers; Fan/Fred are not hidden from the video. I believe the author left names out and other details in an effort to simplify the scenario. (Also, much has come to light since March of ’09)

Nathanial Garin says:

I’d love to contact the person who had made this video, i am making the public a few pieces of animation for local public knowledge .. i am self teaching my own animation programs

DutchVikingGuy21 says:

Sounds great, will look for it when it is there!

bweazel says:

4:14 Wrong. The originator instantly sells the loan to Fannie and Freddie (getting the risk of a big loan off their books, freeing them up to make more loans), who packages the loan (creates a CDO) and then allows Wall Street to invest in these loans (hence the CDS’s the banks made to insure themselves). I love how the creators of this video omit that entire step, which is a very important part of how this all played out.

Fannie and Freddie were allowed to act like financial black holes.

bweazel says:

Great animation, horrible explanation.

bweazel says:

A very untruthful one too.

bweazel says:

So long as it is not government insured greed, yes, greed is very good. When the government begins to pick winners and losers though, no, greed is the end of a society.

bweazel says:

So where this video tries to play like “evil” Wall Street brought these groups together, it was government and government sponsored enterprises that brought the groups together. So again, it was government that created the moral hazard that caused the crisis. It was government that insured Fannie and Freddie. It was government that allowed Fannie and Freddie to grow to a systemic size. It was government that allowed Fannie and Freddie to take over the housing market. Not Wall Street.

bweazel says:

What you, like the video, are failing to admit, is that there are some companies and GSE’s that are more responsible for this crisis than others.

For example, 0:49 No, those groups were brought together by GSE’s named Fannie and Freddie. The author would rather lie and say that Wall Street brought them together when in reality, Wall Street was very late showing up to this game. Again, Fannie and Freddie had created two trillion worth of CDOs before the private banks had even started.

bweazel says:

He doesn’t mention any banks by name, no, but he does mention the banking system at great detail. He doesn’t mention the secondary mortgage market at all (which for all intents and purposes is Fannie and Freddie). Fannie and Freddie created two trillion dollars worth of CDOs before the private banks had even created a hundred billion. You tell me who created this crisis.

The purpose of this video is to demonize Wall Street, when truthfully, very little of the blame should be on Wall Street.

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shirusubemonaku says:

commoners can’t just blame the bankers for the crisis.

Aulia Arif Hidayat says:

Thanks Moustafa Mourad, your visual explanation make everything that I read on financial crisis book (Bailout by Neil Barofski, etc) even become clearer because of the visualization. Appreciate for your work!

timetravelr28 says:

He doesn’t mention ANY banks, investment firms or individuals, not just Fannie and Freddie. The purpose of the video is do illustrate the dynamics of credit, investment cash and collaterals, and the factors that led to the financial crisis. It’s not to name individuals and banks.

Aslam Sara says:

GOOD EXPLANATION

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