Subscribe by EmailThe Credit Crisis For Dummies
February 24, 2009 by Geeks are Sexy | 2 commentsHere is what possibly is the most simple and easy to understand explanation I’ve heard of the credit crisis we’re all going through. Kudos goes to Jonathan Jarvis, the author of this informative video, for his masterful vulgarization skills.
[Via Dominicarpin.ca (french) ]
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The role of Credit Default Swaps (CDS) (and the SEC’s relaxation of the Net Capital Rule in 2004 that enabled them) should have a much larger section in this exposition. Credit Default Swaps (aka “weapons of mass financial desstruction”) have made the current credit crisis far worse than anything in the past. The rest of the system (as described in the video) has been in place and working quite well for half a century; adding credit default swaps tipped the balance and sent the system into the abyss.
Brilliant.