Here is a great video that I think does an awesome job of explaining the current bank implosion. This is a must watch!
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
The only thing I would add to this is that it leaves out the governmental impact. Everytime a home was sold, the property would be reassessed, meaning higher tax rates that were then transferred to state capitals and thus borrowed against in the form of bonds. The bonds were then used for public works, deferred maintenance, and other projects. The federal, state and local governments wanted additional revenue streams and wanted more home owners to buy bigger and more expensive homes causing homeowners to get into greater debt.
Politicians kept quiet.
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I have to say, that is one of the BEST explanation in laymens terms I've seen yet. From previous conversations you were right the Glass-Steagall Act was the one biggest mistake, and marked the beginning of the end (As Bob Brinker said numorous times on his radio talk show). The amount of lobbying being done to republican congress at the time must have been enormous. Of course we all know who runs capital hill, follow the money they say. Probably the sole lobbiest group that financed the reversal of Glass-Steagall was Citibank and Travelers.
ReplyDeletehttp://www.federalreserve.gov/boarddocs/press/BHC/1998/19980923/19980923.pdf
And the end result leaves us where we are:
Heres an idea; How about our great state of PA taking the education part of the stimulus and not spend it on the kids, just dump it all in the retirement for the teachers thats going bankcrupt. Heck they should take all catagories of stimulus and put in the states union backed retirement so State taxes wont need to go up down the road. Instead we all will be paying higher taxes Federal and State. And everybody knows you cant throw money at a problem like education. It's been tried many times before. I'm sure there has been a beauracrat somewhere thinking the same thing but knows it would look like the Banks paying those bonuses!
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