escapinggreatly
04-06-2009, 01:28 PM
(Forgive me for posting this in GP, but I figure that everyone who posts in the economics forum already knows these things.)
Are you one of the millions of Americans whose eyes glaze over when you hear the words "mortgage-backed securities," "credit default swaps," or "derivatives trade"? Do you constantly hear about the financial crisis, but can't figure out what caused it? Can you explain why AIG keeps getting bailed out beyond muttering something vague about not having enough money?
Don't worry, help has arrived. This is a really, really great breakdown of a few of the complicated concepts that are the most important parts of the financial crisis. If you want some easy explanations, take a look.
Link to full article (http://www.meltingpotproject.com/mpp/economic-collapse-for-dummies.html)
I keep nodding every time people talk about credit default swaps. Or mortgage-backed securities.
I nod diligently, and then put on my angry face. Because if I know one thing about credit default swaps and mortgage-backed securities, it's that they are the REASON our economy has collapsed and we're MAD about them.
But, to be frank, I'm not really sure what credit default swaps are. And if a mortgage-backed security were to come up to me on the street and say, "Ohmygod! You look just like you did in HIGH SCHOOL," I would be terribly embarrassed because I wouldn't even recognize it....
You see, I decided that it's not okay for me to be angry with A.I.G. for giving bonuses to derivatives traders without knowing what derivatives traders do. It doesn't make sense for me to be pissed at banks who made ridiculous housing loans till I understand why they did it, which means understanding mortgage-backed securities. And I'm not allowed to ridicule Congress for passing legislation allowing credit default swaps until I figure out what they are.
Are you one of the millions of Americans whose eyes glaze over when you hear the words "mortgage-backed securities," "credit default swaps," or "derivatives trade"? Do you constantly hear about the financial crisis, but can't figure out what caused it? Can you explain why AIG keeps getting bailed out beyond muttering something vague about not having enough money?
Don't worry, help has arrived. This is a really, really great breakdown of a few of the complicated concepts that are the most important parts of the financial crisis. If you want some easy explanations, take a look.
Link to full article (http://www.meltingpotproject.com/mpp/economic-collapse-for-dummies.html)
I keep nodding every time people talk about credit default swaps. Or mortgage-backed securities.
I nod diligently, and then put on my angry face. Because if I know one thing about credit default swaps and mortgage-backed securities, it's that they are the REASON our economy has collapsed and we're MAD about them.
But, to be frank, I'm not really sure what credit default swaps are. And if a mortgage-backed security were to come up to me on the street and say, "Ohmygod! You look just like you did in HIGH SCHOOL," I would be terribly embarrassed because I wouldn't even recognize it....
You see, I decided that it's not okay for me to be angry with A.I.G. for giving bonuses to derivatives traders without knowing what derivatives traders do. It doesn't make sense for me to be pissed at banks who made ridiculous housing loans till I understand why they did it, which means understanding mortgage-backed securities. And I'm not allowed to ridicule Congress for passing legislation allowing credit default swaps until I figure out what they are.