In my insatiable appetite for reading article after article, trying to understand the basics of economics (WAY over my head) and the current financial crisis, I ran across an article called "Five Easy Pieces." In it, Conor Friedersdorf makes the bold claim, "Why is our financial system on the brink of collapse? Believe it or not, I can tell you the whole story in a single page -- as long as I'm allowed help from the easiest to understand stuff on the Internet. Visit these 5 links and you'll once again understand the world."
The first link is to an episode of This American Life which was broadcast back in May, called "The Giant Pool of Money." You can listen to it for free on the website, but it was worth it to me to pay $1.05 to download it and be able to listen on my iPod during a walk. The episode was a special collaboration with NPR News, and it seeks to answer the questions:
What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money.
The story was incredibly enlightening--and incredibly maddening. The reporters did a great job of clarifying jargon like "CDO" and "tranches of mortgage-backed securities." It was also helpful to hear from real people all along the chain, from the guy facing foreclosure on his house to the middle-man mortgage broker to the Wall Street investment broker. But I must have actually slapped my forehead in disgusted amazement at least four times as I listened. Just maddening, how people could be so stupid and so greedy. It was a struggle to keep reminding myself of my earlier post on the subject.
Anyway, if you're struggling to understand what in the world is going on, I highly recommend listening to "The Giant Pool of Money."
1 comment:
I'm gonna have to read that. I am such an econ dummy and I'm married to someone who reads, eats, watches, and breathes finance-related stuff.
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