Easy Guide to the Financial Crisis

skysurfer · 10-07-2008, 02:54 PM

A pal of mine sent me yesterday sent me the below email which he says helps dumbos like me understand what the heck is going on in this financial crisis.
It might help make things clear for others.
And maybe other Avalonions have other links which they can post which simplify the situation?
" A couple days ago I turned on the car radio and heard
the end of a very interesting NPR program discussing the problems
with our economy. It was a special edition of the "This American
Life" program, and it is now available on the internet along with an
earlier related program. I have read and heard a lot of discussion of
the economy lately. Much of it has been full of incomprehensible
financial jargon or has been just plain bovine excrement.
However, these two one-hour programs are by far the best that I
have heard. They actually give you an understanding of what is going on,
including such important things as "commercial paper," "credit default
swaps," "netting," "leverage," etc.

Whatever your politics and philosophy on this subject, these
programs describe things that everybody now should understand.
Of course, each person will have to reach his own conclusions.

One of my conclusions is that I have a feeling of very intense
disgust towards all the people in financial institutions who made
tons and tons of money while creating these problems. This includes
much more than the executives whose compensation will supposedly
be capped by the $700 billion bailout "plan." Also, my feelings of
disgust apply to most of our politicians (both Democrats and
Republicans) and "regulators" who allowed and even encouraged
this bad behavior.

These discussions also lead me to conclude that we do indeed have
a very serious problem and that something needs to be done.
They gave me a much better understanding of the Paulson bailout
plan and its problems. Also discussed was an alternate plan that
a majority of economists think would be much better. It's still a bit
unclear, but perhaps the legislation that was passed includes the
option for Paulson to make use of this alternate plan. (Well, we can
dream, can't we?) Despite the passage of the $700 billion bailout,
I think this problem is far from over. The performance of the stock
market today (Dow down another 365 for the day) would
seem to indicate that I'm not the only one who thinks this.

I recommend that you first listen to the earlier program, which was
broadcast five months ago and is entitled "The Giant Pool of Money":

http://www.thislife.org/Radio_Episode.aspx?episode=355

The description of this program begins with:

"A special program about the housing crisis produced in a special
collaboration with NPR News. We explain it all to you. 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 second program was first broadcast Friday afternoon October 3
after the $700 billion bailout was passed and is entitled "Another
Frightening Show About the Economy":

http://www.thislife.org/Radio_Episode.aspx?episode=365

The description of this program begins with:

"Alex Blumberg and NPR's Adam Davidson—the two guys who
reported our Giant Pool of Money episode—are back, in
collaboration with the Planet Money podcast. They'll explain
what happened this week, including what regulators could've
done to prevent this financial crisis from happening in the first
place. You can learn more about the daily ins and outs on the
Planet Money blog."

The "Frightening" program is available as a free download
(28 MB). You might want to download and save the file so you
can listen to it again later without downloading again.

Planet Money includes a blog and more-or-less daily
podcasts that provide updates on this fast-changing situation:

http://www.npr.org/blogs/money/

Happy listening and reading!

10-07-2008, 02:54 PM	#1
skysurfer Avalon Senior Member Join Date: Sep 2008 Location: Bournemouth, UK Posts: 18	Easy Guide to the Financial Crisis A pal of mine sent me yesterday sent me the below email which he says helps dumbos like me understand what the heck is going on in this financial crisis. It might help make things clear for others. And maybe other Avalonions have other links which they can post which simplify the situation? " A couple days ago I turned on the car radio and heard the end of a very interesting NPR program discussing the problems with our economy. It was a special edition of the "This American Life" program, and it is now available on the internet along with an earlier related program. I have read and heard a lot of discussion of the economy lately. Much of it has been full of incomprehensible financial jargon or has been just plain bovine excrement. However, these two one-hour programs are by far the best that I have heard. They actually give you an understanding of what is going on, including such important things as "commercial paper," "credit default swaps," "netting," "leverage," etc. Whatever your politics and philosophy on this subject, these programs describe things that everybody now should understand. Of course, each person will have to reach his own conclusions. One of my conclusions is that I have a feeling of very intense disgust towards all the people in financial institutions who made tons and tons of money while creating these problems. This includes much more than the executives whose compensation will supposedly be capped by the $700 billion bailout "plan." Also, my feelings of disgust apply to most of our politicians (both Democrats and Republicans) and "regulators" who allowed and even encouraged this bad behavior. These discussions also lead me to conclude that we do indeed have a very serious problem and that something needs to be done. They gave me a much better understanding of the Paulson bailout plan and its problems. Also discussed was an alternate plan that a majority of economists think would be much better. It's still a bit unclear, but perhaps the legislation that was passed includes the option for Paulson to make use of this alternate plan. (Well, we can dream, can't we?) Despite the passage of the $700 billion bailout, I think this problem is far from over. The performance of the stock market today (Dow down another 365 for the day) would seem to indicate that I'm not the only one who thinks this. I recommend that you first listen to the earlier program, which was broadcast five months ago and is entitled "The Giant Pool of Money": http://www.thislife.org/Radio_Episode.aspx?episode=355 The description of this program begins with: "A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. 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 second program was first broadcast Friday afternoon October 3 after the $700 billion bailout was passed and is entitled "Another Frightening Show About the Economy": http://www.thislife.org/Radio_Episode.aspx?episode=365 The description of this program begins with: "Alex Blumberg and NPR's Adam Davidson—the two guys who reported our Giant Pool of Money episode—are back, in collaboration with the Planet Money podcast. They'll explain what happened this week, including what regulators could've done to prevent this financial crisis from happening in the first place. You can learn more about the daily ins and outs on the Planet Money blog." The "Frightening" program is available as a free download (28 MB). You might want to download and save the file so you can listen to it again later without downloading again. Planet Money includes a blog and more-or-less daily podcasts that provide updates on this fast-changing situation: http://www.npr.org/blogs/money/ Happy listening and reading!