Burk and Paul I.-M. both sent me this video that sums up the current credit crisis:
It’s helpful for understanding the situation, but I can’t help pointing out a few issues, like the gendering–almost all the bankers, investors, brokers, and other members of the financial systems are male (I believe one of the investors was female). Also, I found the image of families interesting: “responsible” families are thin and have one kid while irresponsible ones smoke, drink, get fat, and have tons of kids.
Also, it didn’t explain too much about the types of loans made available to the subprime market, particularly the fact that monthly payments often went up significantly after a couple of years, so you might want to throw that in if you show the video–it wasn’t always that people got loans they couldn’t afford at the initial rate, it’s that when the interest rate changed and their payments increased, they couldn’t afford the higher rates. And of course many perfectly “responsible” families took subprime loans, planning on flipping the property for a nice profit, driving real estate prices up for everyone…and now often going into foreclosure along with everybody else.
Those caveats aside, it’s a pretty useful video for boiling down some basic causes behind the credit crisis.
NEW! (Mar. ’10): Caity sent in this video by Westpac, an Australian bank, in which they attempt to explain the credit crisis in a way that some have felt was self-serving and condescending. Caity explains,
Nearly all Australian home loans are on variable interest rates. Our reserve bank recently put up the national rate by 0.25%. Usually, the banks raise (or lower) their rates about in line with the reserve bank’s changes, but this time Westpac (one of our biggest banks) put theirs up by 0.45% – and then emailed this video to all of their home loan customers to explain why.
Gwen Sharp is an associate professor of sociology at Nevada State College. You can follow her on Twitter at @gwensharpnv.
Jonathan — February 23, 2009
Good points about this video. Especially along the lines of how it does not blame the brokers for pushing and tricking lower income people into thinking they can own a home. It also does not mention the role of government deregulation in creating the current "crisis" and also fails to mention the bank industry lobbying that lead to that deregulation.
Larry C Wilson — February 23, 2009
First, the video is concentrating on the economics of the problem, something that few Americans understand. Second, as a very wise man once said, "You can't cheat an honest man."
Chris L — February 24, 2009
Haven't watched the video yet, but... "you can't cheat an honest man"? Really? Wouldn't an honest person be the easiest to cheat? At least, they would be if they assumed the cheater is just as honest as they are. But maybe I'm confusing honesty with naïveté.
chuk — February 24, 2009
Chris, I think the aphorism is meant to suggest that an honest man won't go around do'n business and hang'n with dishonest types. Thus he can't be cheated because he doesn't associate with the people that would cheat him.
Larry is suggesting that the homeowners that got screwed were already just as corrupt as the bankers they dealt with. Maybe he's even trying to hint at the idea that since this event seems to have inculcated all of society, that maybe there was something about society in general that was dishonest. Just saying.
Asada — March 2, 2009
excellent. I'll put this on my website!!!!
Now if only he would cover the stimulus bills, but it changes so much , who has time to do all that!!!
Sociological Images » Job Loss in 100 Largest U.S. Metropolitan Areas — June 17, 2009
[...] data from The Guardian, average stimulus dollars per person by state, unemployment rates by county, video on the credit crisis, framing the stimulus package, beer consumption, the New York Post monkey cartoon, a graph of job [...]