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.