I linked this in facebook already... but it was so interesting I thought I'd embed it here too.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
I linked this in facebook already... but it was so interesting I thought I'd embed it here too.
Now that you have seen the demonstration, a couple of points...
ReplyDeleteThey use the example of a $300,000 house now only being worth $90,000... this is extreme as the actual values of home have only slid 20-30%. So more like a $300,000 home now being worth $215,000.
They other thing to remember here is that home values will probably continue to go up. They have slid now, but like the market in 1920 was much lower than the market in 2009, the market in 2029 is likely to be much higher again. So to me the question is, why did a brief hickup in all this cause such a huge stumble? See I think the real answer is that all those people making the huge piles of cash on the system are now not content to live on what they earned or accept investments that do not perform as well as last years investments.
In many ways, all these people in this clip are not much more complicated than rats in a maze all looking for the shortest routes to the biggest blocks of cheese. This is where the whole mindset of "let the rich drive the economy" of the Republican party breaks down completely. A very rich person who is unsatisfied with with making 150% annual return on his money can choose to stop investing and wait until the market can support fat gains again. They will trade the huge earning they thought they were going to get this year for merely holding their wealth. What probably has them worried is that they will have to completely finance their own lifestyle minus their fat gains--so maybe less caviar for them.
But on the other end of this scale are the sub-prime mortgage holders in default. They are making choices about food, rent, heat or healthcare. This is where the situation gets scary. This constriction gets tighter and tighter the farther down you go on this economic ladder. At the bottom of the ladder, families are being kicked off to die. Every dollar the top of this food chain retains is a meal withheld at the bottom. Somewhere, right now, a family is dying to support another family's 20 million in the bank because those investors are not satisfied with 1% gains.
I'm having a Spiderman moment... "With great power comes great responsibility." Of course, the funny thing is that great wealth in our society does not ever imply great responsibility--it almost seems a guarantee of the opposite.
I'll watch this asap! But for now... homework and the gym await!
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