follow me on Twitter

    Friday, November 28, 2008

    The Makings Of The Economic Crisis In One Sentence

    Of all the reading I've done on the issue, this is the most succinct explanation I've come across for how the economy went to hell:

    While the housing bubble was still inflating, lenders were making lots of money issuing mortgages to anyone who walked in the door; investment banks were making even more money repackaging those mortgages into shiny new securities; and money managers who booked big paper profits by buying those securities with borrowed funds looked like geniuses, and were paid accordingly.

    Read the whole thing here. Read some ideas about what to do about it here.

    1 comment:

    Kimmah said...

    I'm still saying that it's a very sad day in this country when I, the most uneconomically knowledgeable person on the planet, could look at the housing prices and say, "WTF?...who can afford these? Who is lending these bozos money?" I mean, come.on. Our old house--1100 sq. feet 3 bedrooms, 1 bath, a combo kitchen/dining, laundry room and a living room was on the market for $99,000 in a podunk non-urban city in Tennessee...we sold it for somewhere in the high 60s and thought we'd made a killing.

    If I was as inept at my job as those people lending money have been, I would be fired. And probably sued. How can these CEOs still have jobs?

    The more I read about this fiasco, the smarter I feel and the more scared I get to invest in the stock market.