4 March 2009
This video is a very good explanation of how the credit crisis came about if you put mortgages at ground zero. I highly recommend spending 10 minutes absorbing it.
But then I also recall that I don’t think mortgages are at ground zero of this crisis. I think it is much deeper than that, more related to wildly outsized consumer spending and debt, not just mortgage debt. Banks have been crazy to invest in consumer debt for way too long, and the government keeps celebrating the “consumer.” Even now. We have not learned our lesson yet, which is part of why I fear we have a while more to wallow in this trough.