Crisis of Credit Visualized

Pauly
Pauly Posts: 4,519
edited February 2009 in The Clubhouse
interesting watch and gained more insight on my behalf...

<object width="400" height="225"><param name="allowfullscreen" value="true" /><param name="allowscriptaccess" value="always" /><param name="movie" value="http://vimeo.com/moogaloop.swf?clip_id=3261363&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=&fullscreen=1&quot; /><embed src="http://vimeo.com/moogaloop.swf?clip_id=3261363&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=&fullscreen=1&quot; type="application/x-shockwave-flash" allowfullscreen="true" allowscriptaccess="always" width="400" height="225"></embed></object><br /><a href="https://player.vimeo.com/video/3261363 Crisis of Credit Visualized</a> from <a href="http://vimeo.com/jonathanjarvis">Jonathan Jarvis</a> on <a href="http://vimeo.com">Vimeo</a>.

Pauly
Life without music would
Post edited by Pauly on

Comments

  • disneyjoe7
    disneyjoe7 Posts: 11,435
    edited February 2009
    Interesting :) I like it.

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  • KrazyMofo24
    KrazyMofo24 Posts: 1,206
    edited February 2009
    Great video, very informative.
    Setup:

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  • shack
    shack Posts: 11,154
    edited February 2009
    That is a simplistic and basic with all of the foundations...kinda like the Cliff notes. There is much more to it...but it gives you an idea.
    "Just because you’re offended doesn’t mean you’re right." - Ricky Gervais

    "For those who believe, no proof is necessary. For those who don't believe, no proof is possible." - Stuart Chase

    "Consistency requires you to be as ignorant today as you were a year ago." - Bernard Berenson
  • sucks2beme
    sucks2beme Posts: 5,601
    edited February 2009
    What pisses me off is that AAA rated stuff was really junk.
    Someone figured out they were using software to evaluate
    them. They then found ways to fool it. junk=AAA.
    The whole rating system was rendered worthless.
    "The legitimate powers of government extend to such acts only as are injurious to others. But it does me no injury for my neighbour to say there are twenty gods, or no god. It neither picks my pocket nor breaks my leg." --Thomas Jefferson
  • carpenter
    carpenter Posts: 362
    edited February 2009
    sucks2beme wrote: »
    What pisses me off is that AAA rated stuff was really junk.
    Someone figured out they were using software to evaluate
    them. They then found ways to fool it. junk=AAA.
    The whole rating system was rendered worthless.

    Let me tell you something about the rating "system" ..

    1) Who are the rating firms?
    private sector firms.

    2) How do they make money?
    Investment firms (mostly from wall street) hire them to rate their assets (basically any security they want to push, be it a CDO, or any other investment).

    3) So ... if they are overly "pessimistic" when they rate instruments, business might suffer?
    yes.

    4) why?
    because there is more then one rating firm, and the investment bank's income depends on getting good ratings for what they try to unload, so they'll prefer to work with a more "optimistic" company.

    5) Is there no regulation for the rating firms?
    the government is supposed to do it.

    6) Did it?
    yes. every time they spotted a flying pig in the Washington DC sky.

    7) Cynicism aside for a moment, how is it even possible to regulate this? when there are so many securities being rated?
    Well.. do you pay taxes? good for ya! me too! do you cheat on your taxes? I hope you don't. because if you do, you might get audited and find yourself knee deep in it when you do. now ... here's a concept: once in a while, without special notice, some gov't employee visits the rating firm's offices and audits their work. if he sees that a package of two billion$ of "self-certified" loans, is rated as well as the German government (just an example) then .. well you get the point.
    It is an innovative concept: "To hold the same standard for rating firms and tax payers" but it just might work. I mean if you face prison for 50K, others should face prison for 500Mil.
    "If the global crisis continues, by the end of the year Only two Banks will be operational, the Blood Bank and the Sperm Bank. Then these 2 banks will merge and it will be called 'The Bloody **** Bank'"