The Financial Crisis Uncovered: This American Life Explains How We Got Here.

October 1, 2008 · Filed Under Business, Politics 

A friend sent me this transcript of an This American Life (NPR), explaining exactly how the financial crisis started, in terms you and I can understand. Here’s a brief snippet to whet your appetite:

Think how attractive a mortgage loan is to that 70 trillion dollar pool of money.
Remember, they’re desperate to get any kind of interest return. They want to beat
that miserable 1 percent interest Greenspan is offering them.
And here are these homeowners, they’re paying 5, 7, 9 percent to borrow money
from some bank. So what if the global pool could get in on that action?
There are problems. Individual mortgages are too big a hassle for the global pool of
money. They don’t wanna get mixed up with actual people and their catastrophic
health problems or debilitating divorces, and all the reasons which might stop them
from paying their mortgages.
So what Mike and his peers on Wall Street did, was to figure out how to give the
global pool of money all the benefits of a mortgage – basically higher yield - without
the hassle or the risk.

Ken Stewart’s blog, ChangeForge.com, focuses on the collision between the constantly changing worlds of business and technology. Ken is also the Director of Technology at Kearns Business Solutions.

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    • You are welcome to change...

      ChangeForge is a place where business and technology collide with a desire to alter a paradigm and improve how we perceive those things around us. This site is built upon the premise of offering a platform to share ideas and start conversations. This site focuses upon change and shifting paradigms, offering perspective on how technology can be applied to business problems while maintaining a people-friendly perspective. ChangeForge covers a wide variety of topics, but will primarily focus on strategies revolving around bridging technology and business, hosting authors from different walks of life and offering brain-fodder on many different fronts.

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      In this day and age, people don't seem to get that you can have an opinion of your own, and that people are entitled to a responsible opinion. As such, ChangeForge is a place for me to post opinions on various things relating to business and technology. These opinions are those of the author alone, and do not necessarily reflect the opinions of respective employers, co-workers, or those referenced within this site. If you take issue with these opinions, you are most welcome to move on to another slice of the cloud. My hope, however, is that you will engage in some level of an intellectual debate in an effort to learn something, teach me something, or simply make the world just a little better...
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      ChangeForge... a catalyst to affect the paradigm by Ken Stewart is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
      Based on a work at www.changeforge.com.
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