Credit crunch: where has all the money gone?

InMyDreams

This question was asked on another thread but I thought this merited its own thread. It reminded me of a fantasic animation I watched a few months ago by Paul Grignon called “Money as Debt”.

It's 47 minutes long, but I really recommend that you go grab yourself a cuppa and watch it if this whole credit crunch thing is interesting but confusing you. It's a basic history of money and banking and explains really well from scratch how we've ended up in the state we have. Or at least I watched it first some time last year so not sure exactly how old it is.

Here is the Google Video. Looks better if you watch it 'original size' which is small but clearer.

Enjoy and sleep well :eek:

WTF?_2

InMyDreams wrote: »

This question was asked on another thread but I thought this merited its own thread. It reminded me of a fantasic animation I watched a few months ago by Paul Grignon called “Money as Debt”.

It's 47 minutes long, but I really recommend that you go grab yourself a cuppa and watch it if this whole credit crunch thing is interesting but confusing you. It's a basic history of money and banking and explains really well from scratch how we've ended up in the state we have. Or at least I watched it first some time last year so not sure exactly how old it is.

Here is the Google Video. Looks better if you watch it 'original size' which is small but clearer.

Enjoy and sleep well :eek:

It is coming with an agenda but overall it's enlightening and well worth a watch. The basic idea of 'Money as debt' is sound.

Bear in mind that it doesn't tackle the issues of securitization .... and that's actually what has caused the 'credit crunch' and lead to the massive financial crisis threatening to swamp the banking system.

CDO/MBSs and derivatives are really scary, not to mention brain-achingly hard to get your head around. Compared to that, fractional reserve banking looks like a sane and conservative walk in the park.

Conrad

!!!!!!? wrote: »

CDO/MBSs and derivatives are really scary, not to mention brain-achingly hard to get your head around.

Im with Warren Buffet, the world's richest man when he says all these comple instruments are really a nonsense.

In the end at the bottom of the complexity lay the assets - simple shares or property. Bypass all the complexity and related cost and you end up with simple investments.

The complex instruments simply are a vehicle for rich people to charge hefty fees and hide behind seemingly scientific preofessional products.

Hegde funds for example in the end boil down to insiders borrowing lots of cash to leverge into again simple shares and other non complex investments. They then tantalise people with vast potential returns, but in the agregate less than 5% will materialise and many will fail, yet ALL WILL TAKE A MASSIVE SLICE OF THE PIE IN THE PROCESS.

InMyDreams

!!!!!!? wrote: »

It is coming with an agenda but overall it's enlightening and well worth a watch. The basic idea of 'Money as debt' is sound.

Bear in mind that it doesn't tackle the issues of securitization .... and that's actually what has caused the 'credit crunch' and lead to the massive financial crisis threatening to swamp the banking system.

CDO/MBSs and derivatives are really scary, not to mention brain-achingly hard to get your head around. Compared to that, fractional reserve banking looks like a sane and conservative walk in the park.

Thanks. I'm glad some of those more knowledgeable than my self have offered opinion. As an 'amateur' I found the film really helpful. I sort of knew a lot of it, but had never really dared to try to understand it or consider the implications. I think it should be compulsory viewing for all school leavers. Even if it doesn't directly explain the crunch we're in at the moment, it certainly gives an insight into how 'imaginary' banking is. Which is scary enough for me.

Of course now I'm going to have to go and find out what "securitization CDO and MBSs" are before I try to get my head around them too. Then maybe I'll have a chance of understanding Conrad's reply too!

Murtle

Thanks will take a look when I get a moment!!

Bismarck

I thought the film was a very good refresher for a lot of people who kind of knew it but the scale it has grown to since studied monetary systems back in the 80s is beyond belief. It's very useful and educational although I did turn off when it got to discussing sustainability as I was feeling bad enough by then....glad it was posted...could do with more shared resources like this..cheers.

bigcloud72

The thing that gets to me is when banks can write off 20 billion in bad debt and still make billions profit. Presumably they still have these profits and are just scared to lend them to each other.

It just shows how greedy thay have been in the last few years.

At some point they will get greedy again and need something to do with all that capital. No doubt they will invent another financial product and this will all start all over again.