Credit Crisis Explained
Everyday we read the news and hear about another company going bankrupt or thousands more people losing their jobs. The financial markets are in turmoil and our retirement nest eggs are now worth half of what they were a year ago. What caused this global financial disaster? Why does the government have to bail out the largest financial institutions in the world with billions of tax payer dollars? Well, the answer isn’t nearly as complicated as you might think. If you have 10 free minutes to watch this short animated video you will see how financial instruments developed by the banks called mortgage backed securities lead to our current financial meltdown. Keep in mind although this animation is based on the US’s predicament, and is actually nowhere near as severe here in Canada.
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
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[...] and package them up into investments called mortgage backed securities. You can take a look at a previous post to watch a small video on how these securities work. You have probably heard of these mortgage [...]