Without watching, I choose to believe that if it could have been explained in 3 minutes, it wouldn't have happened. I'm going to assume that this is someone reasonably intelligent and confident sounding, outlining plausible reactions with possibly relevant facts, and letting your brain join up the dots.
Also: Following the collapse of the DotCom bubble, interest rates dropped. This causes a housing bubble, because lowered interest rates mean that property prices rise, because most property is bought with mortgages. This freed up a lot of money, as people suddenly found they had a source of cash they could draw on.
The sudden increase in debt on existing housing, coupled with banks extending loans to people that really shouldn't have had them (which, in turn was caused by a break between the people who sold mortgages, the people that backed them, and the people who eventually owned the debt, following the invention of collateralized debt obligations), meant that when the housing bubble burst numerous banks suddenly discovered that what they thought was a lot of money (in the forms of debts owed to them) was not only not going to be paid back, but the collateral itself was worth much less than they thought. This was magnified by over-leverage, as banking/finance regulation had been weakened by legislatures attempting to make themselves financial centres (see, for instance, the repeal of the Glass-Steagall Act). Banks lent out massive multiples of the deposits they had, believing that so long as things were going up they could pay interest, and rake in more than they were paying.
All of this meant that when the housing bubble ground to a halt, and then popped, hundreds of billions of pounds of money vanished instantly from the global economy, and the sudden spiral downwards pushed a lot of banks (and the countries that backed them) to the brink of bankruptcy. Not helped by the numerous countries that had been using large quantities of debt, plus tax on the inflated bank profits, to balance their books.
I'm sure you could read that out loud in less than three minutes :->
And well done for trying to understand why the world is apparently screwed. I personally prefer to wrap my head in tinfoil and ignore the idiotic media anyway. :) We're still selling Vodka!
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the US owes Japan more money than China.
though since I'm not an economist I don't know if that matters
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Following the collapse of the DotCom bubble, interest rates dropped. This causes a housing bubble, because lowered interest rates mean that property prices rise, because most property is bought with mortgages. This freed up a lot of money, as people suddenly found they had a source of cash they could draw on.
The sudden increase in debt on existing housing, coupled with banks extending loans to people that really shouldn't have had them (which, in turn was caused by a break between the people who sold mortgages, the people that backed them, and the people who eventually owned the debt, following the invention of collateralized debt obligations), meant that when the housing bubble burst numerous banks suddenly discovered that what they thought was a lot of money (in the forms of debts owed to them) was not only not going to be paid back, but the collateral itself was worth much less than they thought.
This was magnified by over-leverage, as banking/finance regulation had been weakened by legislatures attempting to make themselves financial centres (see, for instance, the repeal of the Glass-Steagall Act). Banks lent out massive multiples of the deposits they had, believing that so long as things were going up they could pay interest, and rake in more than they were paying.
All of this meant that when the housing bubble ground to a halt, and then popped, hundreds of billions of pounds of money vanished instantly from the global economy, and the sudden spiral downwards pushed a lot of banks (and the countries that backed them) to the brink of bankruptcy. Not helped by the numerous countries that had been using large quantities of debt, plus tax on the inflated bank profits, to balance their books.
I'm sure you could read that out loud in less than three minutes :->
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And well done for trying to understand why the world is apparently screwed. I personally prefer to wrap my head in tinfoil and ignore the idiotic media anyway. :) We're still selling Vodka!
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And huzzah for vodka! Glad it's still selling. Looking forward to seeing what special kinds you have when I visit :->