pbs doc: inside the meltdown

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Chris Dierkes

Chris Dierkes (aka CJ Smith). 29 years old, happily married, adroit purveyor and voracious student of all kinds of information, theories, methods of inquiry, and forms of practice. Studying to be a priest in the Anglican Church in Canada. Main interests: military theory, diplomacy, foreign affairs, medieval history, religion & politics (esp. Islam and Christianity), and political grand bargains of all shapes and sizes.

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7 Responses

  1. Avatar Caltha palustris says:

    This report is a much better explanation than Frontline’s which left me wanting…I suspect (actually I’m hoping) Frontline will do a follow on the commodities bubble that simultaneously popped with the housing crisis. There are individuals who continue to report to Congressional committees explaining the connection between the two bubbles.Report

  2. Avatar Dave says:

    Interesting. I’d put the “First Tremors” at the Summer of 2007. I was at one of the investment banks at the time and it was around then that the credit markets began to shut down. Origination was becoming difficult and all of the sudden lenders were tightening the reins. By the fourth quarter, very little was going on.Report

  3. Avatar Chris Dierkes says:

    Caltha-p,

    Thanks for the link. It is an excellent piece. For anyone interested, here’s the link to the hour long program on This American Life.

    I guess my question is why does the dude take the loan when he realizes that even the criminals won’t give him this kinda loan. I guess ‘cuz it (seems like) free money.Report

  4. Avatar Chris Dierkes says:

    Dave,

    I think they started with Bear & the like because people remember that, but I’m sure you’re right that Summer 2007 was when it started. I think it was in 2006 that Peter Schiff gave that talk to the mortgage lenders association and told them you all f–ed starting next year or the year after. I remember someone sending me the link to that Youtube in Summer ’07.Report

  5. Avatar Dave says:

    Agreed Chris. There were rumblings being made as early as 2006. By late 2006, JPMorgan was reducing its exposure to subprime mortgages and in the early months of 2007, people working in the debt side of the business were starting to see more volatility in pricing than they had.

    Bear is probably a good starting point because it was the first of the major hits that really started to shake some people. I haven’t gotten that far into this but it’s good so far.Report

  6. Avatar Caltha palustris says:

    Dave @2,
    You then, know more than I do about the subject. As an onlooker yes, August 2007 marked the period when liquidity seized – Bear Sterns was at the epicenter of credit market turmoil. By December 2007, analysts tried to assess how bad the damage to the economy was, or would be.

    I suspected at that point – when I saw a segment on The Nightly Business Report – that the recession would begin in January 2008, and we now know it did.

    It was determined by a few experts in commodities that by late spring 2008, speculation spread into the commodities markets. Analysts knew there would be bank consolidation at the end of December 2007, but I suppose no one thought on the scale we witnessed last summer – or knew that Lehman Brothers was so overleveraged (I want to say, though I could be wrong as I don’t recall the exact figure, but to the tune of something like, $600B) that no other banks would step in and buy Lehman. FRS and Treasury officials (Paulson, Bernanke and now Geithner) stated these institutions did not have the authority before Lehman’s collapse (I’m guessing, as I’m not an economist or financial services professional, Lehman’s was not a bank holding company? but an investment bank). The collapse took place on September 15, after Barclays walked away from the bargainng table with government officials . Whether or not it’s relavent, Lehman’s had a 20% in a href=”http://www.forbes.com/2008/09/03/ospraie-lehman-update-markets-equity-cx_ra_0903markets32.html” >commodities hedge fund , which crashed as a result of the commodities sell off that began in May 2008.

    All the while we had regulators (of every stripe) either overworked and ignored, treated as whistle blowers, or completely non-existent and lacked the authority to do anything about what was happening.

    That’s my theory…but I can’t prove it. So here we find ourselves with the markets gripped in fear and faced with a very long slog out of this mess – caused by greed. Well it’s not like bubble are anything new. It’s just another day in paradise in a world that seems to be getting smaller every day, and, disagreements on how best to proceed.

    I highly recommend a few blogs, beginning with this one. Report

  7. Avatar Caltha palustris says:

    I neglected to cite the role of AIG. in all of this.Report