If you’re still somewhat flummoxed by what caused this financial crisis, head over to the Financial Times site and watch this video.
In it, Martin Wolf, the paper’s chief economics commentator, spells out clearly and concisely (in less than six minutes) what happened and what is happening. Here’s a bit from the beginning:
It starts with an extraordinarily long and accelerating credit boom… In the early 1980’s after the big inflation of the Seventies, the amount of debt or credit in our economies, particularly private-sector credit was very small. It’s been expanding extraordinarily quickly ever since and it actually accelerated in the last ten years… In the U.S. it has far more than doubled over the last twenty-five years.
Wolf reports that financial-sector debt has gone from 20 percent to 120 percent of GDP in that time.
This is much recommended if you’re still trying to figure out the crisis or if you’ve got it down but need a refresher.