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Video: The Crisis of Credit Visualized

Discussion in 'General Real Estate and Real Estate Finance' started by Eli Weiss, May 4, 2009.

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  1. Eli Weiss

    Eli Weiss Senior Member

    2
    Nov 28, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    This is an excellent video presentation on the credit crisis, created by designer Jonathan Jarvis.

    Here’s Jarvis’ description of the project, from his website:

    http://vimeo.com/3261363

    (Hat tip: Little Green Footballs)
     
  2. OSU Beavers

    OSU Beavers Elite Member

    10
    Jan 10, 2007
    Professional Status:
    Licensed Appraiser
    State:
    Oregon
    Nice. Thanks for posting.
     
  3. Austin

    Austin Elite Member

    1
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Virginia
    This was a really good presentation as far as it goes. What he didn't say but can be inferred from what he did say relates to Alan Greenspan and the general model of credit management in this country. Every since I have been in this business property inflation has always been around 2.3% annually. In income property appraisal the rate of inflation built into the model can be seen by subtracting the cap rate from the yield rate of return. For as long as I can remember it has always been around 2.3%. That didn't happen by random chance-that was part of the model that got us into this mess. As long as property values are increasing, how can one lose in the long run the story went!!! That is the underlying principle.
    Then came the dot.com boom of the 1990 a la Clinton's executive order to remove all obstacles and let her rip. That led Greenspan to lower interest rates to restore the economy and replace the wealth lost in the dot.com crash. Again, as long as prices are going up, there is no way to lose and lower rates fed the tiger. That is where the story picks up in the above presentation. The lower interest rates insituted to offset the last bubble led to a search for other investment instruments and the story above pretty well explained what happened after that. Everything was leveraged and leverage works both ways but reverse leverage means things come down much faster than they go up. It might take 10 years to reach a certain level but it can come back down in less than a year with reverse leverage.
    This is an interesting time to be alive if this economic stuff interest you. Some of my most vivid childhood memories are killing a snake and watching my grandmother kill a chicken. Cut the head of a snake and it will wiggle until the Sun goes down. Cut a chicken's head off and it will get up and run around for ten minutes with no head. That is the way I view what is going on in this country. We are witnessing a dying snake or chicken economic model with its head cut off. Lots of activity to no productive end as the dance of the dead goes on. It is still fun to watch California and the Federal government writh in the pain of their dance of the dead soon to lie still in the mist of their worshippers wiggling to the very last breath as the Sun sets in the west.
    Truth when crusthed to earth shall rise again, the eternal years of God are hers-but error wounded writhes in pain and dies amist her worshippers.
     
    Last edited: May 5, 2009
  4. OSU Beavers

    OSU Beavers Elite Member

    10
    Jan 10, 2007
    Professional Status:
    Licensed Appraiser
    State:
    Oregon
    Ok then. Back to the video, as long as it was it did leave out the effect of Adjustable Rate Mortgages on the credit crunch. Predatory lenders enticed buyers AND long time homeowners with low ARM rates and the promise that they would refi it for them before the loan adjusted. They lied and lots of people lost their homes. These sub-prime loans should have been regulated in the 2000's.
     
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