Defenestrating Thoughts from the Bivouac

This video explaining how we got into this economic mess has been circulating around the “interwebs” for a week or so now and I thought I’d mention it in case you haven’t seen it. It’s pretty good and worth the 10 minutes to watch.

Continuing on the theme of “Do we really have a free market economy?“, there are couple of things in the video worth pointing out. First, one of the reasons we’re in this mess is the Federal Reserve unilaterally dropped interest rates really, really low. This, in turn, encouraged bankers to create more mortgage-backed securities. Second, the bonds (AAA, AA, etc) are rated by agencies that have a government mandated monopoly and thus they have little incentive to be good (as we can see from their past performance).

(The Crisis of Credit Visualized from Jonathan Jarvis)