I am not trying to depress everyone out there, and no I am not trying to be come a armchair economist, but I am continually looking for more information to educate myself, and in turn share some of the insights that I have learned. Forgive me if some of this seems scattered, it will all make sense eventually.
As most of us remember from our days in school, learning and understanding a subject is a process. During this process you need to do a couple of things, keep an open mind, and try to keep in check your preconceptions. After all I am not an economist, so this was going to be hard.
To that end, I must confess that during the end of the Bush administration, I thought that Henry Paulson was way out of control, taking a heavy hand in controlling the banks and that Ben Bernanke and the Fed wasn't helping the situation either. The TARP program was just throwing more money at bad problem only to make it worst. But at the same time there was still gnawing at the back of my mind, "Where did this all start? Was anyone paying attention to this growing problem? Why wasn't the SEC, or the other government regulation entities throwing up red flags?"
Now I understand that the country thrives on the free market, and in general it is a good thing, but ask yourself this, "if my checking/savings account wasn't FDIC insured (by the banks and government) how much of my money I would keep in a bank now?" So unless your accounts are stuffed with gold bullion, you might answer "none." Yes kids, FDIC insurance is a form of regulation, something that the free market hates, but sometimes accepts because it makes all of us more comfortable investing our hard earned dollars in their company. But I digress, sorry about that.
So to rewind a little bit, in July/August I kept hearing the news drone on and on about the crashing housing market, and the issues with Freddie and Fannie, and the uncertain future for many of the wall street banks. "What does this all mean to me?" I thought.
I knew little about the Bear Sterns debacle from back in March/April, and decided I wanted to know more. I started scanning through blogs and financial websites to no avail. Most of the blogs just pointed fingers at each other, the financial sites just talked about doom and gloom, and then saw what appeared to be Wall Street stabilizing a little, and didn't dig much more. Then upon hearing about the failure of Lehman Brothers, the bailout of AIG, plus watching my retirement portfolio loose almost half its value in a few short months, I figured I should try to start digging again. And this time the learning train pulled into my station.
I listened to an episode on
This American Life called
"The Giant Pool of Money" where they start explaining in fairly clear language what all this hub-bub of the sub-prime market means. Follow that later in October when they had another episode called
Well it finally looks like I found a new source of information that I could actually learn from. Plus it turns out that the special correspondents that did these episodes are now involved with another NPR blog called
Planet Money.
Yea! new information. So for awhile now I have been reading Planet Money, and found the little gem in the previous post. Now its PBS' turn. (ok I found it through Planet Money) But if you missed it I think its a decent rundown of the meltdown with some additional insight in the extra content online.
After watching this, I do need to adjust some of my conceptions, and do some more digging, but that is another post. Let me know what you think