I heard this episode of
This American Life on the radio last week,
The Giant Pool of Money. It was one of the best depictions of the recent decline of the housing market, as impacted by the mortgage industry.
"We explain it all to you. What does the housing crisis have to do with the turmoil on Wall street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s?"
Why did I find it so enlightening and informative?
- It's easy to listen to, making the one hour fly by.
- Real people tell their stories and their intentions. The good, the bad, and the ugly.
- The stories make sense. For example, brokers wanted to lend more money because they made a mint on each deal they made, and mortgage companies wanted to lend more money to borrowers because there was little long-term liability (they would bundle a cluster after a month or two and sell the debt off to other institutions). Money was flowing.
In any event, I highly recommend listening to this if you're interested at all in how the nation got into the housing crisis, with foreclosures taking up more and more news headlines, and the credit crunch, which has impacted us all.
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