The Crisis of Credit, Visualized

Chris Higgins

Having trouble figuring out what the Credit Crisis (ahem, Global Financial Meltdown, Great Depression II, Credit Freeze) really means? Media designer Jonathan Jarvis has created a simple video explaining the situation step by step. There's no alarmism here, just a straightforward explanation of the financial realities leading to our current, uh, predicament.

Discussed: treasury bills, credit, leverage, how banks make their money, mortgages (uh-oh), mortgage brokers, collateralized debt obligations (major uh-oh), credit default swaps, subprime mortgages, underwater mortgages, and more.

To be honest, there are so many steps involved in these transactions that it's all a little baffling. But I promise, if you have a cup of coffee and devote ten minutes to this video, you'll learn something.

See also: Let Public Radio Talk You Through the Financial Crisis.

(Via Daring Fireball.)