I’ve always thought that Greed is the deadliest sin of all 7 deadly sins. This video shows the spiral that created the credit crisis.
By far this is the best narrated visual explanation of the Credit Crisis I saw as of yet.
The most important aspect I learned before I decided to start a company was how to always calculate risk before taking it. To visualize the probability of the worst outcome, and how much damage it can do to me on all levels. If I am ok with it not being the end of the world then I can take the risk in hopes of the higher return of course.
You’d think the people on Wall St. would be a million times better at this, you have specialists in high risk investment for god’s sake. The moment that more than one bank started buying sub-prime mortgages; flags should have been risen everywhere. But I guess that’s when the financial system monitoring failed big time, everywhere. Because any person with little knowledge would know this to be the start of the end.
Yet, using simplified logic, one bank did it, then other banks thought why don’t we try it as well and mass hysteria started. The ability to fool your self, your own logic, economics 101 and experience is one great ability people have. And when greed takes over this ability becomes magnified. Happened in 2000 with the burst of the .com bubble as well.
What’s the next market? Alternative energy?
Note: Thanks TrippleM for posting this on Twitter.