A primer on the economy

The red bamboo isnt going to work.  It’s more pink/salmon than red.  Sigh.  I’m going to trade it in for some Valley Southwick icy blue.  It’s a cotton/bamboo blend.  Then maybe order some Misty Alpaca lace weight.  Webs has some overstock.  It’s 4$ for 400 some odd yards.  Monday is payday and I’d like to knit the Shipwreck shawl from the last Knitty.  It’ll be my first.  Some knitters out there have been a bad influence on me!

I read a lot of economic news.  A lot.  Before August 2007 when the housing market started crashing down on us, the International Herald Tribune had several articles in their Business/Economy section about ARM resets and sub-prime mortgage defaults.  This was Fall/Winter 2006.  The wheels were starting to come off the economy then, even though it seemed like no one was paying attention. 

There is little truth to the argument that no one saw the current economic shit storm coming.  Warren Buffett warned of the dangers of derivativesPaul Krugman and Nouriel Roubini tried to raise the alarm.  The housing market couldnt go up forever, people and banks were over leveraged (meaning they owed much more than they earned or could possibly pay.  An example is: For every 1$ of income you’re allowed to take out 40$ of debt) banks were giving out stated income loans (aka liar loans) where someone could say “I make 250,000$ a year” on their loan paperwork but never have to show any proof of income.

I’m not an economist, but even I can tell that kind of loan is not a good idea. 

 This American Life has done a few hour long shows just about the economy and how we got ourselves into this mess.  Their stories are funny, poignant, and it makes the current mess easy to understand.  There is no dumbing down of the issue, their correspondents interview economists, traders, people who sold some of these mortgages, bankers, etc. 

If you have time, give these a listen.  You wont be sorry.  They’re all free

The Giant Pool of MoneyAnother Frightening Show about the Economy, Bad Bank, Scenes from a RecessionThe Watchmen.

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One Response to A primer on the economy

  1. JulieT says:

    When we moved here in 2005, the hub suggested we buy a house. I said “No, because the housing market is going to crash about a year before we move out, and we’ll be screwed.”

    Am I an economist? Hell no. I can just read the writing on the wall.

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