this week we have some "light entertainment". I found this little film about how all the strings (could) get together to fabricate what we call "the credit crunch". Needless to say that in a 10 minute animation one can hardly explain anything in great detail. Nevertheless I have found it quite interesting and very entertaining. The creator raises some interesting issues; on the other hand it seems that he draws a lot of conclusions about causality, in other words, whose "fault" this whole mess is.
I want to emphasize, before you watch the clip, that people respond to INCENTIVES. Suppose there is an action which a person could take: it is known to be very risky and even dangerous to the entire system, but it promises enormous profits if successful. Now imagine that it is legal to take this action. Some people will take the risk and take the action. You bet they will. It is a simple as that to explain what happens if you let regulation on financial markets loose. Now have fun with the movie!
(note that you can make it full screen by clicking the outward pointing arrows next to the time bar)
I want to emphasize, before you watch the clip, that people respond to INCENTIVES. Suppose there is an action which a person could take: it is known to be very risky and even dangerous to the entire system, but it promises enormous profits if successful. Now imagine that it is legal to take this action. Some people will take the risk and take the action. You bet they will. It is a simple as that to explain what happens if you let regulation on financial markets loose. Now have fun with the movie!
(note that you can make it full screen by clicking the outward pointing arrows next to the time bar)
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
0 comments:
Post a Comment