• The Crisis of Credit: Visualized — The thesis project of Jonathan Jarvis, a student at the Art Center in Pasadena, CA. This is an animated video that succinctly explains how the miscalculations of homeowners, mortgage lenders, investment bankers, and investors led to the credit markets freezing; also explains why leveraging leads to trouble and how the credit rating agencies got duped. Relatively easy to follow with a bit of humor thrown in to lighten the mood.
• The Subprime Primer — The subprime lending meltdown explained with stick figures. This 45-slide presentation details the creation of collateralized debt obligations (CDOs) and the fallacy of perpetually rising house prices. Warning: contains PG-13 language (which makes it rather darkly comedic).
• Kiplinger.com: 15 Things You Need to Know About the Panic of 2008 — When the U.S. Federal Reserve lowered the federal funds rate from 6.5% to 1% over a three-year period from 2000-2003, money got really cheap really quickly. This forms the basis of the current crisis, as explained in the 14 points that follow. This primer concludes by saying that stable home prices are on the horizon and while the economy may suffer from aftershocks for years to come, there’s no need to lose hope (yet).
• Mint.com: A Visual Guide to the Financial Crisis — An easy-to-follow flow chart that concisely connects events together. It all begins with the mania for home ownership fueled by historically low interest rates and the belief that housing prices will always go up.
• This American Life: The Giant Pool of Money — This radio show was produced in May 2008, prior to the stock market crash of the fall, so the reporting may seem a bit overly optimistic when we listen to it now. Still, this is a fantastic in-depth look at what fueled the demand for CDOs and subprime mortgages, as told by insiders. Explains that from 2000-2007, the median household income stayed flat while housing prices went way up. To pay off debt, homeowners took out home equity lines of credit, thereby going into more debt. This is fine as long as housing prices always continue to go up. Uh-oh!

So for those of you who were in the dark about how this whole mess started, I hope these resources have helped shed some light on the origins of our current economic situation. To keep up-to-date on the current recession and other economic news, check out Tip’d Economy and Recovery.gov.

Dorothea Lange: Migrant Mother, 1936 (source)

March of the Unemployed in Camden, NJ (source)

Cattle Skull, Badlands, 1936 (source)

No Way Like the American Way (source)

Free Coffee & Donuts for the Unemployed (source)

All pictures were found on Flickr under the 2.0 Creative Commons License, and each links back to the source. Copyright belongs to the original photographer.

Obviously it’s all speculation at this point, considering how both political-economic discourse seem to be getting further “out there” with each passing day. But I thought it’d be interesting to collect some bloggers’ opinions and predictions.

FiveCentNickel:

“I’m lying about the Magic 8 Ball, but it seems that the underlying message is on point. As of right now, there’s no evidence to suggest that a second stimulus check is on the way.”

Bargaineering:

“At this point, it’s merely political fodder and we shouldn’t expect another stimulus check, just that there have been discussions of one. As anyone who has watched Congress work can attest to, there are plenty of discussions in Washington that lead nowhere.”

FrugalDad:

Perhaps a second stimulus payment would spur economic spending, but I’d rather “the invisible hand” allow this to happen naturally, and without the artificial inflation of disposable income from yet another economic stimulus check.

Moolanamy:

By handing out these checks, I think our government is just trying to keep us happy; instead of doing the right thing… You may not see it immediately, but handing out money now could mean getting less somewhere else later (e.g., infrastructure, social programs, education, environment, etc.), or it could mean higher taxes down the road, or it could result in inflation.

BibleMoneyMatters:

“Now I’m not one to turn down a check if they’re going to be sending it my way anyway, but where exactly is this money coming from? Could it be that in addition to a second stimulus rebate check we’ll also be receiving higher taxes?”

The last quote in particular makes me chuckle a bit, cycnically. As someone whose income level will ensure I never get this type of handout from Uncle Sam, I can’t help but be a little happy that the above bloggers aren’t predicting the second stimulus check. There’s no such thing as “free money”, unless you print it, legislate it away from other people, or out-and-out steal it. Let’s stop looking to others to solve our problems, and get back to self-reliant basics: start an emergency fund; establish a budget; spend less than you earn! A lifetime of bad habits got us into this mess, and only the establishment of good habits–as a country, and as individuals–will get us out of it.