When Magic Unravels: Primer on the 2008-2009 Crisis

This page is one part of the Finance Repo.

When Magic Unravels
Primer on the 2008-2009 Crisis, US & Rest of World
by swyx

NB: This is a technical, verbose document, despite its no-fat creed and point-form structuring. More visual and nonspecialist readers can check out the Financial Cisis infographic from Wallstat.com and Baseline Scenario. Brown University has an FAQ.

  • Problem: “Experts” in the field pick and choose their explanations to sound authoritative
    • but listeners are never provided a comprehensive overview of what that “expert” is failing to mention.
    • Explanations are insufficient because they rely too much on market participant stupidity, or are incomplete because they assume listener stupidity.
  • Mission: This record focuses on recording all extant explanations of the Crisis in as neutral and as simple a fashion as possible.
    • Supporting facts, quotes, chronologies, and solution proposals are presented with the understanding that they were cherrypicked to support particular explanations.
  • Goal:
    • Readers should be able to convincingly argue all (or most) explanations of the Crisis, and
    • Be able to identify what is missing from the explanation of any “expert”, and
    • If “expert” is offering solutions, readers should be able to identify the underlying Crisis explanations he/she is assuming

Take a look at a statement like this:

“In 2008, global financial markets suffered record declines after being hit by a deadly combination of slowing economic growth, an unprecedented credit crisis and a near-total collapse of consumer and investor confidence.” (Investopedia) Hang on… what caused what? Is that really the best explanation? A bottle knocked over “after being hit” by three separate balls at once? Is this even accurate? Who is to blame?

NOTES

  • ON OBJECTIVENESS – You can choose your own explanations, but not your own facts.
  • Style: (agree) just means that the linked article agrees with this, not my own personal opinion.
  • Related Pages
  • Relevant facts are stored in a separate page, see The 2008-09 Crisis: General Facts and Chronology.
  • In The 2008:2009 Crisis: Solutions, proposed solutions are cataloged using the framework adopted here.
  • Version 1.0 finalized August 10 2009.

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