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One of the biggest podcast downloads on iTunes is This American Life by Chicago Public Radio hosted by Ira Glass. It’s an hour long program that is diverse and interesting. The May 9th broadcast was particularly interesting to me called: The Giant Pool of Money.

It is a simple narrative on a complex subject and how the last five years evolved from a housing boom to housing crisis.

Think:

  • $70 Trillion Dollars
  • boiler rooms
  • keeping up with the competition
  • thirst for high returns
  • NINA loans
  • subprime investors
  • from tending bar to buying mortgage pools
  • Wall Street
  • 2% default rates actually 50% default rates
  • Very smart people using the wrong data to manage risk.

I listened to it twice just because it is rare to hear a complex topic that is presented so clearly.

Intelligence beat common sense to a pulp.

Listen to the episode.


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5 Responses to “[Mandatory Reading (Please)] The Giant Pool Of Money”

  1. Todd Huttunen says:

    This story had me glued to my chair. Set aside an hour folks, it’s worth it. When the BEST case scenario is a repeat of Jimmy Carter’s “70’s malaise”, then “Houston (or should I say Nevada, Florida et al) we’ve got a problem”.

  2. I wouldn’t have loaned me the money | Mortgage Industry Blog says:

    […] Hat tip to Matrix. I could pick at some of the small problems with this podcast, but overall, it’s a very well done explanation of the sub prime debacle from a global perspective. […]

  3. marty tessler says:

    this should be required listening in every Economics 101 class in college and ABSOLUTELY required as the Introductory class lecture in EVERY MBA program in the US and worldwide.It does bring to mind the question as to whether most if not all of the appraisals done for subprime or Alt A loans shoud be rescinded considering that the definition of “market value” precludes “undue stimulus”-wasn’t this whole fiasco predicted on “Undue Stimulus”?

  4. Jonathan J. Miller says:

    Bingo! Marty. Of course, we are here ready to do the re-appraisals… 😉

  5. I wouldn’t have loaned me the money | Homeloans 101 says:

    […] Hat tip to Matrix. I could pick at some of the small problems with this podcast, but overall, it’s a very well done explanation of the sub prime debacle from a global perspective. […]