the problem is us

“That chart is the most striking piece of evidence I have that what is happening to us is something that goes way beyond toxic assets in banks. It’s something that has little to do with the mechanics of mortgage securitization, or ethics on Wall Street, or anything else. It says the problem is us. The problem is not the banks, greedy though they may be, overpaid though they may be, the problem is us. We have over borrowed. We’ve been living very high on the hog. Our standard of living has been rising dramatically in the last 25 years and we have been borrowing much of the money needed to make that prosperity happen.”

- Columbia professor David Beim

That’s right, in the United States 100% of GDP is owed by individuals. You can hear the professor utter this passage on the latest episode of This American Life where the guys from Planet Money do a pretty good job of explaining how banks work and what the banking crisis is all about.

Bill Moyers Journal : Simon Johnson | PBS. planet money regular Simon Johnson on the banking bailouts and how to get around the political lobby on the banking industry.

NPR Planet Money: Russia, Russia Everywhere. today’s podcast reminds me how Gazprom is basically one of those “world domination” companies from Tomorrow Never Dies or Quantum of Solace.

Oil Traders Find A Profit In ‘Voodoo’ Science : NPR. I’d recommend listening to the recording over reading the article as Kenstenbaum’s tone is kinda humerous.

This American Life : Heretics “The story of Reverend Carlton Pearson, a renowned evangelical pastor in Tulsa, Oklahoma, who cast aside the idea of Hell, and with it everything hed worked for over his entire life.” This episode was amazing.

buying airline routes and putting money under the mattress

I have to point out this morning’s NPR Planet Money podcast. It was just too good. There’s three segments and the last two are awesome.

The second piece has some guy trying to explain why we can’t just take all the crappy mortgages out of these big CDOs and call it a day. Well, it turns out that a lot of these CDOs have a collection of utterly disconnected things such as “income from a specific Friday night flight on Korean Airlines between Tokyo and Seoul” and “royalties from David Bowie’s songs” but more importantly things like “the mortgage for your office building” and “the mortgage for the cell phone tower your phone used this morning”. That’s one of the reasons why this toxic subprime debt is effecting things completely unrelated, like friday night flights out of Tokyo.

The last piece is talking with some bond and paper traders. The guy mentions how he has a client who had to buy treasury notes that day and ended up only getting 1 basis point for his trouble. That’s 1/100th of 1%. That’s a 1 cent return for $100. He also mentioned that some notes cleared this week for 0, the equivalent of hiding it under your mattress.

planet money

So I started listening to NPR’s Planet Money podcast this morning on my walk to work and I have to say it’s simply phenomenal. One of the guys who hosts the show did the recent This American Life episode’s about the economy. What’s so great about the show is that it takes listener questions about the economy and explains what’s going on in terms that most people could understand. It always takes the time to explain trader jargon and random acronyms.

For example, the latest episode explains why credit markets are incredibly important to every day people and how it’s measured. The interviewee talks about Treasury Bond rates and TED spreads and how they measure “fear” but they take the time to explain where you see those rates on yahoo and bloomberg.

Anyways, if you’re confused about the credit crunch, the bailout, the economy (and who isn’t?) I’d highly recommend checking out this podcast.

This American Life – Another Frightening Show About the Economy. follow-up episode to the phenomenal “Giant Pool of Money” episode.

This American Life on the Housing Crisis. haven’t listened to it yet. via ram.

NPR : Cuaron Faced New Challenges in ‘Children of Men’. director talks about how hard it was to make the 6 minute long action sequence at the end of the film (which really cool).