Like everyone else, I watched the news last week as the stock market tumbled and drained a chunk from mine -- and everyone else's -- investments and retirement savings. While watching the free fall, I definitely felt mugged by Wall Street and the investment banks.
So, this past weekend I surfed the Internet to better understand the causes of this financial disaster. A wise person once said that those who ignore history are destined to repeat it. I found this video:
Crisis explainer: Uncorking CDOs from Marketplace on Vimeo.
This is one of the best explanations I've seen -- in clear visuals and plain English. After watching this video, there seem to be three culprits:
A) People who defaulted on their mortgages
B) Investment bankers who repackaged poor securities and sold them off as good (e.g., AAA)
C) The investment ratings companies didn't do their jobs, and let executives in "B" get away with rating poor investments as good
Given the above scenario and besides heavy fines, the executives in B and C should go straight to jail -- in my opinion. A fiduciary relationship was abused.
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