The collapse of the banking system explained, in just 59 minutes. Alex Blumberg and Adam Davidson are back to help all of us understand the news. For instance, when we talk about an insolvent bank, what does it actually mean, and why are we giving hundreds of billions of dollars to rich bankers who screwed up their own businesses? Also, two guys go to New Jersey to look at a toxic asset.
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The Collapse Of The Us Banking System Explained In Just 39 Minutes
Alex Blumberg and Adam Davidson tackle a very tough subject: Trying to explain exactly what a bank is and does. They talk to a number of experts about what has gone wrong in banking, but not before bringing us all up to speed on some banking basics, like understanding a bank balance sheet, and a bank's assets and liabilities, and the squishy business of what banks say about their balance sheets compared to what they are.
Alex and Adam walk us step by step through the complications of the US government buying up bad assets from banks, and explain why, when it comes to footing the bill, the government might just prefer to not be in charge of the very banks it is having taxpayers bailout. From a dollhouse, to a hypothetical bank worth tens of dollars, to the trillions of dollars being spent to keep banks afloat, Alex and Adam talk economy, and where we might be headed. (39 minutes)
Clean Up Crew
Not everyone hates the idea of "toxic assets." Reporter Lisa Chow goes to New Jersey to follow two guys on their quest to clean up some of America's bad mortgages—by buying them, and going straight to the homes themselves to have a look at how dire the situation really is. (13 minutes)
Our other episodes on the financial crisis include The Giant Pool of Money and Another Frightening Show About the Economy.
These episodes of Planet Money go into more depth on the issues in this week's show:
2/9/09 Get Tougher Please
2/27/09 He Nationalized a Bank
2/2/09 Japan's Lost Lesson
Simon Johnson, the former IMF official on this week's show, has a blog called Baseline Scenario.