Chart Summarizes 7 Major Components of Financial System Failure

This chart was put together by a writer looking for a concise display of the various causes of the current economic situation. More sources here.

"Contrary to the nonsense being fed to the public, the credit crisis and economic collapse was not an accident or the result of a 'perfect storm.' Rather, it was the result of deliberate policies that were pursued over the course of many years." - Barry Ritholz


Wish I'd had this for my economics paper last week though =(
I hate trying to work out how this mess happened, it makes my head hurt.

That's actually not a bad summary. Note that the Fed is at the bottom of everything; this is something I've said repeatedly. Without them monkeying with the system so frequently and massively, there's no possible way that all that stuff on the chart would have gotten to anywhere near the severity and lethality that it did.

The Fed tried to manage the economy by preventing all pain, ever -- this is almost exactly like trying to manage a forest by trying to prevent all fires, ever. Worse, they fought, and continue to fight, all these fires with fertilizer-soaked water, so the brush just gets thicker and thicker and thicker.

Nothing has really been fixed. All that pain we just had? We're going to have even more of it, because we haven't actually fixed anything. We just put out the raging fire with yet more fertilizer.

Proper forest management is mostly just letting it be a forest.