credit-crisisThis might be a little too late as the global financial crisis appears to have stabilized prompting the economic soothsayers to predict a recovery before the year ends but here’s a great video that explains what really happened with the financial crisis that shocked the world like a massive asteroid, nearly toppling down the earth’s biggest and the mightiest financial institutions.

If you can spare a few minutes, of which I am certain you won’t regret, check this out :

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

The creativity of the financial institutions in concocting sophisticated deals that generated profits that looked like they came from the magician’s hat finally met its fate, one that wrought havoc to those players that played the game from both sides – financier and investors alike. When the stage came that  “those who can afford to buy a house already bought a house ( prime customers) ” the savvy deal makers focused their sights on “those who can barely afford a house” ( sub-prime customers), sold houses to them nonetheless, for if they defaulted on payments, the banks took ownership of the houses ( not a problem if the house value appreciates). Then came the proverbial “too much of anything is poison” phenomenon – too many owners defaulted, too many houses on the market brought the price down, even those good paying customers walked out on mortgages that were more than the worth of their homes that devalued so fast in a short span of time . In short, chaos reigned and financial institutions were saddled with tremendous loses as the result of the toxic mortgages they carried on their balance sheets. The big ones survived with government intervention but others collapsed into bankruptcy.

The experience is extremely painful and the economic fallout is still being felt by the world as we speak. I remember a TV interview with former Federal Reserve Chairman Alan Greenspan, when he was blamed for supporting the sub-prime mortgage strategy. He replied in a rather philosophical manner by saying that ” we will be talking about this thing again 10 years from now”. There is no antidote for man’s greed. As long as there is the motivation to make the most profit out of the smallest investment, man will continue to create new schemes in the high stakes game of risk vs. reward. These paradigm shifts will cause the bubble to burst every now and then. The turbulence it will create will be serious and may have life changing effects on society and people. But one thing is certain – we will survive, pick up the pieces  and continue our journey.


2006155417423966621_rsAfter Manny Pacquiao’s quick disposal of Ricky Hatton in 2 rounds, people were quite amazed at Pacquiao’s pugilistic power that the same people began searching for a reason why Hatton fell in 2 rounds instead of 6 or 10. In short, if Pacquiao didn’t manhandle Hatton in the 2 rounds, the left hook that gave the coup de grace to the terrible punishment could have been just a “lucky punch”. There are pundits who up to now are still rationalizing as to why Hatton lost so badly – his belly bloated with beer and had to trim down weight drastically, feud with new trainer, departed from his game strategy… blah blah. In fact, it is the same case as the de la Hoya fight, where Oscar was deemed to have lost too much weight, was old and shot, played only for the money etc.. I remember watching boxing commentators comments on his fight with David Diaz, where one analyst said that because of Pacquiao’s split decision win with Marquez, in his prior fight, his ” best days as a fighter might be over”. In the 5th round of the fight the same analyst said ” Manny does look Ali-like, doesn’t he ?”

For those who really know Ricky Hatton and what kind of fighter he is, Manny’s victory is incredulous, an aberration. You can’t do that to Hatton, who at 43-0 before losing to Floyd Mayweather Jr. in 2007 was a legit contender to the pound for pound title. Manny annihilated Hatton and it was no fluke. Why ? Because his trainer Freddie Roach predicted it ! This is what Lee Beard, Hatton’s assistant trainer had to say with Hatton’s loss to Pacquiao.


On Manny Pacquiao being the modern day Henry Armstrong  for winning the super-featherweight ( title fight), lightweight ( title fight), welterweight ( non-title fight), junior-welterweight ( title-fight), consecutively from Mar 2008 to May 2009 check this video out. Manny has won titles in six divisions – flyweight, super bantamweight, featherweight, super featherweight, lightweight and light welterweight title. It is a rare feat and only Pacquiao and de la Hoya have gotten world titles in 6 weight classes. If Pacquiao fights Shane Mosely and wins the welterweight title, he will be the first man to win 7 titles in different weight classes. 


Who is ducking who ?  Floyd Mayweather Jr. retired after beating Ricky Hatton in 2007 ( Hatton climbed to welterweight to challenge Mayweather) because he refused to fight legit welterweights – Cotto, Mosely and Margarito, preserving is 39-0 record.  Mayweather announced his comeback from retirement with a fight in July 18 with an even smaller man – Juan Manuel Marquez. If he wins and he is certainly favored, he will challenge Manny Pacquiao for the biggest payday in his career. Mayweather is cherry picking his opponents – all smaller guys than him.  On the contrary, Pacquiao had been fighting bigger guys and KO’ing them out. 


36 Responses

  1. Watching the video was worth every second. I was nodding while watching it. He made it very easy to understand. Confession, at some point I wanted to be an investment banker. I’m glad I did stick to my current profession. I wonder what Taleb (author of The Black Swan) when he gets to watch this.

    Too much risk appetite proved to be literally dangerous.

    • I work for one of those Wall Street banks in the technology section but believe me, I still desire to be an investment banker although it might be too late 🙂

      Don’t know much about the Black Swan but judging from the title, it should be be one of those doom and gloom predictions. I personally think the worst might be over and even if the market reaction lacks a thorough economic justification, optimism is far better than pessimism.

  2. Thanks for the link, bro. Now I know the root of this financial crisis which affects us all. And kudos to Jonathan Jarvis for explaining it in layman’s term with matching graphics.

  3. It those financial games there are always winners and losers… but that is with everything in life.
    Although this time there were very few winners…

    As of Pacquiao he is the strongest boxer in his category… might change once he becomes the president of the Philippines… 😉

    • So true. In the recent crisis, those who didn’t participate in the sub-prime mess and didn’t gain anything were also considered winners because they didn’t get hit 😉

      LOL.. Pacquiao is great but I stop short of supporting him as anything other than a boxer 🙂

  4. That’s a good video animation. The language is so simple and easy to understand. Thanks for sharing.

    LOTR for Pacquiao? lol.. that’s so funny. Anyway, I think Pacquiao has class because he is humble and does not bad mouth is opponent.

    • No problem. Now you know what happened. Are your investments OK ? 😉

      There’s a bunch of websites that specialize in Pacquiao caricatures. They have one with Pacquiao’s image on Philippine money – it looks so real 🙂

  5. Have you seen the photo of Manny Star Trek? That was funny too, just like LOTR.

  6. That’s a good video. I am also surprised that some banks and financial institutions didn’t buy into this sub prime mortgage scheme. Maybe they knew it was too risky.

    I also find that many people including boxing analysts still question Pacquiao’s ability to pull a win everytime he fights a bigger man. He will be superman if he gets 7 titles.

    • Yep. Many well known banks stayed away from the sub-prime mess, made less money at the time and not they are having the last laugh.

      7 titles will be quite a stretch for Manny. I really doubt if he would fight Mosely at 147 lbs for the welterweight title. He did fight de la Hoya at 147 though 😉

  7. It’s quite a reassurance that somehow, the worst of this global financial mess is now over, at least as we are made to believe. I thought Mr. Greenspan was partly to blame for all this ‘magical’ schemes occured or were allowed during his tenure as treasury secretary. Now, they should make sure that mistakes wont be replicated again.

    • The mess has abated somehow and the stress tests for the big banks proved that they can withstand more losses but with the real estate activity picking up for the last 2 months it looks like we are on the way up. I would think that the lessons learned in this recession were too painful to be replicated in future.

  8. Scary to think that the very lives of ordinary folks like us are in the hands of these financial magicians. It reminded me of the story about the magic trick that went wrong, wherein the volunteer was accidentally sawed in half, hehe.

    As for Pakyaw, well he is seriously going after a seat in the lower house. In fact, he’s already formed his own party to increase his chances of winning, and becoming a lawmaker… scary thought huh?

    • It also follows that we easy get tricked or deluded by these financial magicians !

      Methinks that if Pacquiao wins the congressional seat, he will leave boxing for good. Can’t blame him fo being delusional because he probably realized that knocking people out didn’t alleviate hunger in his country. I’m sure he will realize that his being a congressman won’t eradicate people’s hunger either – in fact it will probably frustate him more and make him more short handed than when he was a boxer.

  9. We should ask Pakyaw same questions Charlie Gibson asked Sarah (Ms Morality) Palin; ; like what newspapers he reads and what is the Gluerilla Arroyo doctrine.

    Shuttling back and forth to the US already prepared him as experienced in Foreign Policy matters and with a big nice house in GenSan, obviously, he can see Borneo from his bedroom, another plus, hehe….

    Am hoping for a Shane Mosley fight, not Floyd.

    • Asking what papers he reads? hehehe… that’ll be a surprise for sure 🙂 Know what, the moment Pacquiao stops boxing, I won’t be following him any longer 🙂

      Hope Mosely goes down to 140 lbs. and that’s what Roach prefers. Cotto already said he won’t. Manny will be crazy to fight Mosely at 147 :schock:

  10. Have only read a handful of the analysis of boxing “pundits” since the fight, but the ones I’ve read have all been favorable of Pacquiao. Regarding the naysayers, I think there’s always going to be naysayers no matter what Pacquiao does. They’re just in denial. 😉

    • You still read people saying Pacquiao lost to Marquez in both fights 😦 What they don’t know is after Marquez’ first fight ( a draw) with Paqcuiao, he went to Indonesia and fought Chris John for $30,000 and lost a UNANIMOUS decision . Yet, nobody is talking about the embarassment. Now one hears Marquez fighting John again to avenge his defeat. Chris John is the featherweight champ today and is 42-0 and got his wins mainly in Asia.

      Marquez bitches and moans about Pacquiao ALL THE TIME WHEN all he is interested in is the money, capitalizing on Pacquiao’s fame. He had a draw and loss to Pacquiao and that’s end of story for him. I mean people really want to see him being KNOCKED out by Pacquiao to validate a win??

  11. that would make a great topic in my securities class before.

    the poster of pacman is hilarious but he really is the lord of the rings right now.

  12. […] WHAT REALLY HAPPENED – THE GLOBAL FINANCIAL CRISIS « The Warped Zone Uncategorized | […]

  13. That’s a very educational video explanation made for simple Juan dela Cruz like me. Now i do understand how the crisis happened. I was in the US last week and met a lot of acquaintances who lost their houses either by foreclosure or by bankruptcy. I think this crisis is much felt in the US than here in Europe.

    Just for Pacman is it already enough to be proud as Pinoy.. Mabuhay!!

    • You’re welcome. Naks, super pasyal ka ngayong mga panahon ha 🙂 Economic woes notwithstanding, hope you had a swell time at the U.S. of A 😉

      Sure – what an accomplishment for the Pac. Hope he gets the 7th weight title. He will be the best in history 🙂

  14. Sabi nga ni Pacman “I know something that you don’t know but I know that you know it now,.. Now you know.”

  15. BW,
    sorry I wasn’t able to read your post because I am about to leave, I just dropped by to say that I have something for you in my blog! hope to see you there! 🙂

    • nice for you to drop by 🙂 I’m busy as a bee these days, just enjoying the change in weather, having fun and kinda forgotten about blogging too 😉

  16. Great! I needed to watch that. My knowledge of economics/finances is practically nil. Add to that the fact that the crisis is not very much felt by middle-class me who is lucky to have a stable job here in my own country. I have heard the many sad stories and have had some little problems with my company for a certain time, but all is well. We will survive (hey, hey!)

    • Hope you found it educational. The global financial crisis had affected everyone – perhaps more pronounced to some people. I guess your job is secure that’s why you haven’t felt any adverse impact 😉


  18. By the way, why do you want to look like Hayden Kho in your second life? 🙂

    Here’s my reply to your blog comment (I don’t respond to comments na there at nakakapagod):

    “BW, yan ang Pinoy! I bet she was really happy and relieved that you and your wife were there to be of assistance to her.

    Pinoys are naturally warm and helpful.”

    • If I get reincarnated, that meant walang impyerno.. hahaha… di maging Hayden na lang ako 🙂

      As for the Pinay who borrowed my wife’s cell at the fair, She was a bit concerned that she might disappear when she backed a few meters because the rides were noisy or baka tumatawag na sa Pilipinas 🙂 I said, hamo na because she got lost in the crowd with her barkadas. She thanked us after …sori po kasi na low batt ako…but we said it is OK 🙂

  19. Oops, sorry for typing my comment in the wrong comments box!

  20. The reason is more interesting.


    He reckons the USA is Germany II


    This free thinker will leave you thinking about everything!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: