Money, Power and Wall Street

Episode one of Money, Power and Wall Street, FRONTLINE’s four-hour investigation into the global financial crisis, received a Writers Guild Award in the Documentary – Current Events category last night. Produced by Martin Smith and Marcela Gaviria, the episode explored how the the rapid rise of credit default swaps, originally designed to stabilize the economic system, brought the global economy to its knees.

Today it also was announced that the full four-hour series produced by Martin Smith, Marcela Gaviria, Michael Kirk, Jim Gilmore and Mike Wiser will receive the George Polk Awardfor Documentary Television Reporting in April. From the award citation:

It provided a thorough examination of the epic global financial crisis, from its origins to the present day. The team drew on more than 140 in-depth interviews, conducted around the world, with people tangentially or directly responsible for the crisis. In blunt, first-hand accounts, viewers were given an unprecedented look inside key decisions that affected the lives of ordinary people around the country and a play-by-play road map of what ultimately would shatter the global economy. The series also dissected and distilled down the complicated subject of the modern credit derivative market and provided a sober look inside the struggle to rescue and repair this country’s battered economy.

You can watch all four hours of the series on our website, and also watch, read and sharedozens of in-depth interviews that provide first-hand testimony inside the financial crisis and its aftermath.

WATCH THE SERIES

EPISODE ONE

Watch Money, Power and Wall Street: Part One on PBS. See more from FRONTLINE.

EPISODE TWO

Watch Money, Power and Wall Street: Part Two on PBS. See more from FRONTLINE.

EPISODE THREE

Watch Money, Power and Wall Street: Part Three on PBS. See more from FRONTLINE.

EPISODE FOUR

Watch Money, Power and Wall Street: Part Four on PBS. See more from FRONTLINE.

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Sorry folks,  I haven't finished watching the whole thing but...  Very early on in this crisis we learned from the real economists who railed against this insanity,  the loans were not going to the people who could not afford them.  Those people were blissfully unaware that they could even qualify for loans,  so they did not apply in any great numbers.  Of course,  bankers and brokers who had knowledge would seek out high risk borrowers,   because they knew they could create and profit from the paper.  But then,  since these people also knew what they were doing,  why would they need a borrower of any type?  So,  the few people who were knowledgeable invented "straw buyers" and "straw sellers",  so that they could control the entire buying and selling process and pocket all of the money,  then simply walk away and let the "straw buyer" default.  Usually these straw buyers were drug dealers,  meth labs,  homeless people and other such people being victimized.

Meanwhile,  the ready credit in an easy money market,  made people who were long time home owners,  familiar with refi strategies,  eager to draw down profits from homes that were appreciating 10% each year.  First time and poor,  high risk home buyers tend to be very conservative about what they buy,  because they're intending to keep the home and not willing to risk losing it.  While long time home owners,  more familiar with finance,  mortgages and loans,  were eager to take advantage of this "easy money",  they knew and could see as increased equity in their homes due to the 10% /year appreciation.  Knowledge became power for them.  A 250k home was appreciating at a rate of 25k per year compounded. so,  3 or 4 years down the road,  the home owner would say hey,  this house is worth 350k why not refinance it and take some of that 100k appreciation?   Why not indeed,  since next year that same house would be worth 35k more and you could sell it and pass the mortgage (which includes the money you've just borrowed) off onto the new buyer.

The economist who first explained the crisis to us also told us that less than 1% of the people getting these subprime loans were people who should not have gotten them,  the rest went to people who knew what they were doing.  The markets locked up with fraud was discovered in the market and that prevented the buyers of CDO from investing any more money.  The banks couldn't sell any more paper,  thus they could not raise any more money to make any new loans.  Just use the search box up at page top and plug in "29 trillion",  have a nice read.