For quite sometime now I have been trying to figure out how to explain the present global financial turmoil either through words and/or through simple schematics. I tried to put in words and paragraphs, here also, I ended confusing myself. Many times I have started to sketch it on a piece of paper but ended up in a chaotic diagram (not knowing where I started). In this process, I realized, it is probably damn confusing and chaotic. Therefore, nobody could figure out, or nobody could track it, or nobody could measure it, or nobody could quantify it, or nobody understands it from a systemic level. My personal opinion is folks in investment banking sector are among the smartest and brightest group. It is just not possible that they did not see it coming. Folks just choose not to see it.
I found two very good educational or informational piece of information. One is an image which shows the schematic (much better than I was doing). Second one the video which explains in a story format.
Great job by following folks in capturing the essence of the present financial mess.
Image: Originator is unknown. I received it an email from my colleague.
Video: Was under open source sharing, by Jonathan Jarvis.