Understanding the individual factors that made up the Global Financial Crisis is a bit like learning a new language, one whose rules are subject to change. Just when you think you have got on top of basic sentence structure, along comes a grammatical flip that fosters confusion.
I have been burrowing through an excellent book, IOU, by John Lanchester, that explains the GFC is very lay terms. In fact, the author is a fiction writer with a beautiful turn of phrase and an eye for the absurd. And even though it reduces complexity to clear rational jargon-free prose, I still have to read and re-read pages. There is lot to know and the fact is, some of it is quite counter-intuitive. I can handle explanations of how the fundamentals of banking function (quite simple really) but when matters move into the more complex financial instruments developed to free up capital and reduce risk, well, there is difficulty. Quite brilliant chaps, mathematicians and physicists among them, created these products, so it's little wonder that poor old bank managers, fund directors and the like didn't really know exactly what they doing. In time, these canny financial instruments became instruments of torture.
I'll have more to say on this amazing(tax-payer funded) schemozzle as I delve deeper into the book. Or then again, I might have forgotten it all by the time I reach the keyboard.
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