This American Life (a radio program) recently had an interesting show on banks and the financial crisis. It starts out with a very simple and entertaining explanation of a bank balance sheet showing negative net worth. For those of you for whom this is too elementary, stay with the program; it gets more interesting. The program ends with a story of two entrepreneurs in New Jersey who are doing their small part to help homeowners and make money for themselves at the same time. They buy non-performing mortgages on properties they are familiar with at low prices from hedge funds and then make deals with the homeowners.
The most amusing line in the program is during the discussion of a research note written by an economist at Deutsche Bank. The research note states that the taxpayer one way or another is going to pay for the banking crisis. Simon Johnson, a professor at MIT Sloan School of Management and former chief economist at the IMF, call it a "ransom note." At some point someone in the program says something like: "That's a nice global financial system you have there. It would be a shame if anything happened to it."
The program can be listened to or downloaded here.
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