'Summary of the Crisis of Credit' Before & After

The crisis of credit

The video ‘the crisis of credit’ visualizes the worldwide financial fiasco. The relationships between homeowners, investors and the financial system at Wall Street are especially investigated. The underlying connection was defined by investors buying treasury bills. After the dotcom bust, interest rates dropped to one percent. For Investors treasury bills became unattractive, while borrowing became easy for banks, which used leverage to boost their deals. Banks then devised a plan to connect homeowners and investors through mortgages.

Families bought mortgage from brokers who connected them to lenders. Investment bankers secured abundant mortgages. Monthly payments of homeowners contributed to their growing wealth. This source of income constituted CDOs, collateralized debt obligations. The investors were selling them as safe, triple A rated slices and risky hedgefonds. When they asked for more mortgages, brokers had to refuse. As homeowners defaulting on their mortgage, the value of their houses increased. Lenders sold risky mortgages without downpayments. Prime mortgages were no longer available, only sub-prime mortgages. Gradually, investment banker’s income turned into houses. House prices dropped and default rates swept the country. Meanwhile, CDOs have grown worthless. Bankers failed to pay back borrowed millions and brokers were jobless. The Financial system was frozen and therefore collapsed.

[201 words]

The crisis of credit (revised)

‘The Crisis of Credit Visualized’ by Jonathan Javis is about the worldwide financial fiasco in 2008. The relationships between homeowners, investors and the financial system at Wall Street are especially investigated. The underlying connection was defined by investors originally buying treasury bills. After the dotcom bust, interest rates dropped to one percent. For Investors treasury bills became unattractive, while borrowing became easy for banks, which used leverage to boost their deals. Banks planned to connect homeowners and investors through mortgages.

Families bought mortgages from brokers who connected them to lenders. Investment bankers secured abundant mortgages. Monthly payments from homeowners contributed to their growing wealth. This source of income constituted CDOs, Collateralized Debt Obligations. The investors sold some as safe, AAA slices and some unrated hedge funds. When they asked for more mortgages, brokers refused because they had none. As homeowners defaulted on their mortgage, their houses’ value increased. Lenders sold mortgages without downpayments. Prime mortgages were no longer available, only sub-prime mortgages. Gradually, the investment bankers’ income turned into houses. House prices dropped due to oversupply default rates swept the country and CDOs became worthless. Bankers failed to reimburse borrowed millions and brokers were jobless. The financial system was frozen and therefore collapsed.

[203 words]

Personal comment

The first version of the summary was slightly flawed in some points. First of all because I used small letters were there should have been capital letters. For example as I introduced the title of the video, but also when describing what CDO stands for. Another weak point of my summaries seems to be that some phrases and sentences are still too wordy and would need some condensing. Prepositions are also among my most common mistakes. Lastly, what is a vital if I want to avoid all kinds of mistakes in my future writing I was told to devote time to proofreading my texts. I already tried to put this into practice and hope that it will take me a long way when it comes to improving my written efforts