VOICE NARRATOR: I wanted to draw the economic crisis, so first, I drew every connection between the big sectors that represent the whole United States. But we don't need all of these for the main story. It is simple. Loans from the financial system, especially mortgages, helped to pump-up consumer spending, and therefore, pumped-up income and work. This went on for many years. But when the loans stopped, this depressed spending, and therefore depressed incomes, and put people out of work. Again: it pumped up, then it popped. It's a very simple story. Then, after that, the financial system was bailed-out by the central bank, and by the Treasury. But no such generosity was extended to the households. They still owe so much debt that they cannot spend enough to keep the main cycle healthy. The danger in this is that long-term unemployment can permanently hurt people and so it becomes more and more difficult to reverse. Now, in the spring of 2012, growth is slow, and we need mor! tgage relief, which would help spending, and we need infrastructure spending, which would help incomes. Instead, the US has slumped into confusion and politics, as we will see. So let's start the story over, and go into detail. Why did the money rush in, and why did it stop? It happened because there was a housing bubble, financed by a shadow bank bubble. It was a double bubble: housing prices and derivatives values. Next, we will look inside, to see how it worked.
