CNBC’s award-winning journalist, David Farber, takes a close look at the financial bubbles that occurred between the years of 2000 and 2010.
The decade started with the AOL merger with Time Warner. At the time, it was the biggest merger deal in history, subsequently it was one of history’s biggest financial disasters. The excessive valuation of tech companies disappeared almost overnight, leaving financial ruin all over the place when the “dot-coms” became “dot-bombs.”
Next, was the housing crisis, which was a form of banker insanity in making massive amounts of sub-prime loans on variable interest rates that were destined to go into default. The bankers did not care because with the help of investment bankers such as Lehman Brothers, they were able to package up the bad loans and sell them to others.
They achieved this by sprinkling the loan bundle packages with a few goods loans and then they got insurance to cover defaults from AIG and other insurance companies. Once they were in a package and wrapped with insurance coverage The loan bundles achieved ridiculously high ratings from the credit rating agencies, based mostly on the credit worthiness of the insurance companies, which allowed them to sell the bundled loan package to institutional investors from all over the world. Disaster hit when millions of the housing loans went into default and there simply was not even capital or collateral to cover all the risks
Lesser known is the private equity bubble. Securitization lead to private equity firms buying up companies to try to turn them around. The investment firms loaded up the companies with debt to take them over and the companies were not able to pay back the debt.
This enhanced DVD also includes interviews and panel discussions with Mark Cuban, Michael Wolff, and Jon McAfee about their opinions on these bubbles and how they affected their lives.
The Bubble Decade: America's Economy after 2000
- Enhanced DVD
- ISBN: 978-1-62102-354-8
- Run Time: 45 Minutes
- Copyright Date: 2009