The crisis of credit visualised

The finantial system collapsed, resulting in a crisis of credit. It all started when homeowners, who represented mortages were gathered with anxious investors, who were lookng for a profitable investment.

After Alan Greenspan reduced treasury bond to 1%, banks tried their luck in leverage, i.e borrowing money to make a deal more productive.Soon,investors observing banks´ success wanted to get better income, so they were connected with homeowners through mortages. A broker was a mediator between a family,who wanted to buy a house and lender,who gave them mortage. Such a deal was advantageous even for the homeowners,since the housing prices were continuously rising.The investment banker bought numerous mortgages transforming the money he received into CDO. Collaterizated dbt obligations were divided in three:Safe,Okay and Risky.The fist one was used for secure investments and the last on for hedge funds.Mortgage business continued making deals with non-qualified people,since qualified ones no longer wanted to buy homes.

Eventually,although investor bankers recieved many houses,because of payment defaults,they remained in a hopeless situation.Having yhe prices fallen,the houses became valueless and the market was frozen.