Picturing the panic (several visual lessons in what went wrong with Wall Street)

The last many weeks have been a field day for people around the world to unleash their inner stick figure. As everyone from market analysts on Wall Street to truck drivers on Main Street struggles to describe what is happening in the global economy, we see more "solving problems with pictures" than at any time in memory.

Of the dozens of clips and links that people have sent me, here are my four favorites so far. (Warning: some of these are longer than they need to be, some more superficial, and some more crude, but all are worth the few minutes they take to watch.) Think of this as a fifteen minute crash course in global economics, presentation design, and visual thinking -- all at the same time.

1) The Overview

Let's start with what I consider the best overall description of the origins of the meltdown and what is being done about it. Johannes Bhakdi's slideshow is plain brilliant, mapping out in simple charts how we got here, where we are now, and what comes next. (Note: if you replace Johannes' term "SIG" with "SIV" or "CDO" the pieces that follow will all fit together more clearly.)

2) It all started with sub-prime

Next, let's dive into more detail on how this whole thing got started through sub-prime mortgages and the lovely term "predatory mortgage lenders". In this extremely crude slideshow from an unknown author, we get a great sense of what got the snowball rolling. (If you are the author or know who he or she is, please let me know.)

3) How a few bad mortgages destroyed Wall Street

Next up is Steve Liesman's bloody battle with a flipchart on CNBC. Things get a bit messy, but it's wonderful to see Steve's "take-no-prisoners" approach taken out on a sheet of paper. (Full disclosure: I knew and worked with Steve many years ago in Moscow, Russia when he was a correspondent for The Wall Street Journal and I ran an advertising agency. He's a very funny guy, even without the marker in hand.) Steve takes us through more details on sub-prime derivatives and why they exploded.

4) Why the panic isn't stopping (part of the reason, anyway)

Last, let's watch as senior economics analyst from Marketplace Paddy Hirsch exposes himself as the greatest whiteboard man since the UPS guy. As Paddy explains "naked shortselling", he gives the best example in years of how a simple picture drawn live becomes the most effective communication tool ever devised. Whether we fully understand short-selling after watching this or not (there still seem to me to be a couple mysterious moments in the process), it's the power of a simple picture that's the most important lesson.

Thanks to everyone who sent these and other links through. While it does appear that we're still only at the beginning of whatever this economic disaster is going to become, it's reassuring to know that the power of pictures will only increase.

Comments

[acai berry pills]

great read bookmarked will return to read more posts

[carrie bancroft]

Oops -- I put the link in the wrong field. Sorry about that, here it is again:

http://www.youtube.com/watch?v=MJqXFmloc2g

[carrie bancroft]

Wait, what?? You clearly haven't seen this one, then, if those are your top four...

[Tim]

Here's another effort.

http://blog.mint.com/blog/finance-core/a-visual-guide-to-the-financial-crisis/

[Johannes]

Dan - thanks a lot for posting and for showing more crisis visuals! Would be fun to assemble a super-presentation from our stuff and send it to Washington.

I will make the presentation available on Klatcher (www.sophotec.com) the coming days.

And everyone: vote for me on slideshare, the presentation is featured on the mainpage www.slideshare.com!

[Jonny Goldstein]

I'm glad that you have pulled together these different attempts to visually describe the financial crisis. Very useful in trying to wrap my head around this financial crisis.