Very cool, but the Bomb visualization fails to explain an important fact. The investment bankers aren't receiving cash from the homeowners, but those assets (houses) are not worthless.
Given time (in this case a bailout) those houses should return to normal value via demand once they've gone low enough for people to want to buy them again. At least that's the hope.
Yes, but do remember most of these houses were bought during a bubble period. I doubt many houses will ever reach the value that they were bought at.
Especially if you've read "how the crash will reshape America" recently posted on HN (http://news.ycombinator.com/item?id=485036), you'll realize that many places where economic growth was fueled solely by home value will never fully recover (Arizona, Las Vegas, etc).
Amazing video. I wish he had a second video to explain how exactly the government is trying to fix the problem.
Maybe that could be represented as a giant firehose of money fueled by the giant firetruck of taxpayers, which in turn is used to put out the fire in the banks and the fuses on the bombs.
I am not an expert on this. However, it's probably worth mentioning here what I've understood from economists: the banks are not nearly as broke as they say they are -- the ones that are still in business, anyway. If they were really that broke, they wouldn't have taken the TARP money to buy out competitors and give upper management the fat bonuses. The banks that are going out of business ... well, they aren't, really. They're being bought out (e.g. WaMu) and the assets are now held by the parent bank. In that light, I think the original commenter's point stands; the houses aren't worthless.
Given time (in this case a bailout) those houses should return to normal value via demand once they've gone low enough for people to want to buy them again. At least that's the hope.