Content of The Show
The episode's name "The Giant Pool of Money" is derived from the description used in the show of fixed-income securities; it was identified in passing with the global saving glut. Davidson described it as follows:
- Most people don’t think about it but there’s this huge pool of money out there, which is basically all the money the world is saving now. Insurance companies saving for a catastrophe, pension funds saving money for retirement, the central bank of England saving for whatever central banks save for. All the world’s savings.
The show begins at a black tie gala, where an award is being presented for CDO of the year. The show does not lay blame on the financiers directly, going so far as to say "Let me just say, they’re aware that there’s a certain irony, giving awards to the instrument that almost destroyed the world’s economy. They did consider canceling this year but it’s been a really tough year, it’s been really gloomy for them." They then proceed to the opposite end of the spectrum, with a borrower whose mortgage is in default.
After some background on what caused a shift in capital to mortgages, which they hypothesize to be Alan Greenspan's keeping fed funds rates low during the early 2000s (decade), the show moves to Mike Francis, a Wall Street financier who worked at Morgan Stanley. From there, the show describes "another Mike", Mike Garner, who worked down the chain, at Silver State Mortgage. He described the pressures and motivations faced by mortgage salesmen. After describing that area of the chain, they moved onto a CDO investment management firm run by Jim Finkel of Dynamic Credit, LLC. Davidson through an interview with Finkel describes the nature and creation of CDOs.
After describing these market players, the show goes on to discuss the nature of the speculative bubble, highlighting real estate TV shows that sprung up during the bubble, such as A&E's Flip This House. The show then revisits some of the interviewees, describing the bursting of the bubble, both in terms of their business and personal fortunes. Blumberg and Davidson end with a prognosis of the financial system. Blumberg states "there's more talk that the next few years will feel like the 1970s. There are lots of technical differences between this crisis and Jimmy Carter's malaise. But for the average person, it could feel the same."
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