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Leveraging and deleveraging

Leveraging -- or borrowing -- has been cited as one of the contributors to the financial crisis. Senior Editor Paddy Hirsch explains how the move to deleverage -- or reduce debt -- is prompting wild market swings and concerns about deflation

About the author

Paddy Hirsch is a Senior Editor at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
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Excellent! Love your method of breaking complex subjects into simpler day-to-day analogies. Very easy to understand and remember.

Jim

GREAT work, Paddy! You are now my new financial hero!!! We hear the media muddy all these concepts to their preference and here you are separating what is milk and what is water...I couldn't find few Harvard MBA's who brought us all here but you (hoping you are not)to enlighten us...forever grateful!!! BTW, I am drinking more since I started seeing these videos, no wait...these help me justify...good humor as well! Thanks a TON!!!

Great explanation, thanks a lot!
One silly question: when everyone was borrowing, from whom did they all borrow? It cannot be the banks since they were heavy borrowers themselves, did all that money really come from people's savings or there were some kind of accounting games going on? say, banks were just "creating" money with each other on their books.

MARK JOHNSON from COLLEGE PARK, GA, perhaps you should take an etiquette course at your local community college to learn the "corrcet" way to make a suggestion without insulting someone by implying they lack knowledge in business fundamentals.

Chas Windham from the great state of IL, feel free to produce your own set of free, high quality creative videos that use humor and analogy to explain often-obscure financial concepts. Make sure to post the link so that we can comment on how unprofessional and how appallingly low quality it likely would be.

Paddy Hirsch, keep up the good work! I really enjoy these and I hope that we get to hear more from you in the future.

:Quote:
By tony p
From schaumburg, IL, 12/15/2008

These are great videos meant to explain in layman's term what's going on in the marketplace.

He explains it without speculating like almost all the talking heads do know a days, great job Paddy!

If the balloon/market deflates what's the worst that can happen?

hi. great discussion. would you consider uploading it on another video provider. (i.e. youtube) it always stops midway and i have to refresh it.

Chas from IL and Mark from GA should increase their dosage and loose their bowties; give us a break geniuses.

Excellent explanations / analogies as what has unfolded in the marketplace and the current actions of the central banks / banks / governments trying to mitigate the fallout. Perhaps there could be a Whiteboard session on indicators when the market has crossed over from deleverage to deflation? The market seems to be at this tipping point now - will the governments massive capital injections into the financial system stem deflation or are we into a negative feedback loop already (ie. deflation)?

These are great videos meant to explain in layman's term what's going on in the marketplace.

He explains it without speculating like almost all the talking heads do know a days, great job Paddy!

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