Understanding how exactly these complex events unfolded is challenging enough in its own right, but further occluding the issues, there are serious political stakes involved and that naturally means the real issues can be hard to separate from the surrounding political rancor and partisan spin-doctoring.
So to try to cut through all the jibber-jabber and get to the heart of it all, below is my simple, visual guide to how the financial crisis unfolded. You'll probably want to zoom in on the diagram for a more detailed view (just click the image and it will open in a full-sized view), because there's really no way to present it here in a more practical size.
[Note: Since I originally published this illustration, I've come to realize that its characterizations of events are inaccurate on a number of fundamental points. And with the benefit of hindsight, it's also become apparent that my illustration includes some potentially misleading characterizations of key historical events that I'd originally intended as jokes, but that I now see could easily help to perpetuate common misconceptions about the major contributing factors to the financial crisis.
For example, the chart emphasizes the roles that the Clinton White House and the government sponsored entity, Fannie Mae, played in the events leading up to the financial crisis. To be honest, I only chose this particular, controversial interpretation of events in order to set myself up to make a cheap joke about Clinton having used his powers of seduction to talk Fannie Mae into doing things "she" normally wouldn't do.
For a serious discussion of all these issues that tries to pierce the veil of political spin that still so often keeps us in the dark, I'd recommend this recent discussion on MetaFilter, for starters. I should have been clearer up front that this chart was being offered as satire, not a serious examination of these extraordinarily complex matters.]
