[Stormieweather]

Anyone able to clearly describe this (economic crisis origins), in terms a 12yr old can understand? My daughter asked me this question as I was driving her to school this morning...

She doesn't have a good understanding of what an investment is, barely knows what a mortgage is, and has no idea what 'unemployment rate' means.

I had 3 minutes to lay it out...and what I said was, it's a domino effect that basically began with mortgages. Some banks/mortgage co's began giving mortgages to people who couldn't really afford it. The people (who couldn't really afford it to start with) began to default (ie: not pay) and so the banks and/or servicing co's began to lose money. Stock markets don't like when banks start losing money/going under, so their prices fell. This meant some people's companies became worthless, so they closed up. When they closed up, they began to lay people off (so they lost their jobs). These people no longer had money to spend, so other businesses began to lose money. The banks aren't giving any more loans to people who need it. So the companies have to lay people off. These people can't pay their mortgages without a job, and more banks go under and more stock prices fall and more prices get raised to make up for the people who no longer have money to spend.

Hell, I'm not really sure I understand the origins. Anyone got a better (ie: more accurate), simpler explanation I can offer her this afternoon?

Stormie