This is amazing, shocking – I find it hard to believe that the voiceover is telling what’s really happening, but there it is: a sort of shanty town outside Los Angeles composed of people whose sub-prime mortgages went bang.

And now there’s the pair of illustrations that I came across showing how American banks’ mortgages went bang. (These look terrible in Firefox and Camino on the Mac; fine in Safari. No idea how they are on Windows – anyone care to tell me? OK, fixed.)

The source is And Still I Persist which has used its own technology, called Boomerang, to disentangle this colossally complex topic. The first graph shows (by bank) the value of mortgages, by bank, where there were payments outstanding by 90 days or more. The number of “late” loans is vertical; the asset size of the bank horizontal; its total loan portfolio is the area of the circle at any point. (It’s bad to be vertical, small and near the x-origin.)

And secondly, total charged-off loans – that is, number of loans that have been written off as “non-performing” (vertical axis), total assets (shouldn’t that be claimed assets?) of the bank on the horizontal, and the area of the circles showing the bank’s total loan portfolio. (Being vertical and not far along the axis and having a small circle is bad.)

So – the question we now have is, why did it all go pear-shaped in 2007? What in particular happened?