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Can We Survive the Next Financial Crisis?

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Re: Can We Survive the Next Financial Crisis?

#61

Post by losteric »

ben_jones wrote: post #52
HashThis wrote: post #5

The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. Working American's had to financially absorb the 2008 Mortgage crisis. 2008 was a direct robbery because Mortgage Orginators KNEW the mortgages would blow up, because their own Underwriting equations said they would. That is why they did fraud on the customer's income levels or worked with politicians to al…

If you're hinting at a revolution, a.k.a. what used to be a check against the upper classes, you can't really have one of those when every police department has a tank, a swat team, and carte blanc access to all social media and mobile data/communications.

Police departments are made of individuals with friends and families. Factor in all the bureaucracy and pension cuts, you'll find they are more of a wild-card that will backfire against the elite in many areas.

Re: Can We Survive the Next Financial Crisis?

#62

Post by sschueller »

bogomipz wrote: post #32

The article states: >"Leverage has shifted to companies from consumers, and some risk has migrated to shadow banks from traditional lenders." Can someone explain this statement to me. The banks were the one's that were too heavily leveraged before. This is why the required the bailout. What am I missing?

What are shadow banks? Sounds to me the risk was just moved off the books using some financial trickery into "shadow banks" and when those blow they take the regular banks with them.

Re: Can We Survive the Next Financial Crisis?

#63

Post by nabla9 »

acconrad wrote: post #2

One of the few times Bettridge's Law of Headlines doesn't apply. "Survive" is an extreme word here, but I do see a big issue w/ index funds. Perhaps an unpopular opinion - but I believe index funds will be the next major bubble that cripples the financial system. It's one massive way to persist the same inequality status quo. You know what made Bezos so rich in spite of a company that doesn't make much accounting sen…

For the discussion in relatively high quality formus like HN to survive there needs to be new rule adopted: Nobody is allowed to criticize or discuss the title of the article. Only the content in the body of the article.

These titles are usually written by editors who think in clicks and they are not the original titles from the writers.

This was good and interesting article but unless we discuss the content (and read it) there is nothing to say.

Re: Can We Survive the Next Financial Crisis?

#64

Post by ryandrake »

HashThis wrote: post #5

The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. Working American's had to financially absorb the 2008 Mortgage crisis. 2008 was a direct robbery because Mortgage Orginators KNEW the mortgages would blow up, because their own Underwriting equations said they would. That is why they did fraud on the customer's income levels or worked with politicians to al…

The 1%, including politicians, will find some other wedge social issue to keep the working and middle classes continually fighting each other, allowing the rich to keep siphoning off the world’s wealth. The day after the crash, headlines will be back to “transsexual bathrooms” and “football stars kneeling” and we will forget that we are losing our jobs and homes again. This play book is not new.

My prediction for the next market crash:

1. Working class will lose their jobs

2. Middle class will lose their homes/investments

3. Wealthy class will get huge tax breaks to “stimulate investment”

4. Big companies will get massive bailouts in exchange for empty promises to create jobs that they never will keep

What makes you think next time will be any different?

Re: Can We Survive the Next Financial Crisis?

#65

Post by HashThis »

prolikewh0a wrote: post #42
craftyguy wrote: post #15

Earlier quoted context omitted.

> The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? If the working class has no tolerance for these things, then it definitely isn't reflected in the people the working class has ele…

>If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? I find your average worker doesn't really pay attention to the day-to-day news/politics (especially regulations & individual votes, media doesn't cover this either and nobody watches CSPAN) but by now knows that in 2008 the bankers & wall stre…

The average citizen not paying attention will stop when the next financial crisis hits.

Re: Can We Survive the Next Financial Crisis?

#66

Post by votepaunchy »

aphextron wrote: post #54
the_gastropod wrote: post #4

Earlier quoted context omitted.

> You know what made Bezos so rich in spite of a company that doesn't make much accounting sense? When everyone is betting on his success by blindly investing in index funds. Let's see... AMZN: up 62.93% YTD S&P500: up 6.81% YTD I don't think index fund investors are the cause of Amazon's growth.

>I don't think index fund investors are the cause of Amazon's growth. Sure they are. Index funds are not equally weighted. Practically every tech ETF you can buy has Amazon weighted in the top 10, sometimes over 10% of total assets [0] whereas the average for other securities is below 1% at the most. [0] https://money.usnews.com/funds/etfs/large-growth/invesco-qqq...

The OP cites "S&P 500 or some total market fund", which are market-cap weighted.

Re: Can We Survive the Next Financial Crisis?

#67

Post by travisoneill1 »

linuxftw wrote: post #43
y-c-o-m-b wrote: post #21

The definition of "we" and "survive" needs to be established clearly first and I don't think all those fancy graphs and market trends will define them. There's a lot of people that ended up bankrupt, in a bottomless depression, turned to drug abuse or committed suicide because of the last crisis. Wages are still relatively low while prices continue to climb. Many people are working 2-3 jobs and having trouble affordi…

I agree. It's I don't care if banks survive as long as I'm not negatively impacted. I'm sure the banks feel the same way. Survive also doesn't mean 'maintain standard of living.' The government has a surefire way of propping up the wealthy: Inflation. Savings accounts lose purchasing power (normal person) and the means of production gets more expensive (wealthy).

This is backwards. Inflation destroys the value of debt. Poor tend to be borrowers and rich tend to be lenders, so inflation is an equalizer.

Re: Can We Survive the Next Financial Crisis?

#68

Post by oihoaihsfoiahsf »

kolbe wrote: post #46
waterphone wrote: post #28

Earlier quoted context omitted.

Investing in total market index funds is literally investing in the economy as a whole. (Or as much of a whole as the index represents.) So while yes, they will crash with future market crashes, of which there will be many in each of our lifetimes, historically in the U.S. so far the market has always recovered.

What percentage of 'the economy' do you think is represented by publicly traded corporations?

According to this article [1], public firms account for about 80% of the pre-tax profit in the private sector. That's probably enough, given that public and private company returns are probably at least somewhat correlated.

[1]: https://www.forbes.com/sites/sageworks/2012/09/21/private-co...

Re: Can We Survive the Next Financial Crisis?

#69

Post by busterarm »

ryandrake wrote: post #56
busterarm wrote: post #14

Earlier quoted context omitted.

I'm bullish on the sentiment expressed by the parent poster, actually. Like another commentator, I believe index funds are going to be ripped hard and this is what the average saver has been told to dump their money into by the banking industry since the last crisis.

Only around 50% of Americans own any stock at all, including indirect ownership like IRAs and pensions. So, I don’t see the working class suffering that much due to stock market decline. They will suffer due to joblessness.

If you know your history, it's the "middle class" that has directed just about every non-marxist revolution.

I guess I should add the clarification that I think most folks who consider themselves middle-class and who are investing and saving money are actually working-class.

If you don't own your residence outright or have the liquid assets to purchase it and still make investments, you are working-class.

If you live in the valley and can't afford to buy and can't uproot your job to somewhere more affordable to buy while maintaining roughly the same income level, you're working-class too.

Re: Can We Survive the Next Financial Crisis?

#70

Post by wiz21c »

oihoaihsfoiahsf wrote: post #51
chadbaud wrote: post #48

Earlier quoted context omitted.

The banks did cause it to happen. They had an insatiable appetite for mortgage backed securities and would shop credit rating agencies (who were newly public companies) to get a AAA rating on total garbage they knew would explode. Municipalities and pension funds would buy AAA securities even though the originators and packagers of the mortgagers knew they were garbage. It was a big fraud caused by the bankers greed.

Yes, the banks were part of the cause. That is not in dispute, as you can see by reading my previous comments. But they would not have been able to commit their fraud without the aid of credulous buyers willing to purchase far more house than they could afford. That's all I'm saying.

>>> without the aid of credulous buyers

or with the aid of people with that necessary skill needed to convince regular people to do something only credulous people would do. What was the name of that skill,... hmm... isn't it "manipulation" or "marketing" ?

You see, if someone's is going to make a mistake, I tend to help him by preventing him to do so. I don't give him the pen to sign its destiny.

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