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Can We Survive the Next Financial Crisis?

bloomberg.com

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Re: Can We Survive the Next Financial Crisis?

#201

Post by beaconstudios »

sigfubar wrote: post #182
jandrese wrote: post #115

Earlier quoted context omitted.

It's not just the 7 years on your credit score, it's having collection agencies hound you incessantly. It's having people constantly trying to scam your bank to drain your account. It is legal threats against you, your family, your friends, your employer, etc... You're basically dropping you bloody name to a pool of sharks who have little respect for what is legal or ethical.

What does it mean to be "hounded" by collection agencies? I've allowed some of my debts to go unpaid because I considered repayment to be a poor deal. Yes, I've received phone calls, which I answered and calmly informed the caller that (a) the conversation was being recorded; and (b) this was the last time they called me because I was invoking the FDCPA. I've never had to repeat this more than twice. Yes, I've receiv…

> I've allowed some of my debts to go unpaid because I considered repayment to be a poor deal.

Could you elaborate on this? I don't know if it's what you intended but it just comes off like you defrauded a company.

Re: Can We Survive the Next Financial Crisis?

#202

Post by darawk »

topspin wrote: post #176
darawk wrote: post #57

> The leveraged loans are now being packaged into collateralized loan obligations and sold to investors. Sound familiar? And the CLO market has grown to match the size of the CDO market at its pre-crisis peak. Yet one major difference makes the CLOs of today less scary: The loans that comprise them are backed by collateral, and if one of the companies in the mix defaults, an investor can find recourse through the sal…

> but weren't they collateralized by the homes? Much exaggerated in value homes, yes. > And wouldn't that make this CLO market exactly identical to the CDO market? The mortgage debt market is backed by GSEs. When the bubble popped Fannie and Freddie held over $5 trillion in mortgage securities. They are the market maker -- the buyer of last resort -- that makes the whole mortgage securities market liquid. CLOs don't…

All true. But my point is that the factual claim made by this article - that CLOs have backing collateral and CDOs do not, is false, and a pretty egregious error for a publication like Bloomberg to make.

Re: Can We Survive the Next Financial Crisis?

#203

Post by darawk »

cm2187 wrote: post #196
darawk wrote: post #160

Earlier quoted context omitted.

It doesn't cause it to rise in price relative to others in the same index.

But these strategies do have all sorts of side effects on the market. It pushes the correlation between stocks up. Investors might be more hot handed as their investment is more liquid, which may result in more selling in a dip. There are all sort of algorithmic strategies that are pro-cyclical. And also it reduces discrimination between stocks which results in weaker stocks benefiting from just being in the index an…

> It pushes the correlation between stocks up.

Citation needed. I seriously doubt that this is true.

> And also it reduces discrimination between stocks which results in weaker stocks benefiting from just being in the index and being overpriced.

Not really. Retail investors allocating their money to index funds just leaves the price-setting power to the professionals, which, on net, ought to be better for price discovery anyway.

Re: Can We Survive the Next Financial Crisis?

#204

Post by darawk »

toss1 wrote: post #165
darawk wrote: post #164

Earlier quoted context omitted.

Yes, but it impacts everyone in the index equally. Index funds are not responsible for amazon in particular's performance.

around the time they add/remove Amazon (or company X) to the index, they do enhance or detract from it's performance. Of course, when't it's there for years, it merely adds a relatively steady-state chunk to their price, affecting the level of their price curve, but not so much the slope.

Yep, true. My point is just that indexing has nothing to do with Amazon's meteoric rise. Nor does it make the market less efficient or any other such nonsense.

Re: Can We Survive the Next Financial Crisis?

#205

Post by travisoneill1 »

danhak wrote: post #100
travisoneill1 wrote: post #67

Earlier quoted context omitted.

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.

Most wealthy people borrow significantly even if they have high net worth (think mortgage on multi-million dollar home or investment property). Inflation helps them while they put their assets to work elsewhere. And it helps them far more than it helps some poor person with a few thousand in credit card debt.

Sure there are exceptions but inflation is (1st order) zero sum. People with a negative net worth clearly benefit and someone has to take that loss as someone is owed money. Yes there will be rich people who benefit (and more than any poor person in this scenario), but as an aggregate it will be a reduction in wealth inequality.

Re: Can We Survive the Next Financial Crisis?

#206

Post by gdubs »

briatx wrote: post #38

Yes. The lesson of 2008-9 is that TBTF and bailouts will be applied in case of any financial crisis. Not much has been done to rein in moral hazard and so institutions will continue to offload risk to the public when they can. This works as long as the Treasury and Fed can absorb the shock and will create near term stability, at the potential cost of a currency crisis if the shock is too big to be absorbed.

Part of the story of 2008-9 was that congress nearly didn't act, with Paulson famously getting down on bended knee to beg Pelosi to whip the necessary votes. The government has the capacity to act – but there's no guarantee that they'll make the correct choices in a timely manner.

Re: Can We Survive the Next Financial Crisis?

#207

Post by TaylorAlexander »

TearsInTheRain wrote: post #190
headmelted wrote: post #146

Earlier quoted context omitted.

Still though (and correct me if I'm wrong), but if you get sick tomorrow with some ailment for which treatment is complex (and therefore expensive) AND you don't have insurance - your options are to find the money or go bankrupt? That's nuts in 2018 in a wealthy democracy.

Why is that nuts? Honestly it seems kind of nuts that someone would expect another person to pick up their tab

I honestly feel like it’s nuts that we don’t collectively fund healthcare, precisely because I don’t want to live in a world where I may be ruined by an illness and I am willing to pay to make sure others don’t have to live in that world.

However I am specifically a proponent of voluntary collectives for things, as government forced cooperation seems suboptimal and fragile to me.

Re: Can We Survive the Next Financial Crisis?

#208

Post by craftyguy »

HashThis wrote: post #65
prolikewh0a wrote: post #42

Earlier quoted context omitted.

>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.

Only briefly, and then promptly forget when things start looking good again.

"It couldn't possibly happen again, we're better/bigger/smarter than last time. So we have nothing to worry about, no reason to put in safety guards/regulations!" - Humans throughout history.

Re: Can We Survive the Next Financial Crisis?

#209

Post by ajross »

crazynick4 wrote: post #104
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…

If you have an extreme health care incident, why pay the bill? Sure it would hurt your credit score not to, but if it's between that and tens/hundreds of thousands, I think it is worth it to take the hit for 7 years. I know health care workers who give this 'unofficial' advice to their patients and I've had friends and family members do the same thing - people who had no health insurance but still got health care and…

> people who had no health insurance but still got health care

This is a harmful myth. It's possible to get emergency care under pretty much any conditions. Everything else isn't available.

You can use this trick if you got hit by a truck or had a big infection. It doesn't work to get a hip replacement, or chemo, or post-stroke occupational therapy, or a prosthetic, or a pacemaker, or...

That stuff requires insurance. You need to stop telling your friends that fraud is the answer and start telling them to sign up for care.

Re: Can We Survive the Next Financial Crisis?

#210

Post by adiusmus »

dc_gregory wrote: post #197
yardie wrote: post #193

Earlier quoted context omitted.

> It is legal threats against you, your family, your friends, your employer, etc... If any debt collector is brave enough to do any of this I'm documenting all of it and suing the everloving pants off of them. Because that is harassment.

With what money?

Does Saul do “no win no fee”?
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