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The Real Cost of the 2008 Financial Crisis

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Re: The Real Cost of the 2008 Financial Crisis

#11

Post by sampo »

nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

The Wikipedia article has a list of proposed alternatives.

https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...

Especially I'd like to point out the one proposed by Paul Krugman. Instead of injecting money into the banks, the government invests the money in the banks, diluting the previous shares. After the crisis, the government starts selling their shares, getting at least part of the money back.

https://en.wikipedia.org/wiki/Swedish_banking_rescue

Re: The Real Cost of the 2008 Financial Crisis

#12

Post by michaelt »

nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

  But what was the alternative to the bailouts?
The bailouts, but engaging with the narrative of a rigged game and applying substantial and highly visible reforms to prevent another financial crisis.

I mean, when your ship hits rocks you gotta patch the holes so you don't drown - but then you also gotta stop the captain navigating you into rocks. We did an OK job at the first, but did practically nothing about the second.

Re: The Real Cost of the 2008 Financial Crisis

#13

Post by lotsofpulp »

teekert wrote: post #10
simplemts wrote: post #4

Earlier quoted context omitted.

Debt is worse now than in 2008. We haven't / didn't escape anything, just passed it on to future generation(s). Future generations will be paying the bill for mistakes of their parents.

Will they pay the bill or will they revolt? I feel it is time for some of the latter.

Depends what proportion of them are kept content with mediocre food, shelter, and a slimmer of hope that their kids can move up in the game. And as long as the security guards (military and police) are kept happy and well equipped, then a small number of them should be able to keep the rest in line.

Debt is the smart way to keep them in the hamster wheel.

Edit: fixed contempt to content

Re: The Real Cost of the 2008 Financial Crisis

#14

Post by vinceguidry »

The takeaway I got from reading the article to the end does not match the impression given by the headline, though the headline isn't exactly wrong, per se. The conclusion given is that the mechanisms put in place to avoid another recession work just fine but that the political will to use them has been dried up by the political retrenchment of the right.

That said, if you're at all curious, you should read the article, if not the book it's summarizing, because it's really really good. One thing that had escaped me was the fact that America's bailout of its own banks and QE were both drops in the bucket compared to the massive amount of liquidity the Fed injected into the global financial system, all of which was paid back just like the bailouts.

On a personal level, this allays my fears of another recession. The Anglosphere will wake up one day as if it was dreaming, and the political upwelling that put Trump into office will fade back down into insignificance. Another recession at this stage will only accelerate that process, provide some juicy real estate opportunities to those positioned well enough to take advantage, and we'll be back to normal within a few years to a decade. I strongly suspect that Trump won't stand in the way of another global firefighting operation conducted by the Fed should it become necessary, he's way too cynical to not do something that works.

We should avoid 'othering' the alt-right if we can. These are Americans like you and me, as scared and uncertain as all of us, momentarily in the spotlight and proud of it, but ultimately decent human beings just like the rest of us.

Re: The Real Cost of the 2008 Financial Crisis

#15

Post by Shivetya »

simplemts wrote: post #4
nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

Debt is worse now than in 2008. We haven't / didn't escape anything, just passed it on to future generation(s). Future generations will be paying the bill for mistakes of their parents.

if you are referring to the budget debt of the US government then a simple cap limiting expenses to less than inflation would in a decade result in a positive balances. however Congress changed their accounting rules decades ago and neither party is interested in fiscal responsibility while the other is in office.

the only real fix is getting out of the tyranny of a two party system, however each new finance reform bill does its best to prevent that possibility under the guise of protecting democracy from outside influence

Re: The Real Cost of the 2008 Financial Crisis

#16

Post by jondubois »

brobdingnagians wrote: post #3
nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

We haven't escaped the depression; the bailouts and quantitative easing simply delayed it for a bit, and the more it is delayed, the worse it will be. It would be far better to have economic corrections along the way with little dips than to keep the house of cards going on worse and worse foundations until it all falls apart in a large depression. Little distortions can be corrected in the short term, but keeping th…

Agreed, by delaying crashes, the problems pile up and they compound. You're not allowing the population to update their skills and targets to meet real economic needs because reality has been distorted by the bailouts. For example, maybe one reason for the crash is that the economy couldn't support so many people working in finance. Because of the bailouts however, it's now probably more lucrative than ever to work in finance; so we probably have even more people working in finance today than in 2008. People who are succeeding in business today don't actually know how to fulfil real economic needs. They only know how to fulfil artificial economic needs in this make-believe economy that the Fed has created.

Re: The Real Cost of the 2008 Financial Crisis

#17

Post by swarnie_ »

simonh wrote: post #7
brobdingnagians wrote: post #3

Earlier quoted context omitted.

We haven't escaped the depression; the bailouts and quantitative easing simply delayed it for a bit, and the more it is delayed, the worse it will be. It would be far better to have economic corrections along the way with little dips than to keep the house of cards going on worse and worse foundations until it all falls apart in a large depression. Little distortions can be corrected in the short term, but keeping th…

Sure, but allowing half the banks to fail would not have lead to a little dip. The collapse of Lehmans was very damaging for many perfectly healthy, well managed firms that depended on them. The only reason the effects were not worse was that there were other banks around to pick up the pieces, but if the domino effect had been allowed to play itself out the dramatic loss of capacity in the banking sector would have…

> Note that the bailout money wasn't simply gifted with no strings, it was leant and paid back with a profit to the tax payer.

I can't comment if this is true in America but in the UK we've been selling off bailed out assets at a loss. Sales seem to be timed for political points not to maximize profit.

Re: The Real Cost of the 2008 Financial Crisis

#18

Post by icu »

wiz21c wrote: post #8
simplemts wrote: post #4

Earlier quoted context omitted.

Debt is worse now than in 2008. We haven't / didn't escape anything, just passed it on to future generation(s). Future generations will be paying the bill for mistakes of their parents.

As a parent, I fail to see exactly how I'm guilty of anything here. I used the banks because I had to, I listened to their advice because I can't possibly become an expert on their subjects, etc. I even voted for people who want to regulate them. I don't play on the stock exchange (pension funds do, with my money). I didn't do anything wrong. My children will pay for the mess a few made by pushing unreasonable expect…

I'm with you on decent alternatives of which I think a non-Fed based monetary system as well as the end of crony capitalism (not capitalism itself) would probably be a decent alternative.

However, the biggest problem is the education of the wider public and garnering the democratic will of the people to make necessary changes.

Economics, for all its show of being empirical is really just politics, and politics is really just philosophy.

In the daily struggle, hustle and bustle of life, few have the time and desire to learn these subjects, let alone pay the price to apply themselves politically to make the necessary changes.

Are you willing to?

I'm not... at least for now, willing to do anything. Charity starts at home and before I contemplate doing anything political I must ensure my family is well off.

However if you are willing, and able to do something, I strongly encourage you to.

Re: The Real Cost of the 2008 Financial Crisis

#19

Post by sidstling »

I don't think I agree with the article. Not from a European perspective. I'm Danish and we've had anti-establishment parties all my life on both the left and right side of the political spectrum. The populist rightwingers most similar to Trump and the teaparty saw their dawn in 1998 where they got elected with 7.4% of the votes. In 2001, three months after 9/11, they recived 12%. In 2005 it was 13.3%. In 2007, before the financial crisis they got 13.9%. In 2011 they got 12.3% and then in 2015 they got their current 21.1%.

If you look at the data, our right wing populist party saw a small decline following the financial crisis. They saw two major increases, one following 9/11 and one at the height of the European migration crisis but at this point our economy had fully recovered.

I think it's some what like this around much of Europe. Back in 2001 we got critiqued by the European Council because we elected a racist party to government, but Austria recieved much sterner critique at the same time. In Eastern Europe the local economies have seen huge increases along with right-wing populism. Greece, who took the worst of the financial crisis, turned to the intellectual left, not populism.

I think the article is probably on point about America. The tea-party saw it's dawn in the years following the financial crisis. You had the occupy movement and now you have the alt-right. We didn't really see similar movements in Europe though. I guess we do today, and I think we're unfortunately receiving a lot of bad influence from America. I mean, I can go on the Danish subreddit right now and see people complain about the MSM. Which makes no sense, because our media-landscape is completely different from the American. On facebook we have anti-vaxxer and flathearter groups, mostly using sources like infowars or breitbart because we simply don't have nonsense-media equivalents in my country. At least not yet.

So I guess, in a way the article isn't wrong, but all the nonsense is happening in an economy that's mostly better than before 2007.

Re: The Real Cost of the 2008 Financial Crisis

#20

Post by tokyodude »

nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

I haven't a clue about the whether the bailouts were important or not. What I feel like I would have liked is for the bailouts to happen AND the top 20 to 100 people from every financial institution to have gone to prison for at least 10 years. The president of Goldman Sachs, the president (or ex-President) of Lehman, etc... etc...

What it seems like from the outside is they screwed the world over and completely got away with it on our dime.

I don't know if my impression is right or what would convince me the fact that there seemed to be no repercussions for their actions is somehow the right thing. Just saying that's how it seems.

I don't believe for a second those people were irreplaceable as some have suggested. People are replaced at giant companies all the time and the companies keep on functioning. If we need one example Steve Jobs death certainly shows that. Could pick any other CEO that left or was shoved out or past away.

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