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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

#71

Post by hef19898 »

thdxr wrote: post #56
m_st wrote: post #54

Earlier quoted context omitted.

Could you elaborate the link of the Arab Spring to the 2008 financial crisis? I can't think of a link and neither does the English Wikipedia article.

Probably referring to the narrative of rising commodity costs driving revolt. Not a very substantiated view as commodity costs in the area have been worse in the not to distant past

I think that is always realitve. Sure, in absolute numbers that might be true (I didn't check), in relative terms not so much if I remember well. At least in some countries affected by the Arab Spring people started to demonstrate against increasing bread Prices.

That and general uncertainity combined did not cause the revolts but definetly a factor. What thfollowed was a bad handling of the crisis by the Western powers. And with all the convenient dictators, viable road-blocks for everyone trying to get to Europe, in North Africa gone already existing refugees had open venues to Europe. Add to that all the People trying to get out of the civil wars that followed after the revolts in certain countries and you can explain a big part of the so called refugee crisis.

Unfortunately this crisis, despite being basically over in Terms of numbers, is playing an ever increasing roll in European politics. And I personally don't like the results a single bit, not every country is realizing what voting for righ-wing populists means like the French did. Germany certainlly isn't.

Re: The Real Cost of the 2008 Financial Crisis

#72

Post by m_st »

nicktelford wrote: post #62
m_st wrote: post #54

Earlier quoted context omitted.

Could you elaborate the link of the Arab Spring to the 2008 financial crisis? I can't think of a link and neither does the English Wikipedia article.

Here's a piece on the wider subject: https://fpif.org/the_economics_of_the_arab_spring/ It doesn't directly make the connection, but it does allude to it: > The recent global financial, food, and energy crises accentuated the failure of economic liberalization to adequately spread the region’s wealth. Significant declines in the tourism, financial, and real estate sectors due to the financial crisis crippled the few…

As corv just wrote, the decline in tourism is a result of the Arab Sprint and the instability, let alone wars, it produced. Not the other way around.

The linked article from 2011 is great reading in hindsight.

> This might be the last and best opportunity for the West to facilitate the creation of another “island of peace” — a sympathetic democratic community in the much-troubled Arab world.

If there ever was such a plan, it failed miserably.

Anyway I'm no expert on the subject, just a witness of the time and I don't remember anything that links these two.

Re: The Real Cost of the 2008 Financial Crisis

#73

Post by droidist2 »

teekert wrote: post #53
tonyedgecombe wrote: post #29

Earlier quoted context omitted.

The trouble with revolutions is you end up with a new set of leaders, who may well be worse than what you have now.

It served the US quite well the last time they did it around 1776.

We got pretty lucky though, George Washington and others were exceptional people.

Re: The Real Cost of the 2008 Financial Crisis

#74

Post by pas »

andrepd wrote: post #41
nafey wrote: post #2

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

The bailouts are controversial, but it's the bailouts AND the complete absence of criminal responsibility that's inexcusable. It is well known and documented that the financial crisis was no accident; everybody who headed the financial services industry to the state it was in did so knowingly , knowing full well the inevitable consequences, but not giving a damn because the arrangement let them to become handsomely w…

Could you dig up a few of those CDO washing theses?

The Inside Job documentary showcased a few economists that had conflict of interest, but haven't mentioned anything concrete about CDOs.

> Much to the contrary, they went on enjoying the same mind-boggling luxurious elite lifestyle they always did.

The culprits had money and they will have money. They own the banks, and of course they opposed regulation.

But they are not the same as those who know what's going on.

"It is well known and documented that the financial crisis was no accident; everybody who headed the financial services industry to the state it was in did so knowingly, knowing full well the inevitable consequences, but not giving a damn because the arrangement let them to become handsomely wealthy, beyond our imagination."

This is incorrect. Some knew and bet on it. (See the Big Short for example.) Some knew and exploited it. (See Goldman Sachs selling shit to clients, for which it paid 550M USD, and the guy got charged with fraud, etc.)

It was an emergent phenomenon. It's not an accident as a car accident, where you look away for a sec and you rear end someone because someone stepped before the car before you, but it's very much not a conspiracy.

It was a systemic breakdown, fueled by the very much gutted oversight and misaligned incentives created by money in politics. And that's something very hard to escape.

The lack of jail-time verdicts is not surprising, after all the laws are very much set by those who have the most money, and they usually don't like to go to jail if caught.

So we're left with DPAs ( https://www.penningtons.co.uk/news-publications/latest-news/... ) and they are pretty effective from time to time ( https://www.osler.com/en/blogs/risk/december-2017/the-long-a... ) but it needs investigators, staffing, and cooperating legislators.

Banks (and the financial industry) listen to incentives. Jail time is meaningless if all you can get is some middle manager. For that the reporting and compliance regulations help - as higher ups have to sign off on certain stuff, so they can't deny knowing this or that - but this means that really shady things will turn into compliance issues, and into fines. (Which is a lot better than remaining in the dark without any consequences, as it was before compliance regulations.)

> It's feudalism with extra steps.

Agreed.

Re: The Real Cost of the 2008 Financial Crisis

#75

Post by hef19898 »

corv wrote: post #67
nicktelford wrote: post #62

Earlier quoted context omitted.

Here's a piece on the wider subject: https://fpif.org/the_economics_of_the_arab_spring/ It doesn't directly make the connection, but it does allude to it: > The recent global financial, food, and energy crises accentuated the failure of economic liberalization to adequately spread the region’s wealth. Significant declines in the tourism, financial, and real estate sectors due to the financial crisis crippled the few…

The decline in tourism was a direct result of destabilizing the Middle East and North Africa due to wars and the resulting increase of terrorism.

Kind of a vicious cycle. First, Europeans travelled less, then these countries became "unsafe", people travelled even less to these countries aggrevating the existing Problems making these countries even unsafer. Whatever was there first, well I can't tell. Not that in matters as it doesn't change the result.

Re: The Real Cost of the 2008 Financial Crisis

#76

Post by seanmcdirmid »

chiefalchemist wrote: post #47
seanmcdirmid wrote: post #27

Earlier quoted context omitted.

Sending people to prison involves prosecuting people for breaking laws somehow, which isn’t easy. You can’t just send them to jail on a whim. Even if what they did was wrong, unless there was a law against it the government didn’t really have many options here. They could make up some laws after the fact to prevent future abuse, but cannot make them retroactive.

I think it's fairly safe to say, the conspiracy that created the collapse amounted to financial terrorism , and then (to fix things) extortion. We have the laws. What we lack if the will and the power to apply them. Economist had calculated a significant number of deaths (worldwide) resulted from the 2007 / 2008 crisis. I believe the number was approx 30,000 (but it may be higher). Editorial: If we don't have laws fo…

Financial terrorism isn’t even defined as a crime. It would have to racketeering or something, not easy things to prove even in gang/mob cases.

Legislative neglect also isn’t a crime that lawmakers can be prosecuted under. You can, however, not vote for them during their reelection campaign. You can also vote for lawmakers that would bother to push for such laws.

For better or worse, western countries are generally strong rule of law ones. If this was a country like China that practiced rule by law instead, I’m sure they could find something to throw them in jail on, but it isn’t.

Re: The Real Cost of the 2008 Financial Crisis

#77

Post by lotsofpulp »

ThomPete wrote: post #70

The best explanation I have heard of the financial crisis was in the book "The End of Alchemy: Money, Banking and the Future of the Global Economy" by the former head of Bank of England. It makes the convincing case that there is no real single place to point fingers and that the crash was the logical consequence of people all doing the "right thing" I can highly recommend it as it also takes a historical view of mon…

I can point to all the underwriters that approved loans with no income verification, fraudulent paperwork, officially stating they did checks for a physically impossible number of mortgages.

Re: The Real Cost of the 2008 Financial Crisis

#78

Post by maxxxxx »

lucozade wrote: post #32
tokyodude wrote: post #20

Earlier quoted context omitted.

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…

Is it their failure you believe they should be jailed for or something else? Do you believe that the CEO of any company that fails should be jailed or just banks? There was undoubtedly plenty of hubris, greed and incompetence to go round. I also believe that some of what occurred should, in hindsight, have been illegal. But having some sort of sacrifice to appease the gods is a little outdated. Oh, and yes, all the C…

"Do you believe that the CEO of any company that fails should be jailed or just banks?"

At a minimum they should have lost all their money and not walk away with hundreds of millions of dollars.

Re: The Real Cost of the 2008 Financial Crisis

#79

Post by koolba »

crispyambulance wrote: post #64
koolba wrote: post #35

Earlier quoted context omitted.

What crime did each of those executives commit? That’s what needs to be answered. Otherwise your comment reads like a mob chanting “ We want blood! ” Being greedy is not a crime. Taking advantage of lax regulations is not a crime. Being bailed out with tax dollars for risks that paid you off privately if they won is not a crime.

I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it. But there are many behaviors which aren't "crimes" but which are morally repulsive. The danger of not reacting, one way or another, to such inequities is that people lose faith in the system. Already, the ele…

> I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it.

> But there are many behaviors which aren't "crimes" but which are morally repulsive.

I don't agree with that concept. I don't think it's possible to legislate morality and the entire concept is downright scary. What's even more scary though is metering out justice based on perceived morality. Justice needs to be impartial, otherwise you're literally putting people in jail because your dislike them.

> The danger of not reacting, one way or another, to such inequities is that people lose faith in the system. Already, the election of Trump and rise of fascist sentiments everywhere are like a giant "fuck you" to politics as usual.

On the contrary, I see the election of Trump as a demonstration of people's faith in the system. It worked as intended and they got what they (electorally speaking) asked for.

> It can get much worse. At some point, as one billionaire said, "the pitchforks are coming". I don't think we'll be able to avoid it the way things are going.

I really doubt that. I've got significantly more faith in our shared humanity and the rule of law. I do find it disturbing how a lot of the politics on the left has shifted from policy disagreement to directly stoking violence. But it'll eventually pass.

Unemployment and immigration policy is at a tipping point where the only choice for employers is going to be rising wages. The left is going to have a hard time arguing that's a bad thing.

Re: The Real Cost of the 2008 Financial Crisis

#80

Post by seanmcdirmid »

slivym wrote: post #34
seanmcdirmid wrote: post #27

Earlier quoted context omitted.

Sending people to prison involves prosecuting people for breaking laws somehow, which isn’t easy. You can’t just send them to jail on a whim. Even if what they did was wrong, unless there was a law against it the government didn’t really have many options here. They could make up some laws after the fact to prevent future abuse, but cannot make them retroactive.

Even if you subscribe to the idea that there weren't correct laws in place to ensure that those who should have been criminally responsible, you then have to contend with the the corollary. Which is that instead of prosecuting those responsible, legislation should have been brought forward so that this couldn't happen legally in the future. That didn't even begin to happen- and it's not difficult to see how that has…

I’m all for that, and some new civil laws were introduced. Trump is busy trying to undo them ATM, but there we go. The problem criminal laws, however, is that they should be really well defined without being overly restricting. Being greedy can’t be made a crime; it has to be fraud, racketeering, or something obvious.
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