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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

#111

Post by Gys »

netsharc wrote: post #66
nicktelford wrote: post #39

While a generally fascinating piece that connects together the events in the American and European financial and political systems, it shouldn't be understated how much of an effect the refugee crisis is having on European politics, which can be attributed largely to the "Arab Spring"; itself largely a consequence of the 2008 financial crisis.

I can't help but believe that if the common folk of Europe of the last, say 10 years, was doing economically better, they would have been more generous with people fleeing warzones looking for help...

Doing economically well makes people more generous ? Do you know research to backup your believe ? Its not what I experience around me. The more we have, the more afraid we can loose it again, it seems to me.

Re: The Real Cost of the 2008 Financial Crisis

#112

Post by majewsky »

guelo wrote: post #97
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…

Everybody gets their propaganda from different places but I'm pretty sure the European political upheaval was caused by the Syrian refugee crisis not the welfare system.

Check again. The financial crisis started the rise of the right-wing parties. The refugee crisis then exacerbated it.

For instance, the German AfD was originally a euro-skeptic party lead by some economics professors. It later ousted those leaders and rebranded into a more plainly nationalist party when that became en vogue.

I don't know exactly about other European countries since I'm German, but from what I've seen, the downfall of the classical parties started way before 2015 in many of them as a result of frustration over the handling of the 2008 financial crisis.

Re: The Real Cost of the 2008 Financial Crisis

#113

Post by madengr »

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.

The terrorism is due to Islam. Unfortunately, dictators are needed to keep Islam in check, as it’s wholly incompatible with democracy.

Re: The Real Cost of the 2008 Financial Crisis

#114

Post by [deleted] »

compcoffee wrote: post #61
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…

> 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's this mentality which is going to cost you in the long run. People have been saying "the next one is around the corner" for 10 years, and missed the biggest bull run in history. If you bought prior to the Lehman collapse you'd still be up 130%. > Even if the gove…

[deleted]

Re: The Real Cost of the 2008 Financial Crisis

#115

Post by pas »

bitxbit wrote: post #68

I experienced the financial crisis first hand on Wall Street, a place fraught with people who pretended to know the ins and outs of risks. It was also a brutally honest place when it came to winners and losers. But that changed when Hank Paulson, then the Secretary of Treasury, knelt down on camera and begged Nancy Pelosi for what was effectively a blank check. Wall Street could not face reality when it was its turn…

Finiteness (scarcity) of resources is the essence of capitalism, and thus the effective counterparty risk is also finite. The banking sector converged on this state via the bad incentives of under-regulation.

The problem is that the counterparty was (and still is) the whole host economy, the country, the world, etc. And similarly the economy would have stopped without the bailout.

There is no bigger fish when it comes to global finance, geopolitical institutions are largely reactionary (eg. the Basel III accords are nice, but they are completely post-crisis, as there was simply no incentive to push for better/stronger capital requirements before the crisis). And each country's financial regulation/oversight agency is bound by the incentives of our greedy human optimization strategies. (That is politics with all of its problems: money in politics as in regulatory capture, lack of campaign finance reforms, etc.)

Re: The Real Cost of the 2008 Financial Crisis

#116

Post by josefresco »

dhimes wrote: post #95
josefresco wrote: post #83

Earlier quoted context omitted.

Confidence in the market , and preventing panic was the highest priority, which is why no bank executive was punished in any meaningful way. Frontline did a great piece on this, which I watched years ago. Not sure if this is it: https://www.pbs.org/wgbh/frontline/film/meltdown/ I believe it also explains why the election hacking of 2016 wasn't and isn't being addressed fully. If the US were to admit actual votes were…

Throwing the bad guys in jail would have spurred even more confidence in the market. The same guys are still in charge.

"The same guys are still in charge"

The problem is, there are no "other guys".

Re: The Real Cost of the 2008 Financial Crisis

#117

Post by sidstling »

freddie_mercury wrote: post #110
sidstling wrote: post #101

Earlier quoted context omitted.

Is Fidesz really a comparison point though, for anti-establishment parties? They held power in 1998 and they saw their biggest increase in votes in from 1998 to 2002. I mean, you definitely have a point, with them going from from 42.03% in 2006 to 52.73% in 2010, but they weren't born out of the crisis like their American counterparts, and while they started out anti-establishment, they kind of became the establishme…

Tooze never made they claim that all of the consequences didn't exist at all before the crisis. For instance, one of the consequences was the rehabilitation of Yanukovych in Ukraine. Obviously he existed, with quite a lot of power, before. But the crisis destroyed the credibility of his rivals leaving him as "last man standing". And that -- along with the clear abandonment of Ukraine by the EU (or at least the ECB) d…

I guess the outtake is that it's better to read the book than the article about the book. :)

Re: The Real Cost of the 2008 Financial Crisis

#118

Post by asta42 »

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…

And not only is there absence of criminal responsibility, but the regulation that made banking stable for 100 years and was taken away in 90s (like the Glass-Steagall Act) cannot be put back in place. Seems like people that caused the GFC are the ones in charge of 'fixing' it.

Re: The Real Cost of the 2008 Financial Crisis

#119

Post by pas »

freddie_mercury wrote: post #88
sidstling wrote: post #19

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…

Tooze makes the case that Fidesz's victory in Hungary in 2010 was a direct result of the terms of the IMF bailout. That the supremacy of the Law & Justice party in Poland was a result of the crisis. That the fall of Tymoshenko and Yushchenko -- tarred with the pains of the crisi -- in Ukraine led to rehabilitation of Yanukovych and the subsequent Russian invasion of Crimea. In Greece the populists didn't take power i…

Fidesz' victory was guaranteed in 2010. With or without the bailout. The preceding government was full of typical scandals of corruption and incompetence, and they were seen as the old guard from the Communist/Socialist era. People hated them, and it was surprising for a lot of people that Fidesz lost in 2006.

Without the bailout the economy would have been much worse, and Fidesz could have used some kind of other external enemy instead of the IMF.

Re: The Real Cost of the 2008 Financial Crisis

#120

Post by majewsky »

hef19898 wrote: post #71
thdxr wrote: post #56

Earlier quoted context omitted.

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 pow…

> 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.

The AfD is still below 20% nationwide. And there's a glimmer of hope: Opinion polls suggest that the majority of Germans are increasingly frustrated that refugees and immigration politics are about the only topic of national discourse, even though we have a ton of issues that need addressing (affordable housing, shortage of nurses, sustainable pensions, crumbling infrastructure, the energy revolution, etc.).

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