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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

#151

Post by rinze »

lovich wrote: post #121
bradleyjg wrote: post #105

Earlier quoted context omitted.

The incentives were screwy. Originators shouldn’t be able to offload all the risk of mortgages they underwrite. Incidentally that’s something that is still true today. Originators are still unloading 100% of the risk of mortgages they issue. Except these days it’s almost to the federal government instead of private securities holders. Dodd-Frank had a skin-in-the-game rule but it was effectively nullified in the rule…

That doesn't make it the "right thing". That makes it a "best for me" thing.

Isn't that what the current system is all about?

Re: The Real Cost of the 2008 Financial Crisis

#152

Post by misja111 »

mercurysmessage wrote: post #131
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…

"Mixed with that and the liberal social welfare system in Europe and PC culture which claimed any critical voice was facist, racist etc. That's why the antiestablishment came about not because of 2008 and wallstreet." Oh come on, this is ridiculous. Pointing out fascism and racism doesn't turn people fascist or racist. If you think there aren't some problems with racism and fascists I don't know what to tell you, bec…

>> Pointing out fascism and racism doesn't turn people fascist or racist.

First of all you're slightly modifying OP's comment. He was not talking about actual fascism or racism that was pointed out, but about the abuse of those terms to silence critics regardless if they were racists or not.

If this kind of qualification is used purely a means to silence critics and it is used repeatedly without proper justification then yes, it can actually turn some people who used to have more moderate views into actual racists or fascists.

Re: The Real Cost of the 2008 Financial Crisis

#153

Post by cirgue »

lotsofpulp wrote: post #77
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.

A global financial system should absolutely not be able to be taken down by fraudulent behavior like writing shitty loans. You can point all the fingers you want at them, but ultimately that's like saying that the intern who was able to push changes directly to production is the reason your site now shows nothing but cat pictures: they had a hand in it, but the fact that it happened points to much larger and more pernicious structural problems that, while everyone else might have been doing their job correctly, indicate that the system obviously didn't do the thing you need it to do.

Re: The Real Cost of the 2008 Financial Crisis

#154

Post by Retric »

cirgue wrote: post #153
lotsofpulp wrote: post #77

Earlier quoted context omitted.

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.

A global financial system should absolutely not be able to be taken down by fraudulent behavior like writing shitty loans. You can point all the fingers you want at them, but ultimately that's like saying that the intern who was able to push changes directly to production is the reason your site now shows nothing but cat pictures: they had a hand in it, but the fact that it happened points to much larger and more per…

Should and did are different things. Banks where approving loans because they where offloading the risks from bad loans by reselling the mortgage while pocketing fees.

That's a systematic change that obviously created huge conflicts of interest and thus had a huge negative impact on the financial sector. Really, it's not about bad actors it's about bad incentives creating bad actors and worse those incentives have not really gone away.

Re: The Real Cost of the 2008 Financial Crisis

#155

Post by dragonwriter »

imtringued wrote: post #22
nafey wrote: post #2

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

If there was no bailout then even people who were paying their mortgages on time would be affected. The bank needs money now so it will have to sell some of it's assets such as the house you're living in but 5 years later it is probably swimming in money.The government effectively acts as a very large insurance company by giving the bank a loan.

> If there was no bailout then even people who were paying their mortgages on time would be affected.

People who were paying their mortgages were effected by the general economic downturn, collapse of home values, and credit crunch, for some parts of which the bank bailouts were an ineffective remedy. (Bailing out troubled homeowners probably would have been more effective.)

> The bank needs money now so it will have to sell some of it's assets such as the house you're living in

Unless you are renting from a bank, it's not going to sell your house, because it doesn't own it; particularly, that's not how most mortgages work (there are some that are callable early where that would be a theoretical possibility, but they are almost never used for owner-occupied residential property.)

> The government effectively acts as a very large insurance company by giving the bank a loan.

No, it was acting as a very large bank. An insurance company would have recieved premiums in advance and not given loans, but just paid out money.

Re: The Real Cost of the 2008 Financial Crisis

#156

Post by wuliwong »

Gys wrote: post #111
netsharc wrote: post #66

Earlier quoted context omitted.

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.

Do you know research to backup what you believe?

Re: The Real Cost of the 2008 Financial Crisis

#157

Post by qaq »

lovich wrote: post #121
bradleyjg wrote: post #105

Earlier quoted context omitted.

The incentives were screwy. Originators shouldn’t be able to offload all the risk of mortgages they underwrite. Incidentally that’s something that is still true today. Originators are still unloading 100% of the risk of mortgages they issue. Except these days it’s almost to the federal government instead of private securities holders. Dodd-Frank had a skin-in-the-game rule but it was effectively nullified in the rule…

That doesn't make it the "right thing". That makes it a "best for me" thing.

Many countries tried to build systems around doing "the right thing" did not work out too well.

Re: The Real Cost of the 2008 Financial Crisis

#158

Post by cycrutchfield »

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…

>Mixed with that and the liberal social welfare system in Europe and PC culture which claimed any critical voice was facist, racist etc

Sorry, what does the social welfare system have to do with any of that stuff? You may have some valid points somewhere in there but it is completely undermined by that rambling screed of a last paragraph.

Re: The Real Cost of the 2008 Financial Crisis

#159

Post by maxsilver »

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…

> However, the anti establishment movement didn't rise because of the financial crisis

The financial crisis isn't the only cause, sure, but it's played a sizable part. (Arguably, it's still one of the leading causes of problems today).

Wealth recovered from the financial crisis, but people didn't. Many actual humans still haven't recovered yet. Some never will. There's close to a whole generation of people who were permanently set back by that crash, and the financial scars of that will carry with them until the day they die.

I don't disagree with the rest -- political corruption and globalization are major causes too. But it would be easier for people to be "ok" with that, if they weren't also directly struggling on the ground.

Re: The Real Cost of the 2008 Financial Crisis

#160

Post by kakarot »

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…

The "right thing" in a game theory sense?
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