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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

#171

Post by notfromhere »

pas wrote: post #106
pjc50 wrote: post #31

Earlier quoted context omitted.

Actual bankruptcy could have resulted in a chain of collapses that might have left large areas of the Western economy without functional banking for weeks or even months. But the bailout should have had a lot more "never again" in it, rather than "how can we get back to the old normal of bubble finance as quickly as possible".

> a lot more "never again" What do you have in mind? Could you explain this?

We didn't break up banks, nor did we reform credit rating agencies much.

We basically gave them a big sack of cash and asked them not to do it again. No one went to prison and GS went back to paying out bonuses.

Re: The Real Cost of the 2008 Financial Crisis

#172

Post by and0 »

pc86 wrote: post #126
Gys wrote: post #108

Earlier quoted context omitted.

> the crash was the logical consequence of people all doing the "right thing" I did not read the book, but I highly suspect 'right thing' is misused in this context and that the writer actually means 'within the boundaries of the law'. To me that is a very different thing. Very interesting to see how a former head of Bank of England thinks those 'things' are the same. It also makes me pessimistic about the future of…

Perhaps rather than assuming you know what the author meant you should actually read the book.

Sounds like typical "rational actor" arguments. Everyone was trying to make the most money possible using the tools and information available, and if your political / moral philosophy can't distinguish that from "morally good" then all you can do is shrug. Surprise! The guy who heads a massive bank doesn't think all the crazy things banks do to make money are bad.

Re: The Real Cost of the 2008 Financial Crisis

#173

Post by ptero »

Just a personal observation / data point as a lot of folks everywhere are saying "put bankers in prison" any time they recall 2008 crisis. This is from the US, no idea how things played out in other countries:

Government shares a significant portion of the blame for this crisis. It required raising affordability of homes (i.e., loans) for lower income families. They might as well legislate away entropy, friction or gravity. Banks cannot lower home selling prices, so instead they had to become "creative" with loans, for example lend at 0% for the first 5 years. And lend more than today's purchase price (creating strong demand for inflated assessments) so some of that extra cash can be used to pay mortgage for a few years. Five years later the music stops unless you can refinance again and kick that can down the road.

This insane game of musical chairs, where banks generate toxic loans, securitize them and throw them at someone else, had to end in tears. Everyone understood this. But faced with the regulation to raise affordability, what exactly should the lenders have done? They HAD to use at least X% of new loans to low income families.

Sadly, this is yet another case of good intentions (helping lower income families) implemented as a clumsy regulation that ends up hurting people you wanted to help. My 2c.

Re: The Real Cost of the 2008 Financial Crisis

#174

Post by and0 »

rwmj wrote: post #142
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…

Unlike the other replies, I did read this book based on an HN recommendation, and it's pretty terrible. If you know anything at all about economics you'll find it very dull, like a secondary-school level introduction to the subject. I found his analysis was either simplistic and obvious, or in a few places I recall it being obviously wrong. Also (and I didn't know this while reading the book) the author is a nutty Br…

No surprises there.

Re: The Real Cost of the 2008 Financial Crisis

#175

Post by sokoloff »

koolba wrote: post #79
crispyambulance wrote: post #64

Earlier quoted context omitted.

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 s…

> The left is going to have a hard time arguing [rising wages are] a bad thing.

Why would the left argue that rising wages is a bad thing anyway? It seems that a significant subset of the left has been beating the “we need higher minimum wages and more wage growth overall" drum for a while.

Is it just because they strictly prefer a governmental rather than a natural market solution? Or something else?

Re: The Real Cost of the 2008 Financial Crisis

#176

Post by EADGBE »

bitxbit wrote: post #145
shshhdhs wrote: post #136

Earlier quoted context omitted.

I don’t recall him kneeling. I think the commentator was exaggerating

No, I am not exaggerating. https://www.nytimes.com/2008/09/26/business/26bailout.html [“I didn’t know I was going to be the referee for an internal G.O.P. ideological civil war,” Mr. Frank said, according to The A.P.Thursday, in the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by…

> There are some pictures of it as well but appears most of them have been taken down over the years.

Convenient

Re: The Real Cost of the 2008 Financial Crisis

#177

Post by ionised »

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…

Manslaughter as a result of gross criminal negligence.

Re: The Real Cost of the 2008 Financial Crisis

#178

Post by ionised »

koolba wrote: post #79
crispyambulance wrote: post #64

Earlier quoted context omitted.

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 s…

> I don't think it's possible to legislate morality and the entire concept is downright scary.

What are laws if they are not an attempt to codify and enforce a group morality?

Re: The Real Cost of the 2008 Financial Crisis

#179

Post by EADGBE »

RickJWagner wrote: post #87

As long as there have been economies there have been periodic upheavals. I don't think that can be changed. What can be changed is how the next meltdown/booming economy will affect our own personal finances. It's a life skill, one that should be given more attention in school.

> What can be changed is how the next meltdown/booming economy will affect our own personal finances. It's a life skill, one that should be given more attention in school.

It's sad that this is the first mention of this in the thread.

Ever since graduating high school and finding myself in college for a useless degree, during the Great Recession and trying to come away from it intact; I've been a big proponent of financial literacy K-12, living within your means, having a "plan" and not being afraid to wait for it (read: college isn't for everyone, and alternatives exist; also taking a year or two before you start is sometimes a great idea), and knowing what a budget is and how to use it.

Overspending and under-making will always lead to catastrophes when the well runs dry.

Trusting the parents to do this on their own time can't seriously be more important that some of the superfluous credits taken before graduating high school.

Re: The Real Cost of the 2008 Financial Crisis

#180

Post by r_smart »

josefresco wrote: post #149
pc86 wrote: post #140

Earlier quoted context omitted.

When people who know what they're talking about talk about "election hacking," they know that no actual hacking took place. They were Facebook ads. That's it.

"They were Facebook ads. That's it." If you think Russian "election interference" (does that term make you feel better?) was limited to "Facebook ads" you either haven't been paying attention, or are just trolling. I'm going to guess the latter.

I've been checked out for a bit. Did they finally come up with concrete evidence? Are you saying they actually altered vote tallies?
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