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The Real Cost of the 2008 Financial Crisis

newyorker.com

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Re: The Real Cost of the 2008 Financial Crisis

#201

Post by Avshalom »

ptero wrote: post #173

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 g…

the increase in mortgage originations was shared across the whole distribution of borrowers, and that middle- and high-income borrowers made up the majority of originations even at the peak of the boom. Compared to prior years, middle- and high-income borrowers (not the poor), as well as those with medium and high credit scores, made up a much larger share of delinquencies in the crisis relative to earlier years.

http://www.nber.org/papers/w20848

Re: The Real Cost of the 2008 Financial Crisis

#202

Post by xamuel »

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...

I've heard people are doing pretty well in Silicon Valley, maybe Silicon Valley should take in a bunch of refugees?

Re: The Real Cost of the 2008 Financial Crisis

#203

Post by debt »

ptero wrote: post #173

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 g…

Nah you’re throwing the baby out with the bath water.

Poor people can’t afford homes and in many cases don’t have proper identification even to buy a home. That’s where the whole NINJA subprime thing came in.

But the actual problem was that those loans were being rated AAA when repackaged into a CDO.

From that point forward is where the problem began. Tha is, if they were properly rated ‘08 would not have happened.

The swaps and derivatives that nearly brought down AIG then took that bug in the system(the bad improperly rated mortgages repacackaged is high quality shit) and nearly collapsed the world economy.

There’s nothing wrong with helping poor people buy homes but don’t call those mortgages AAA otherwise you’re basically operating under false information from there on out and should expect unpredictable results.

Re: The Real Cost of the 2008 Financial Crisis

#204

Post by y-c-o-m-b »

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…

> not ONE of those criminals (with the blood of millions across the globe on their hands, make no mistake) was prosecuted or in any way made to answer for their actions

I found this yesterday and it shows there were many convictions in Europe and North America: https://www.channel4.com/news/factcheck/factcheck-how-many-b...

Here's a direct quote from that page for the U.S.: "The US: Hundreds of criminal and civil cases brought against people and banks, with over 200 leading to prison sentences"

Do you have alternative evidence that supports none of them were prosecuted?

Re: The Real Cost of the 2008 Financial Crisis

#205

Post by TimJYoung »

ghostly_s wrote: post #186
ptero wrote: post #173

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 g…

What was the vehicle by which US gov't 'required raising affordability of homes'?

Yeah, I want to know that, also. My understanding is that anything explicitly backed by the government (Fannie Mae) was your standard 30-year mortgage with the normal requirements. The interest-only loans, variable-rate loans, etc. were all originated through the brokers like Countrywide and packaged/sold as securities.

Re: The Real Cost of the 2008 Financial Crisis

#206

Post by pjmorris »

danharaj wrote: post #200
pjmorris wrote: post #196

Earlier quoted context omitted.

If we're going to be capitalistic, apply Bagehot's dictum (from 1873) "in times of financial crisis central banks should lend freely to solvent depository institutions, yet only against sound collateral and at interest rates high enough to dissuade those borrowers that are not genuinely in need" [0] I feel like, jail or no, the financial executives who got us into the mess - and who haven't really gotten us out yet -…

We shouldn't get any banking advice from anyone from the 1800's.

You should weigh any advice on its merits.

Re: The Real Cost of the 2008 Financial Crisis

#207

Post by Brockenstein »

slg wrote: post #199
wonder_er wrote: post #185

Earlier quoted context omitted.

There was a time when fractional reserve banking [0] was considered simple fraud (it wasn't called "fractional reserve banking" at the time, it was "bankers using for personal gain assets that were owned by another and stored for safe keeping at their bank.") So, as banking gets complex, the laws get complex. Once we decide fraudulent (fractional reserve) banking is legal, most of the rest can be whitewashed with eno…

By that logic anyone who gave out a loan should be thrown in jail. After all there was a time when charging interest of any kind was considered usury and was illegal. Once we decided that usury banking is legal, most of the rest can be whitewashed with enough handwaving.

Well that's an argument between the letter of the law and the spirit of the law it sounds like.

Re: The Real Cost of the 2008 Financial Crisis

#208

Post by voodootrucker »

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…

No new laws are needed. The credit ratings agencies fraudulently mislabeled loans. This was criminal behavior and was not prosecuted.

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

Re: The Real Cost of the 2008 Financial Crisis

#209

Post by rando444 »

ptero wrote: post #173

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 g…

What about the people that didn't have good intentions?

How do you feel about Lehman's Repo 105 maneuver where they intentionally used a Tobashi scheme to hide their losses from their investors?

The state of New York went after Ernst and Young on fraud charges for helping facilitate the scam and E&Y ended up paying a $10mil fine.

Is this justice? It doesn't feel like it.

Re: The Real Cost of the 2008 Financial Crisis

#210

Post by paulddraper »

slg wrote: post #193
ptero wrote: post #173

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 g…

You see a similar thing with student loans. You can't make any reasonable system work when you set the requirements to be that everyone should be able to afford to go to college and free market lenders are the ones responsible for making that happen. I imagine that the first condition is one that most people agree one. So instead of making college cheaper for those people who can't afford it, we decided that we need…

What is the easier, little-bit socialist solution to home ownership?
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