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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

#211

Post by Brockenstein »

compcoffee wrote: post #59
andrepd wrote: post #41

Earlier quoted context omitted.

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…

> Then while we (working class) were dealing with the fallout On the ground, parts of the financial services and the "working class" were responsible. This story that it was simply a bunch of innocent people trying to fulfill the American Dream of owning a home is hogwash. People were knowingly buying property beyond what they could afford because prices would "always go up" and they could flip it to a greater fool.…

Being able to find shady people on one side of the fence doesn't absolve, in any way, the behavior of people on the other side of the fence.

Whataboutism is not a proper argument or defense.

Re: The Real Cost of the 2008 Financial Crisis

#212

Post by voodootrucker »

koolba wrote: post #35
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…

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.

The crime was massive fraud by the credit rating agencies:

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

Re: The Real Cost of the 2008 Financial Crisis

#213

Post by MrEldritch »

wonder_er wrote: post #185
rottyguy wrote: post #166

Earlier quoted context omitted.

I hope this doesn't come across as me trying to justify what happened but can anyone be explicitly about what laws were broken and who should have gone to jail? I know there was a bunch of outrage but want to cut through all that and get at exactly the issue.

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…

It's pretty obvious, actually. If you tell people you're doing it, and they still choose to give you money in exchange for the good or service you're actually performing, it cannot possibly be fraud.

Banks are very up-front about the fact that they're doing fractional reserve banking. You set up accounts in full knowledge of the fact that some of your deposit will be used for investments and that - if too many people try to withdraw the full value of their account at once - the bank may run out of reserves and you will be unable to withdraw.

Even an outright Ponzi scheme wouldn't be fraud in any moral sense if it specifically and openly said you would be investing in a Ponzi scheme and that any returns entirely depended on the extremely unlikely gamble that you would be among the first, rather than last, people to invest. (In fact, there are quite a lot of Ponzi schemes like this in cryptocurrency; at one point they made up a fairly significant proportion of all Ethereum transactions. They were treated - correctly, I think - as basically just a form of gambling for entertainment.)

And whatever your opinion of fractional reserve banking, even if you do think it's fraud you have to admit that it's clearly much less fraudulent than an outright Ponzi scheme.

Re: The Real Cost of the 2008 Financial Crisis

#214

Post by learc83 »

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…

We haven't guaranteed student loans since 2010 when the government started directly issuing student loans.

Today 91% of student loan disbursements are public loans that are funded directly from the treasury. The remaining new private loans aren't federally guaranteed (although we still make it difficult to discharge them in bankruptcy).

Re: The Real Cost of the 2008 Financial Crisis

#215

Post by hueving »

rando444 wrote: post #209
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.

Lehman went bankrupt. It seems they got precisely what they deserved.

If the only problem were the bad actors it wouldn't have been a systemic collapse.

Re: The Real Cost of the 2008 Financial Crisis

#216

Post by MarkSweep »

y-c-o-m-b wrote: post #204
andrepd wrote: post #41

Earlier quoted context omitted.

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 cas…

That article talks about charging bankers for LIBOR rigging (a European index) and fining Europeon banks for MBS fraud. The only US charges are for TARP fraud, which was after the crisis started.

The article does not show any US banker or US Bank was charged for MBS fraud done before the crisis.

Re: The Real Cost of the 2008 Financial Crisis

#217

Post by Brockenstein »

bko wrote: post #38
slivym wrote: post #34

Earlier quoted context omitted.

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…

> legislation should have been brought forward so that this couldn't happen legally in the future What couldn't happen legally?

A repeat of 2008. The idea being that there wasn't sufficient laws in protections in place to prevent this sort of thing from happening again, or that people most directly involved can't just skate.

Problem is though, even if laws were passed, once 2008 fades far enough into the past you'll get someone with a really bright idea, "Hey there's too much regulation stifling our economy. If we just got rid of all those pesky laws the free market would create a utopia!" Because every tom, dick and harry wants their chance to repeat history after the last tom, dick and harry have died.

Re: The Real Cost of the 2008 Financial Crisis

#218

Post by kenmicklas »

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…

This is an inevitable consequence of the commodification of housing.

Re: The Real Cost of the 2008 Financial Crisis

#219

Post by mdorazio »

wuliwong wrote: post #156
Gys wrote: post #111

Earlier quoted context omitted.

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?

There's actually a fair amount. This SA article summarizes some of it [1].

[1] https://www.scientificamerican.com/article/how-wealth-reduce...

Re: The Real Cost of the 2008 Financial Crisis

#220

Post by leetcrew »

annabellish wrote: post #69
compcoffee wrote: post #59

Earlier quoted context omitted.

> Then while we (working class) were dealing with the fallout On the ground, parts of the financial services and the "working class" were responsible. This story that it was simply a bunch of innocent people trying to fulfill the American Dream of owning a home is hogwash. People were knowingly buying property beyond what they could afford because prices would "always go up" and they could flip it to a greater fool.…

I really feel like this is just victim blaming. When financial advisors are telling people they can afford something because prices will always go up and will give them those loans, working out a payment plan they say that is affordable, how on _earth_ is it the fault of the people who believed financial experts on financial matters?

credentialed or not, if somebody told you you could afford something because "prices will always go up", would you believe them?
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