Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Real Cost of the 2008 Financial Crisis

newyorker.com

Post reply on HN
Print view View original

371–380 of 404 posts

Re: The Real Cost of the 2008 Financial Crisis

#371

Post by pcwalton »

nostrademons wrote: post #144
dhimes wrote: post #90

Earlier quoted context omitted.

Without reading the book or even TFA, I'll comment on the concept of everybody doing the "right thing" leading to bad outcomes. I have a hunch that this is a pretty universal law, and the only way to mitigate it is through regulations that ban some of those "right things." I think that honest, moral players welcome good regulations because it keeps them from having to go down a slippery slope.

The other way to mitigate it is to incentivize some of the players in the system to ferret out and report wrongdoing on the part of other players. Think of short-sellers in a market: they can profit handsomely by identifying fraud or irrational exuberance, taking a position opposite it, and then loudly reporting the fraud so everyone knows about it. The legal system is also setup like this, as is the U.S. government:…

> there's no one entity that regulates the U.S. government

Well, in theory the voters do.

Re: The Real Cost of the 2008 Financial Crisis

#372

Post by heisenbergs »

craftyguy wrote: post #270
pitaj wrote: post #268

Earlier quoted context omitted.

Don't forget another thing the government did: previous bailouts. When large banks were told they were "too big to fail", they heard "your risks will be subsidized by taxpayers", so of course they took on more risk. We should have let the banks fail, if they really were going to. Another thing: monetary policy causing business cycles, or making them much worse. The recent money-printing by the fed is super scary to m…

> "too big to fail" I guess we're doomed to repeat history, since this was upheld again in 2008.

Not entirely true. We let one of the massive banks fail. Lehman brothers is no more...

Re: The Real Cost of the 2008 Financial Crisis

#373

Post by wuliwong »

mdorazio wrote: post #219
wuliwong wrote: post #156

Earlier quoted context omitted.

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...

My comment was was rhetorical. The purpose was to point out that the OP was asking for research to back up a claim but not offering anything but their anecdotal experience for the contrary view.

Re: The Real Cost of the 2008 Financial Crisis

#374

Post by BookmarkSaver »

craftyguy wrote: post #270
pitaj wrote: post #268

Earlier quoted context omitted.

Don't forget another thing the government did: previous bailouts. When large banks were told they were "too big to fail", they heard "your risks will be subsidized by taxpayers", so of course they took on more risk. We should have let the banks fail, if they really were going to. Another thing: monetary policy causing business cycles, or making them much worse. The recent money-printing by the fed is super scary to m…

> "too big to fail" I guess we're doomed to repeat history, since this was upheld again in 2008.

There was an attempt to impose regulation on banks that qualify for this designation, with some (limited) success. Republicans have mostly dismantled it by this point though.

Re: The Real Cost of the 2008 Financial Crisis

#375

Post by learc83 »

slg wrote: post #240
learc83 wrote: post #214

Earlier quoted context omitted.

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).

Undergrad students are limited to $31k or $57.5k in federal loans (including only $23k of subsidized loans) depending on whether they are a dependent or not. [1] That is still not enough for many students to attend their college of choice. I will admit I chose the wrong word in my prior comment when I said guaranteed since that has a very specific meaning in this context. I was using that phrase more colloquially bec…

It's enough that only a small percentage of students are taking out private loans. New private loans are a very small part of the problem.

I'm not really concerned with whether or not students are able to attend their "college of choice."

If government loans provide enough to go to a state school, or even enough to live at home or off campus and go to a community college for the first 2 years, I'm fine with that.

Also you'll notice that I mentioned bankruptcy in my comment.

Re: The Real Cost of the 2008 Financial Crisis

#376

Post by nostrademons »

pcwalton wrote: post #371
nostrademons wrote: post #144

Earlier quoted context omitted.

The other way to mitigate it is to incentivize some of the players in the system to ferret out and report wrongdoing on the part of other players. Think of short-sellers in a market: they can profit handsomely by identifying fraud or irrational exuberance, taking a position opposite it, and then loudly reporting the fraud so everyone knows about it. The legal system is also setup like this, as is the U.S. government:…

> there's no one entity that regulates the U.S. government Well, in theory the voters do.

Hence checks & balances. It's a different sort of regulation than the grandparent was talking about, though - voters don't get to directly tell the government "You can do this and this, but you can't do this", they just get to vote the people who make up the government out if they start doing unpopular stuff.

Re: The Real Cost of the 2008 Financial Crisis

#377

Post by danharaj »

seppin wrote: post #362
danharaj wrote: post #200

Earlier quoted context omitted.

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

That's like saying we shouldn't pay attention to the lessons of the great depression because it was in the 1930s.

You shouldn't take advice on building a stable financial system from 1920s economists either.

Take lessons from their failures? Yes. Not what the GP was saying.

Re: The Real Cost of the 2008 Financial Crisis

#378

Post by tootie »

DesiLurker wrote: post #337
tootie wrote: post #304

Earlier quoted context omitted.

In the long run, we're all dead.

I hear that tongue in cheek response many times but that's not true in its spirit, we will be survived by our next generation & they by theirs. Unless you are talking about ultimate heat death of universe. but then if you truly are that fatalistic then why bother commenting?

Idk what Keynes really meant honestly, but I like to think it means we can only plan so far ahead. Every action we take is to push Armageddon back another 5 years. Having disaster be just over the horizon is our constant state of being.

Re: The Real Cost of the 2008 Financial Crisis

#379

Post by debt »

elhudy wrote: post #348
debt wrote: post #203

Earlier quoted context omitted.

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. T…

>But the actual problem was that those loans were being rated AAA when repackaged into a CDO. I was under the impression that the CDO as a whole was being rated well - and the junk loans still maintained their rating when they were packaged. In other words, both parties were aware that the highly rated CDO contained bad loans. Is this not the case?

The junk stuff was repackaged many times over and sold as separate financial products. That was where the whole rocket scientist quant bs came in as it required made-up math to make it work. So it was re-rated from crap to AAA. And then AIG started offering insurance against those products and things really started heating up.

So it took taking some good bonds and some bad bonds and throwing them into the same CDO to get a good rating.

Post reply on HN