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

Can We Survive the Next Financial Crisis?

bloomberg.com

Post reply on HN
Print view View original

101–110 of 304 posts

Re: Can We Survive the Next Financial Crisis?

#101

Post by travisoneill1 »

izacus wrote: post #81
travisoneill1 wrote: post #49

Earlier quoted context omitted.

The data doesn't support your conclusion. Almost nobody keeps all their assets in a savings account. What you should be looking at is net worth. https://dqydj.com/net-worth-by-age-calculator-united-states/

What exactly are they keeping their assets in? A house that they can't sell and make that worth liquid? A retirement account they cannot withdraw without huge costs and compromising old age? Where else?

1) Credit card availability

2) Home equity line

3) Retirement account

It's not painless. Losing money never is. But you said "wipe out" not "will pay fees and lose 10% of net worth."

Re: Can We Survive the Next Financial Crisis?

#102

Post by topspin »

briatx wrote: post #38

Yes. The lesson of 2008-9 is that TBTF and bailouts will be applied in case of any financial crisis. Not much has been done to rein in moral hazard and so institutions will continue to offload risk to the public when they can. This works as long as the Treasury and Fed can absorb the shock and will create near term stability, at the potential cost of a currency crisis if the shock is too big to be absorbed.

This is dead on correct; the precedent has been set and has no significant opposition; almost no one in power today would deviate.

Questions I ponder;

Is the US in the coffin corner where then next recession inevitably induces the next financial crisis or can we still have a conventional recession that doesn't strip a bunch of gears and lead to QE funded deficits and bailouts? Is the traditional recession/recovery cycle politically feasible any longer or will the great and the good open up the QE spigot at the first sign of trouble?

The answers would help to predict a lower bound on the eventual currency collapse.

Re: Can We Survive the Next Financial Crisis?

#103

Post by metalliqaz »

HashThis wrote: post #5

The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. Working American's had to financially absorb the 2008 Mortgage crisis. 2008 was a direct robbery because Mortgage Orginators KNEW the mortgages would blow up, because their own Underwriting equations said they would. That is why they did fraud on the customer's income levels or worked with politicians to al…

The working class will not only tolerate it, they will cheer being robbed. Their anger will be directed towards China, Europe, Mexico, even Canada.

Re: Can We Survive the Next Financial Crisis?

#104

Post by crazynick4 »

y-c-o-m-b wrote: post #21

The definition of "we" and "survive" needs to be established clearly first and I don't think all those fancy graphs and market trends will define them. There's a lot of people that ended up bankrupt, in a bottomless depression, turned to drug abuse or committed suicide because of the last crisis. Wages are still relatively low while prices continue to climb. Many people are working 2-3 jobs and having trouble affordi…

If you have an extreme health care incident, why pay the bill? Sure it would hurt your credit score not to, but if it's between that and tens/hundreds of thousands, I think it is worth it to take the hit for 7 years. I know health care workers who give this 'unofficial' advice to their patients and I've had friends and family members do the same thing - people who had no health insurance but still got health care and paid nothing for it.

Re: Can We Survive the Next Financial Crisis?

#105

Post by y-c-o-m-b »

travisoneill1 wrote: post #49
y-c-o-m-b wrote: post #21

The definition of "we" and "survive" needs to be established clearly first and I don't think all those fancy graphs and market trends will define them. There's a lot of people that ended up bankrupt, in a bottomless depression, turned to drug abuse or committed suicide because of the last crisis. Wages are still relatively low while prices continue to climb. Many people are working 2-3 jobs and having trouble affordi…

The data doesn't support your conclusion. Almost nobody keeps all their assets in a savings account. What you should be looking at is net worth. https://dqydj.com/net-worth-by-age-calculator-united-states/

I disagree. Net worth is an unstable data point and I always view it as a status symbol more than a realistic means of acquiring cash.

For example in a market where nobody is willing (or able) to buy your home, your net worth can be ... well, worthless. In a financial crisis it's even worse.

Your "on-demand" cash is what's in your checking or savings account. There's no guarantee you'll be able to tap into your home, car, 401K, etc. and even if you could, in the long term it may be more damaging to you. For instance in a city like Seattle if you sell your home, you could be looking at paying double or triple your previous mortgage in rent, so you're ultimately putting yourself in a worse position.

Re: Can We Survive the Next Financial Crisis?

#106

Post by noobermin »

y-c-o-m-b wrote: post #21

The definition of "we" and "survive" needs to be established clearly first and I don't think all those fancy graphs and market trends will define them. There's a lot of people that ended up bankrupt, in a bottomless depression, turned to drug abuse or committed suicide because of the last crisis. Wages are still relatively low while prices continue to climb. Many people are working 2-3 jobs and having trouble affordi…

The distance between the average and the median is staggering. This should be why you always should be suspicious when someone uses an average as a good statistic for wealth or income in the US.

Re: Can We Survive the Next Financial Crisis?

#107

Post by kolbe »

oihoaihsfoiahsf wrote: post #68
kolbe wrote: post #46

Earlier quoted context omitted.

What percentage of 'the economy' do you think is represented by publicly traded corporations?

According to this article [1], public firms account for about 80% of the pre-tax profit in the private sector. That's probably enough, given that public and private company returns are probably at least somewhat correlated. [1]: https://www.forbes.com/sites/sageworks/2012/09/21/private-co...

The P in GDP does not stand for Profit. An economy consists of a lot more than private sector profits.

Re: Can We Survive the Next Financial Crisis?

#108

Post by teddyh »

HashThis wrote: post #5

The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. Working American's had to financially absorb the 2008 Mortgage crisis. 2008 was a direct robbery because Mortgage Orginators KNEW the mortgages would blow up, because their own Underwriting equations said they would. That is why they did fraud on the customer's income levels or worked with politicians to al…

“won't tolerate”? How, exactly?

Re: Can We Survive the Next Financial Crisis?

#109

Post by camjohnson26 »

darawk wrote: post #36
acconrad wrote: post #2

One of the few times Bettridge's Law of Headlines doesn't apply. "Survive" is an extreme word here, but I do see a big issue w/ index funds. Perhaps an unpopular opinion - but I believe index funds will be the next major bubble that cripples the financial system. It's one massive way to persist the same inequality status quo. You know what made Bezos so rich in spite of a company that doesn't make much accounting sen…

This is a real misunderstanding of how markets work. An index fund invests in everything, market-cap weighted (usually). This means that your investment merely reinforces the prices already determined by the other participants in the market . There are still huge numbers of active managers, not to mention quants and others. They, collectively, determine the prices of assets. When you invest in an index fund, you're j…

You're saying that an increase in demand won't increase the price. Obviously there are other factors that affect the price too but being in an index fund is absolutely one of them.

Re: Can We Survive the Next Financial Crisis?

#110

Post by camjohnson26 »

airstrike wrote: post #72
camjohnson26 wrote: post #8

Earlier quoted context omitted.

Looks like investor Bill Ackman, famous for shorting the housing market before the bubble burst, had the same theory back in 2016. It's an interesting perspective. https://www.marketwatch.com/story/bill-ackman-actually-had-a...

> famous for shorting the housing market before the bubble burst Also famous for losing more than $3 billion (or $7.7 million per day) on Valeant http://fortune.com/2017/03/15/valeant-stock-bill-ackman/

Famous for taking big risks that sometimes pay out and sometimes fail dramatically.
Post reply on HN