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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

#101

Post by sidstling »

freddie_mercury wrote: post #88
sidstling wrote: post #19

I don't think I agree with the article. Not from a European perspective. I'm Danish and we've had anti-establishment parties all my life on both the left and right side of the political spectrum. The populist rightwingers most similar to Trump and the teaparty saw their dawn in 1998 where they got elected with 7.4% of the votes. In 2001, three months after 9/11, they recived 12%. In 2005 it was 13.3%. In 2007, before…

Tooze makes the case that Fidesz's victory in Hungary in 2010 was a direct result of the terms of the IMF bailout. That the supremacy of the Law & Justice party in Poland was a result of the crisis. That the fall of Tymoshenko and Yushchenko -- tarred with the pains of the crisi -- in Ukraine led to rehabilitation of Yanukovych and the subsequent Russian invasion of Crimea. In Greece the populists didn't take power i…

Is Fidesz really a comparison point though, for anti-establishment parties? They held power in 1998 and they saw their biggest increase in votes in from 1998 to 2002.

I mean, you definitely have a point, with them going from from 42.03% in 2006 to 52.73% in 2010, but they weren't born out of the crisis like their American counterparts, and while they started out anti-establishment, they kind of became the establishment in 2002.

I'm not saying the financial crisis didn't have an impact on Europe, it absolutely did, I just think it's much more nuanced and complicated than the article outlines. On one hand you have countries like Italy, that fit the bill perfectly, on the other hand you have the Scandinavian countries like my own, where we didn't really see a rise of populism because it was already here, in fact we kind of saw a decline. For a while anyway, because right-wing populism is certainly on the rise now, but is that really the delayed effect of the financial crisis or is it something much more complicated?

Re: The Real Cost of the 2008 Financial Crisis

#102

Post by rwc »

bitxbit wrote: post #68

I experienced the financial crisis first hand on Wall Street, a place fraught with people who pretended to know the ins and outs of risks. It was also a brutally honest place when it came to winners and losers. But that changed when Hank Paulson, then the Secretary of Treasury, knelt down on camera and begged Nancy Pelosi for what was effectively a blank check. Wall Street could not face reality when it was its turn…

Wow I don’t remember this kneeling down on camera. Can you link?

Re: The Real Cost of the 2008 Financial Crisis

#103

Post by pas »

KarlRutnick wrote: post #50
nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

Both US and EU should have done the same as Norwegian Government did during our banking crisis in the 90s. Let the banks fail, stocks to zero, no bailout of investors or paper/derivatives holders etc... then nationalize their brick and mortar operation so the real economy keeps functioning

Much of the economy is not brick and mortar anymore. And wasn't in 2008 either.

Sure, Congress could have created an Uncle Sam bank, but that wouldn't have solved anything.

Stocks, investors, bondholders are important, because they underlie much of US pension plans, social security account, and so on.

And even if the day to day operations could have been somehow continued, someone would had to arbitrate what is okay to save, and what is okay to let it perish. And that would have been a much harder and basically impossible task.

Re: The Real Cost of the 2008 Financial Crisis

#104

Post by pas »

michaelt wrote: post #12
nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

But what was the alternative to the bailouts? The bailouts, but engaging with the narrative of a rigged game and applying substantial and highly visible reforms to prevent another financial crisis. I mean, when your ship hits rocks you gotta patch the holes so you don't drown - but then you also gotta stop the captain navigating you into rocks. We did an OK job at the first, but did practically nothing about the seco…

There were "reforms" (or at least important fixes, like the stress test based financial sector oversight, and other stuff enacted in 2010 as the Dodd-Frank Act), but visibility was and still is shit. (And now Dodd-Frank is being reversed bit-by-bit, but again, nobody really cares, which is not surprising when there are new disasters every day in US politics.)

The Obama stimulus was too small, and it simply took too much time for the economy to recover.

Re: The Real Cost of the 2008 Financial Crisis

#105

Post by bradleyjg »

lotsofpulp wrote: post #77
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…

I can point to all the underwriters that approved loans with no income verification, fraudulent paperwork, officially stating they did checks for a physically impossible number of mortgages.

The incentives were screwy. Originators shouldn’t be able to offload all the risk of mortgages they underwrite.

Incidentally that’s something that is still true today. Originators are still unloading 100% of the risk of mortgages they issue. Except these days it’s almost to the federal government instead of private securities holders.

Dodd-Frank had a skin-in-the-game rule but it was effectively nullified in the rule making process even before this current administration.

Re: The Real Cost of the 2008 Financial Crisis

#106

Post by pas »

pjc50 wrote: post #31
nafey wrote: post #2

But what was the alternative to the bailouts? Another depression? I feel we made it across fairly well.

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?

Re: The Real Cost of the 2008 Financial Crisis

#107

Post by madengr »

Marazan wrote: post #89
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…

The rating agencies absolutely did not do the right thing. There were contemporary pre-crash criticisms of their rating of mortgage backed securities so this is not Monday morning quarter backing

The government also backed risky loans.

Re: The Real Cost of the 2008 Financial Crisis

#108

Post by Gys »

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…

> 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 our civilization.

Re: The Real Cost of the 2008 Financial Crisis

#109

Post by seanmcdirmid »

chiefalchemist wrote: post #85
seanmcdirmid wrote: post #76

Earlier quoted context omitted.

Financial terrorism isn’t even defined as a crime. It would have to racketeering or something, not easy things to prove even in gang/mob cases. Legislative neglect also isn’t a crime that lawmakers can be prosecuted under. You can, however, not vote for them during their reelection campaign. You can also vote for lawmakers that would bother to push for such laws. For better or worse, western countries are generally s…

Perhaps. Not being snarky but how do you establish precedent if you don't try? In the context of justice, I find it troubling the (US) gov made no effort.

You can’t just go up to a grand jury and say: we don’t know what we can get them for, but I’m sure we will find something along the way.

What does “effort” mean here? Even an investigation requires some kind of suspicion of foul play. They can’t just investigate someone because they are out to get them (well, at least they shouldn’t).

Re: The Real Cost of the 2008 Financial Crisis

#110

Post by freddie_mercury »

sidstling wrote: post #101
freddie_mercury wrote: post #88

Earlier quoted context omitted.

Tooze makes the case that Fidesz's victory in Hungary in 2010 was a direct result of the terms of the IMF bailout. That the supremacy of the Law & Justice party in Poland was a result of the crisis. That the fall of Tymoshenko and Yushchenko -- tarred with the pains of the crisi -- in Ukraine led to rehabilitation of Yanukovych and the subsequent Russian invasion of Crimea. In Greece the populists didn't take power i…

Is Fidesz really a comparison point though, for anti-establishment parties? They held power in 1998 and they saw their biggest increase in votes in from 1998 to 2002. I mean, you definitely have a point, with them going from from 42.03% in 2006 to 52.73% in 2010, but they weren't born out of the crisis like their American counterparts, and while they started out anti-establishment, they kind of became the establishme…

Tooze never made they claim that all of the consequences didn't exist at all before the crisis. For instance, one of the consequences was the rehabilitation of Yanukovych in Ukraine. Obviously he existed, with quite a lot of power, before. But the crisis destroyed the credibility of his rivals leaving him as "last man standing". And that -- along with the clear abandonment of Ukraine by the EU (or at least the ECB) during the crisis -- led almost directly to the current invasion of Crimea.

> I just think it's much more nuanced and complicated than the article outlines.

Maybe this is where the article is giving you a skewed perception because Tooze's whole point in his book is that things are super nuanced and complicated! I mean, part of his thesis is that the invasion of Iraq played an (eventual, partial) role in Putin humbling the oligarchs in 2009 and further cementing his power. The whole vibe I got from reading Crashed was that nothing was simple. It wasn't "subprime mortgages", it wasn't "bad bankers", for instance. Because those are simple answers, simple explanations.

Tooze's main thesis is that the traditional, simple view is that the 2008 subprime crash was an American thing, the 2010 European crisis was a European thing, both of them are basically wrapped up by now, and that's that. And that traditional, simple view is wrong because the real world (unsurprisingly) is nuanced and complicated.

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