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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

#121

Post by lovich »

bradleyjg wrote: post #105
lotsofpulp wrote: post #77

Earlier quoted context omitted.

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…

That doesn't make it the "right thing".

That makes it a "best for me" thing.

Re: The Real Cost of the 2008 Financial Crisis

#122

Post by pjc50 »

pas wrote: post #106
pjc50 wrote: post #31

Earlier quoted context omitted.

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?

Ideally when there is a sufficiently large disaster an inquiry is held which suggests measures to prevent the disaster, and these measures are implemented and enforced. Air safety is closest to the ideal on this. Politics and political economy is often very far from it, especially when it's possible to profit from a disaster.

Part of the explicit aim of the bailout was to preserve the finance industry status quo, one of very unequal incomes and widespread effects on people by forces outside their control. In the long run this has turned into a sort of formless populist anger that's been successfully transmuted into racial hatred, but there is a real and persistent sense of injustice that needs to be addressed.

Turning this into specific plans is too big a question for me. All that has really been done to prevent it happening again has been a raising of European regulatory capital requirements.

Re: The Real Cost of the 2008 Financial Crisis

#123

Post by hef19898 »

majewsky wrote: post #120
hef19898 wrote: post #71

Earlier quoted context omitted.

I think that is always realitve. Sure, in absolute numbers that might be true (I didn't check), in relative terms not so much if I remember well. At least in some countries affected by the Arab Spring people started to demonstrate against increasing bread Prices. That and general uncertainity combined did not cause the revolts but definetly a factor. What thfollowed was a bad handling of the crisis by the Western pow…

> And I personally don't like the results a single bit, not every country is realizing what voting for righ-wing populists means like the French did. Germany certainlly isn't. The AfD is still below 20% nationwide. And there's a glimmer of hope: Opinion polls suggest that the majority of Germans are increasingly frustrated that refugees and immigration politics are about the only topic of national discourse, even tho…

I Keep the fingers crossed, that's for sure! Let's see how the Bavarian state elections go down in November. I kind of hope that the CSU's drift top the right will not be appreciated by voters.

Re: The Real Cost of the 2008 Financial Crisis

#124

Post by lovich »

pas wrote: post #74
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…

Could you dig up a few of those CDO washing theses? The Inside Job documentary showcased a few economists that had conflict of interest, but haven't mentioned anything concrete about CDOs. > Much to the contrary, they went on enjoying the same mind-boggling luxurious elite lifestyle they always did. The culprits had money and they will have money. They own the banks, and of course they opposed regulation. But they ar…

https://www.theguardian.com/business/2012/aug/06/financial-c...

>"Let's hope we're all wealthy and retired by the time this house of cards falters."

Thats just what people put in email. Given that being told to not talk about certain topics via any recorded medium is not unheard of in companies, there is likely far more than this one notable example.

Even if there's not, the fact that even this person, who outright stated that this was going to collapse and kept at it anyway, has not gone to jail is just an extreme breakdown of the rule of law.

When you start making rules for thee and different rules for me, then people start wondering why they follow the law to begin with. It's a basic tenant of political science

Re: The Real Cost of the 2008 Financial Crisis

#125

Post by misja111 »

majewsky wrote: post #112
guelo wrote: post #97

Earlier quoted context omitted.

Everybody gets their propaganda from different places but I'm pretty sure the European political upheaval was caused by the Syrian refugee crisis not the welfare system.

Check again. The financial crisis started the rise of the right-wing parties. The refugee crisis then exacerbated it. For instance, the German AfD was originally a euro-skeptic party lead by some economics professors. It later ousted those leaders and rebranded into a more plainly nationalist party when that became en vogue. I don't know exactly about other European countries since I'm German, but from what I've seen…

Don't know about Germany but in the Netherlands, Belgium and France the rise of the right wing parties started way earlier than 2008.

Re: The Real Cost of the 2008 Financial Crisis

#126

Post by pc86 »

Gys wrote: post #108
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…

Perhaps rather than assuming you know what the author meant you should actually read the book.

Re: The Real Cost of the 2008 Financial Crisis

#127

Post by lovich »

pas wrote: post #92
lotsofpulp wrote: post #77

Earlier quoted context omitted.

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.

Were these loan sharks prosecuted? Probably yes, but that won't bring back the lost percents of GDP.

>"We're these loan sharks prosecuted? Probably yes,..."

How about definitely not, other than one guy?[1] Additionally, while it won't bring back the GDP it will send a message that the laws will be enforced and that this behavior has consequences. Currently the message we send is that if you do low level crime we'll be harsh on you to make an example. Crash the global economy and harm the entire country though? Ah, how could we hold you accountable for that?

[1]https://www.nytimes.com/2014/05/04/magazine/only-one-top-ban...

Re: The Real Cost of the 2008 Financial Crisis

#128

Post by pc86 »

pas wrote: post #92
lotsofpulp wrote: post #77

Earlier quoted context omitted.

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.

Were these loan sharks prosecuted? Probably yes, but that won't bring back the lost percents of GDP.

A) That's not what a loan shark is

B) No, they were not prosecuted, because for the most part they did not violate any laws (I'm sure you could find some that did)

C) Let's avoid speaking of "percents of GDP" as if they're lives we've lost. The economy is doing better now than it was in 2008.

Re: The Real Cost of the 2008 Financial Crisis

#129

Post by pc86 »

dhimes wrote: post #90
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…

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.

I think most people are fine with regulations when they feel they're evenly applied, or that it's unlikely their competitors will be able to break them without consequence. It's when they feel that regulations will affect them more than others or that their competitors will be able to ignore them while they won't that people start getting loud.

Re: The Real Cost of the 2008 Financial Crisis

#130

Post by lovich »

pc86 wrote: post #128
pas wrote: post #92

Earlier quoted context omitted.

Were these loan sharks prosecuted? Probably yes, but that won't bring back the lost percents of GDP.

A) That's not what a loan shark is B) No, they were not prosecuted, because for the most part they did not violate any laws (I'm sure you could find some that did) C) Let's avoid speaking of "percents of GDP" as if they're lives we've lost. The economy is doing better now than it was in 2008.

When there's a recession suicides are up and people can afford less care that extends there lives. There's explicitly a link to lives lost with the suicides. With the degraded healthcare, is it fine if you steal a few days from a few million people when that adds up to thousands of lifetimes?

Giving a pass to that sort of distributed harm because it doesn't hurt a single individual massively is a common problem in the modern world that is leading to more and more egregious behavior in the pursuit of profit

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