The Real Cost of the 2008 Financial Crisis • Hacker News Board

Re: The Real Cost of the 2008 Financial Crisis

#181

Post by PunchTornado » Tue, Sep 11, 2018, 2:44 PM UTC

netsharc wrote: post #66

nicktelford wrote: post #39

While a generally fascinating piece that connects together the events in the American and European financial and political systems, it shouldn't be understated how much of an effect the refugee crisis is having on European politics, which can be attributed largely to the "Arab Spring"; itself largely a consequence of the 2008 financial crisis.

I can't help but believe that if the common folk of Europe of the last, say 10 years, was doing economically better, they would have been more generous with people fleeing warzones looking for help...

I don't think so. A lot of people I talk with just don't want immigrants/refugees in the country. This is the most important issue for them.

Re: The Real Cost of the 2008 Financial Crisis

#182

Post by hndamien » Tue, Sep 11, 2018, 2:46 PM UTC

nafey wrote: post #2

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

Nationalisation was the alternative. Government acquires the failed banks. Manages the issue (even almost the same way the did). Profits flow back to the public. When happy, privatise again with a healthy profit. Maybe keep one as a public asset.

Re: The Real Cost of the 2008 Financial Crisis

#183

Post by crispyambulance » Tue, Sep 11, 2018, 2:46 PM UTC

koolba wrote: post #79

crispyambulance wrote: post #64

Earlier quoted context omitted.

I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it. But there are many behaviors which aren't "crimes" but which are morally repulsive. The danger of not reacting, one way or another, to such inequities is that people lose faith in the system. Already, the ele…

> I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it. > But there are many behaviors which aren't "crimes" but which are morally repulsive. I don't agree with that concept. I don't think it's possible to legislate morality and the entire concept is downright s…

     > I don't agree with that concept. I don't think it's possible to legislate morality...

We don't have to "legislate" the morality but we do have a responsibility for doing _something_. "Rule of law" means nothing if one class of people has subverted the law, enforcement and governance to their benefit at the expense of everyone else.

Re: The Real Cost of the 2008 Financial Crisis

#184

Post by bobwaycott » Tue, Sep 11, 2018, 2:48 PM UTC

lovich wrote: post #121

bradleyjg wrote: post #105

Earlier quoted context omitted.

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.

It doesn’t appear the parent was explaining it as the “right thing”.

Re: The Real Cost of the 2008 Financial Crisis

#185

Post by wonder_er » Tue, Sep 11, 2018, 2:48 PM UTC

rottyguy wrote: post #166

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…

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 enough handwaving.

[0] https://en.wikipedia.org/wiki/Fractional-reserve_banking [1] https://www.mises.ca/the-economic-benefits-of-ending-the-fra...

I know the assertion that fractional reserve banking == fraud is extremely contentions, and most disagree with me. Feel free to explain why you disagree!

Re: The Real Cost of the 2008 Financial Crisis

#186

Post by ghostly_s » Tue, Sep 11, 2018, 2:53 PM UTC

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 was the vehicle by which US gov't 'required raising affordability of homes'?

Re: The Real Cost of the 2008 Financial Crisis

#187

Post by azinman2 » Tue, Sep 11, 2018, 2:56 PM UTC

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’re forgetting that the fact that many ignored the law and their own banks policies, driven internally to give out more loans (to anyone, not just the poor), and then mislabeled the risk when repackaging and selling these to others.

https://www.housingwire.com/articles/46335-wells-fargo-to-pa...

I’d recommend watching this bbc documentary that gives a wider perspective on “risk”: https://topdocumentaryfilms.com/all-watched-over-by-machines...

Re: The Real Cost of the 2008 Financial Crisis

#188

Post by mercurysmessage » Tue, Sep 11, 2018, 2:57 PM UTC

CompelTechnic wrote: post #167

misja111 wrote: post #152

Earlier quoted context omitted.

>> Pointing out fascism and racism doesn't turn people fascist or racist. First of all you're slightly modifying OP's comment. He was not talking about actual fascism or racism that was pointed out, but about the abuse of those terms to silence critics regardless if they were racists or not. If this kind of qualification is used purely a means to silence critics and it is used repeatedly without proper justification…

The comment from mercurysmessage is even a good example of shame being used to silence dissent, which is ironic considering that the conversation was about shame being used to silence dissent. mercurysmessage shamed you, by implicitly calling you a racist, for being of the opinion that people who were not racist were shamed by being called racist.

No, I did not.

Re: The Real Cost of the 2008 Financial Crisis

#189

Post by petermcneeley » Tue, Sep 11, 2018, 2:59 PM UTC

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…

The loans of a bank are its product. The forced loans to poor are just a lost leader product. These loans will have negative profits and must be compensated by having loans that are profitable. This is just a government wealth transfer program and at worst would cut into the profits of the banks.

If the banks were profitable leading up to the crash then its still the banks responsibility. The government is allowed to force these rules because the banks are allowed to create money out of thin air.

Re: The Real Cost of the 2008 Financial Crisis

#190

Post by Isamu » Tue, Sep 11, 2018, 3:02 PM UTC

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…

>Government shares a significant portion of the blame for this crisis.

Agreed, I think the sheer size of the crisis relates back to deliberate policies to support sub-prime lending. The idea was to help people to afford homes even though they would not normally be considered a good risk.

But opening this up created a vast new market, like adding a wider bottom tier to an already giant pyramid. Along with the vast size came even higher risk, since all these people would be more liable to default if the economy tanked.

Even still because we are accepting more sub-prime liability, it goes beyond poor people to others with better incomes but are buying into a more expensive neighborhood. Now people of all incomes are getting sub-prime loans, and this feed into rising housing prices.