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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

#261

Post by ThomPete »

empath75 wrote: post #84
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…

> to take away opportunities from its own citizens and start giving it to countries like China after the fall of Soviet Union. Citation needed

Read the book I recommend :)

Re: The Real Cost of the 2008 Financial Crisis

#262

Post by frgtpsswrdlame »

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…

I find it interesting how your comment grants a lot of agency to the government but very little of it to banks:

>so instead they had to become "creative" with loans

>They HAD to use at least X% of new loans to low income families.

But there's no actual connection between their requirement to loan to low income families and this:

>This insane game of musical chairs, where banks generate toxic loans, securitize them and throw them at someone else

They didn't have to repackage those loans into complex instruments, they didn't have to sell those instruments, they didn't have to do both of the above knowing that the rating agencies had intentionally mislabeled the risk of those products.

They also incentivized their low-level workers to lie or let borrowers lie on loan applications which regulation did not require. The problem here isn't regulation, the problem is banks and their management let The Fear of Missing Out rule the day and they put a bunch of money into a bubble and then leveraged it and sold it to other people as a safe investment.

Re: The Real Cost of the 2008 Financial Crisis

#263

Post by InclinedPlane »

nafey wrote: post #2

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

False dichotomy. The problem was letting it get that bad to start with, and letting any single bank get so huge. If banks had been kept smaller and limited from taking on such crazy risks then it would have been far easier to just let some banks go out of business and let the market adjust itself.

Additionally, the fact that people in the street got screwed while hedge funds got their profit margins protected by tax payers is something that shouldn't have been allowed to happen. Much of the pain for the top 1% from the crash was socialized away and absorbed by tax payers and the working class. There should have been much more financial assistance to the working class.

Re: The Real Cost of the 2008 Financial Crisis

#264

Post by Gys »

paulddraper wrote: post #254
Gys wrote: post #111

Earlier quoted context omitted.

Doing economically well makes people more generous ? Do you know research to backup your believe ? Its not what I experience around me. The more we have, the more afraid we can loose it again, it seems to me.

Study of High Net Worth Philanthropy is published every few years. https://www.ustrust.com/publish/content/application/pdf/GWMO... That's focuses only on the wealthy ($200k income or $1m assets), but within that group, higher incomes consistently donate a greater percentage to charity.

The research in this article (2010) tells a different story: https://www.nytimes.com/2010/08/22/magazine/22FOB-wwln-t.htm...

Re: The Real Cost of the 2008 Financial Crisis

#265

Post by fenwick67 »

paulddraper wrote: post #254
Gys wrote: post #111

Earlier quoted context omitted.

Doing economically well makes people more generous ? Do you know research to backup your believe ? Its not what I experience around me. The more we have, the more afraid we can loose it again, it seems to me.

Study of High Net Worth Philanthropy is published every few years. https://www.ustrust.com/publish/content/application/pdf/GWMO... That's focuses only on the wealthy ($200k income or $1m assets), but within that group, higher incomes consistently donate a greater percentage to charity.

This is interesting but I don't think you can assume this phenomenon applies to a whole county's wage growth.

Re: The Real Cost of the 2008 Financial Crisis

#267

Post by OscarCunningham »

api wrote: post #239
petra wrote: post #236

Earlier quoted context omitted.

Wasn't this a predicted result of offering cheap loans? And if so,why was this the route chosen?

Americans (even some center-left ones) hate the idea of directly supporting anything, so cheap loans were used as a substitute for directly operating and funding public colleges. Same with housing. Directly supporting people is "socialism," a handout, and is seen as supporting laziness and vice. A loan must be paid back, which allows many Americans to view it as something encouraging responsibility and virtue. It all…

Wouldn't directly supporting people also produce price inflation?

Re: The Real Cost of the 2008 Financial Crisis

#268

Post by pitaj »

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…

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 me, because it created a new bubble in the stock market.

Re: The Real Cost of the 2008 Financial Crisis

#269

Post by Lavery »

fzzzy wrote: post #257
Lavery wrote: post #231

In a lot of ways, the current expression of the tech sector (certainly from a valuation standpoint) and the startup scene particularly feels like a consequence of the response to the financial crisis. Critics of the Fed spent years loudly worrying about how the various QE programs were going to drive up inflation. Of course, this didn't materialize, at least as measured in the usual basket of goods and services. What…

I'd just like to point out that the tech pay explosion likely has a lot to do with this: https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

No question that played a role, but it's not like the settlement happened in 2011 and then salaries immediately corrected to the current levels and stayed. This has been a steady climb upwards.

Re: The Real Cost of the 2008 Financial Crisis

#270

Post by craftyguy »

pitaj wrote: post #268
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…

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.

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