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Can We Survive the Next Financial Crisis?

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Re: Can We Survive the Next Financial Crisis?

#41

Post by yourbandsucks »

oihoaihsfoiahsf wrote: post #35
yourbandsucks wrote: post #31

Earlier quoted context omitted.

A lot of Americans have/had home equity as their biggest asset.

That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.

I'd argue you're into red herring land a little yourself with the systemic goings-on.

From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him.

It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.

Re: Can We Survive the Next Financial Crisis?

#42

Post by prolikewh0a »

craftyguy wrote: post #15
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 surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? If the working class has no tolerance for these things, then it definitely isn't reflected in the people the working class has ele…

>If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again?

I find your average worker doesn't really pay attention to the day-to-day news/politics (especially regulations & individual votes, media doesn't cover this either and nobody watches CSPAN) but by now knows that in 2008 the bankers & wall street — the people who put us in such predicament in the first place — got an enormous bail out that went to already super rich executive & CEO bonuses, but the working class lost their homes & jobs and received absolutely nothing.

I don't think think it will go that way the next time it happens.

Re: Can We Survive the Next Financial Crisis?

#43

Post by linuxftw »

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…

I agree. It's I don't care if banks survive as long as I'm not negatively impacted. I'm sure the banks feel the same way.

Survive also doesn't mean 'maintain standard of living.' The government has a surefire way of propping up the wealthy: Inflation. Savings accounts lose purchasing power (normal person) and the means of production gets more expensive (wealthy).

Re: Can We Survive the Next Financial Crisis?

#44

Post by vinylkey »

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…

I think I'll listen to Warren Buffet's advice on index funds.

Re: Can We Survive the Next Financial Crisis?

#45

Post by oihoaihsfoiahsf »

yourbandsucks wrote: post #41
oihoaihsfoiahsf wrote: post #35

Earlier quoted context omitted.

That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.

I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.

If Joe Sixpack owned for twenty years, he was not underwater after the crisis. He might not be in as good of a shape as he was at the top, and I can understand how that would be disappointing, but he's still doing fine. If he got greedy and did a big cash out ARM refinance, well, that sucks, but people are told from a very young age that when something seems too good to be true, it probably is. Caveat emptor! And there are warnings ALL OVER the documents you have to sign to actually participate in such a transaction. I reject the notion that American adults should not or cannot be custodians of their own financial lives.

I'm certainly not saying that I expect the average American to understand what actually happened. The average American believes all kinds of things that aren't true, even in much simpler domains of knowledge. I am just saying what actually happened.

Re: Can We Survive the Next Financial Crisis?

#46

Post by kolbe »

waterphone wrote: post #28
busterarm wrote: post #14

Earlier quoted context omitted.

I'm bullish on the sentiment expressed by the parent poster, actually. Like another commentator, I believe index funds are going to be ripped hard and this is what the average saver has been told to dump their money into by the banking industry since the last crisis.

Investing in total market index funds is literally investing in the economy as a whole. (Or as much of a whole as the index represents.) So while yes, they will crash with future market crashes, of which there will be many in each of our lifetimes, historically in the U.S. so far the market has always recovered.

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

Re: Can We Survive the Next Financial Crisis?

#47

Post by isoskeles »

yourbandsucks wrote: post #41
oihoaihsfoiahsf wrote: post #35

Earlier quoted context omitted.

That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.

I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.

What about the Joe Sixpacks who bought homes because housing always goes up and I can just flip this in three years?

Re: Can We Survive the Next Financial Crisis?

#48

Post by chadbaud »

oihoaihsfoiahsf wrote: post #35
yourbandsucks wrote: post #31

Earlier quoted context omitted.

A lot of Americans have/had home equity as their biggest asset.

That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.

The banks did cause it to happen. They had an insatiable appetite for mortgage backed securities and would shop credit rating agencies (who were newly public companies) to get a AAA rating on total garbage they knew would explode.

Municipalities and pension funds would buy AAA securities even though the originators and packagers of the mortgagers knew they were garbage.

It was a big fraud caused by the bankers greed.

Re: Can We Survive the Next Financial Crisis?

#49

Post by travisoneill1 »

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/

Re: Can We Survive the Next Financial Crisis?

#50

Post by seppel »

ram_rar wrote: post #19
jorblumesea wrote: post #7

Earlier quoted context omitted.

If you bought an actively managed fund 30 years ago, it was literally an index fund with more fees attached. Active managers actually just index, but try hard to obfuscate this fact to justify their high fees. If you dive into their books, they are basically buying the market. I think it begs the question, how active was/is active? The math is clear, you are statistically unlikely to beat the market.

But, what if everybody only buys index funds and there arent any active players anymore ? I am not an expert in this field, but I do feel that the passive nature of index funds has been benefiting greatly from the actions of active investors.

If everyone invests passive, you could make a ton of money by buying companies which are worth more than their stock or just give you an extremely high dividend.
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