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Can We Survive the Next Financial Crisis?

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Re: Can We Survive the Next Financial Crisis?

#51

Post by oihoaihsfoiahsf »

chadbaud wrote: post #48
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.

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.

Yes, the banks were part of the cause. That is not in dispute, as you can see by reading my previous comments. But they would not have been able to commit their fraud without the aid of credulous buyers willing to purchase far more house than they could afford. That's all I'm saying.

Re: Can We Survive the Next Financial Crisis?

#52

Post by ben_jones »

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…

If you're hinting at a revolution, a.k.a. what used to be a check against the upper classes, you can't really have one of those when every police department has a tank, a swat team, and carte blanc access to all social media and mobile data/communications.

Re: Can We Survive the Next Financial Crisis?

#53

Post by Xcelerate »

nradov wrote: post #39
mikert5671 wrote: post #9

Earlier quoted context omitted.

Some of them do beat the market. They are also producing returns that are more robust to a downturn. So even if they dont match the S&P performance, in a downturn they dont lose as much as the S&P does. It's difficult to compare index funds to hedge funds, they have different purposes. When the market is always going up, it looks like a scam.

Did they beat the market because they are actually better investors, or did they just get lucky? There are so many hedge funds now that statistically a few of them are guaranteed to have long lucky streaks.

If you could decide this accurately, then you would have a strategy for your own hedge fund.

Re: Can We Survive the Next Financial Crisis?

#54

Post by aphextron »

the_gastropod wrote: post #4
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…

> You know what made Bezos so rich in spite of a company that doesn't make much accounting sense? When everyone is betting on his success by blindly investing in index funds. Let's see... AMZN: up 62.93% YTD S&P500: up 6.81% YTD I don't think index fund investors are the cause of Amazon's growth.

>I don't think index fund investors are the cause of Amazon's growth.

Sure they are.

Index funds are not equally weighted. Practically every tech ETF you can buy has Amazon weighted in the top 10, sometimes over 10% of total assets [0] whereas the average for other securities is below 1% at the most.

[0] https://money.usnews.com/funds/etfs/large-growth/invesco-qqq...

Re: Can We Survive the Next Financial Crisis?

#55

Post by andrewla »

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 will come the next time a Financial Crisis comes and the government works to sell out the working class

Meh. There won't be any surprise at all. Even now, people who are outraged about the bailouts are just the lunatic fringe libertarians (like myself) and some equally fringe progressives. Almost everyone I talk to about it says, "yeah, it's too bad that we had to give Citibank billions of dollars, but otherwise bad things would have happened, according to people who didn't predict the previous bad things, and are thus totally qualified in their predictive abilities, and Citibank paid it all back anyway, with no fudging of balance sheets or interest-free loans or anything like that".

I think people make the mistake of seeing the 2008 crisis as the mortgage failure, instead of the massive wealth transfer that you're talking about. When working class people paid too much and took too much leverage for real estate, and the market turned, they had to deal with the fallout. When banks like Goldman paid too much and took too much leverage betting on CDS, the proper response is the same -- not to give money to AIG to pay them back, but to have them face the consequences just as everyone else did.

Re: Can We Survive the Next Financial Crisis?

#56

Post by ryandrake »

busterarm wrote: post #14
badbug wrote: post #11

Earlier quoted context omitted.

The working class will be too busy trying to keep up. There won't be time for a revolution.

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.

Only around 50% of Americans own any stock at all, including indirect ownership like IRAs and pensions. So, I don’t see the working class suffering that much due to stock market decline. They will suffer due to joblessness.

Re: Can We Survive the Next Financial Crisis?

#57

Post by darawk »

> The leveraged loans are now being packaged into collateralized loan obligations and sold to investors. Sound familiar? And the CLO market has grown to match the size of the CDO market at its pre-crisis peak. Yet one major difference makes the CLOs of today less scary: The loans that comprise them are backed by collateral, and if one of the companies in the mix defaults, an investor can find recourse through the sale of that collateral. Pre-crisis CDOs built on mortgage-backed securities had no such backstops.

Maybe this is just my ignorance of the terms of CDO agreements...but weren't they collateralized by the homes? I mean, it's in the name: Collateralized Debt Obligation. And wouldn't that make this CLO market exactly identical to the CDO market?

Re: Can We Survive the Next Financial Crisis?

#58

Post by hindsightbias »

the_gastropod wrote: post #4
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…

> You know what made Bezos so rich in spite of a company that doesn't make much accounting sense? When everyone is betting on his success by blindly investing in index funds. Let's see... AMZN: up 62.93% YTD S&P500: up 6.81% YTD I don't think index fund investors are the cause of Amazon's growth.

[edit - sorry, read that as amzn not causing index growth]

FAANG+M probably has a disproportionate impact on the index

https://www.cnbc.com/2017/07/28/fang-tech-market-concern-vol...

>But the Street's favorite stocks have outsized clout in the index. For instance, Silverblatt says the FANG names — Facebook, Amazon, Netflix and Google parent Alphabet — equal about 7 percent of the S&P 500. With Apple, they make up about 10.6 percent.

Re: Can We Survive the Next Financial Crisis?

#59

Post by chadbaud »

kolbe wrote: post #40
yourbandsucks wrote: post #31

Earlier quoted context omitted.

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

> A lot of Americans have/had home equity as their biggest asset. In all fairness, the only reason their home equity had any value was thanks to an inflated housing market. It seems that what people 'stole' from them was the delusion that their homes had actually increased in value for the long term.

They had every right to believe their homes were going up in value and make decisions accordingly, especially from 2003-2006. Subprime lenders were selling loans to people who were not qualified to have loans that greatly inflated the housing prices. It doesn't matter if they person signed off on a mortgage, by law, they shouldn't have received it.

People were making decisions in a market they thought was fair. But, that market was fraudulent created by originators and bankers trying to make a quick buck.

Re: Can We Survive the Next Financial Crisis?

#60

Post by [deleted] »

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…

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