2008 Financial crisis redux

Who was to blame? Clinton? Bush? Republicans in Congress? Democrats in Congress? The FED?

 

I blame the 99%.

They don't work hard enough. And they don't know how to manage their money. Or understand how much house they can afford.

Even Lloyd Blankfein couldn't save these losers from themselves.

 

Repealing the Glass-Stegal Act basically insures that it could never happen again.

 

I should have specified in the OP that my question is about who is to blame in terms of government policy.

 

I'd go with the economists at the FED and government who insisted, as late as 2007, that the economy was fine and we had nothing to worry about.

 

Neo-liberals from Reagan to Clinton who integrated, privatized, and liberalized finance.

 

Giving out home loans to people who aren't financially responsible. There are credit scores for a reason and while it's not perfect, it's the best way to filter out who's good with money and who's bad with it. Half the entire population are bad with money, no matter what profession or how much they make. They will always spend more than they take it and BORROW money to keep up the lifestyle.

 

What do you think the Fed (not an acronym) could have done differently to prevent the crisis? Note that if they were publicly panicking, that would have had real-world effects.

Trying to assign blame in the sense of moral culpability is misguided, but if you want to look at what led to it, there's a game being played between regulators and "innovators" focused on avoiding regulations, and innovators getting ahead were a big part of it (which you can blame on them or on regulators). Markets kind of organically tend toward crises, but that can be prevented with good regulations.

 

No, this doesn't really matter. Let me try to illustrate why:

Say you lend $100 at 5%, and you get 100% repayment. You made $5. Now, say you lend $100 at 15% and get 91.31% repayment. How much did you make? $5. Higher repayment would mean you made more than $5. Higher-risk loans aren't inherently a worse business than lower-risk loans *as long as you price risk correctly*. Of course real-world lending is more-complicated than that (if the loans are collateralized, you have to account for that, for example). But that's the thing. Financial innovation obscured but did not actually reduce, risk, leading to large-scale mispricing of risk by highly leveraged entities--a recipe for disaster.

 

What got Viva banned?

 

Good question, especially bc of plat status

 

Woah

 

Sounds like escalation

 

Something about foreign money in elections and storming the halls of congress with a rifle, that was the basic gist of it.
I assume, I don't know 100% that was it. But I saw the thread he started earlier and...

 

fedor.

 

Hmm, sadly I'm not surprised. He was pretty eccentric.

 

Guys like Allan "frothy" Greenspan were so in over their heads, it isn't funny. On the topic of economists that don't have a clue, you could set up a high return fund betting against everything Paul Krugman writes (who knows if he actually believes it?).

 

Anti Redliners- Bloombergs right.