2008 Financial crisis redux

[7437]

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.

But the people giving the loans hold no responsibility whatsoever

 

[PHATV]

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

Yeah, seemed pretty fired up over the thought of a contested convention or Bernie getting screwed out of the nomination, too. Wound up like a Tijuana banjo. He probably needs a short break. He'll be back.

 

[xcvbn]

Neoliberalism and neoconservatism

Policy makers who forced those economic and foreign policies on us

Corporate press which failed(or rather succeeded) in keeping the public in the dark of this betrayal of constituents

 

[Jack V Savage]

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?).

Actually, anyone who was betting against Krugman probably would have gone bankrupt a while ago, and people betting on him (I know some), have made off like bandits. Good, fun piece on that kind of thing:

http://noahpinionblog.blogspot.com/2013/04/krugtron-invincible.html

Also, look at what happened to Clarium. Don't just blindly believe everything you read on Breitbart.

 

[PHATV]

But the people giving the loans hold no responsibility whatsoever

They were forced to. That's the point. Started back with Clinton "you must loan to even those with F- credit" and continued under W to a point where I think we had record home ownership among most demographics. For a minute...

If you think the banks wanted to do that, you're crazy. They knew those loans would not be paid back. Their business model is to make money, not lend it with no hope of ever seeing it again, much less a return on investment.

But, it was crazy what went on. I remember people I worked with saying they were pre-approved for like $290,000 or whatever when they were looking for a new house. I don't know if that was the banks fault or the algorithms used in order to lend to lower-qualifying individuals or what. I knew their wife or husband worked there as well or stayed home with the kids and knew approximately what their income was and I'd think to myself that $150,000 would seem more appropriate---as an absolute top end of the scale for them. I heard things like that (double what they should ever consider pre-approvals) many times over and then of course some of them would find a house out of their original price range but within the pre-approval and go for it. Que disaster incoming.

Now, once they (banks) were all loaded up with that toxic debt and started to sell it off is when things got shady as fuck on their part. Some of them, at least. Que plane crash into a train wreck.

 

[F1980]

But the people giving the loans hold no responsibility whatsoever

Why wouldn't they hold no responsibility when it's 100% their fault? They knew these people were eventually going to foreclosures. I don't blame people asking for loans to buy a house one bit.

 

[KONG-D'SNT-TAP]

You people do know prime borrowers defaulted at the same rates, if not higher, than sub prime borrowers.

 

[PHATV]

Why wouldn't they hold no responsibility when it's 100% their fault? They knew these people were eventually going to foreclosures. I don't blame people asking for loans to buy a house one bit.

I think he was being sarcastic. Like it was all the bank's fault.
You're also missing that they wouldn't have made any of the shit loans absent gubblemint intervention telling them they had to. The loans were made at the behest of the government, normal logic be damned.

 

[PHATV]

You people do know prime borrowers defaulted at the same rates, if not higher, than sub prime borrowers.

Just stop. Eventually, borrowers that weren't "prime" previously were "prime" under gubblemint guidance. Again, the bank wants to rake in profits, not hand out stacks to people with (sometimes very) sketchy income histories and the like with a handshake promise to get it back.

I would still question your statement above.

 

[KONG-D'SNT-TAP]

Just stop. Eventually, borrows that weren't "prime" were "prime" under gubblemint guidance. Again, the bank wants to rake in profits, not hand out stacks to people with (sometimes very) sketchy income histories and the like with a handshake promise to get it back.

No one told the banks to sell these sub prime bundles as sound investments. Which they did. They also got good ratings and were just toxic debt.


And yes prime borrowers defaulted about the same rates as sub prime borrowers.

You do know this has been covered since 2008 right?

 

[44nutman]

It’s just a matter of time for the collapse. Liar loans have made a comeback. Housing supply is up and as someone who has been a real estate appraiser, it’s about a year or two away.
On the lending side it’s the Wild West again. Don’t worry as a country we privatize profit and socialize any losses banks occur for being wreckless. When people are paying 500k to Eat with Trump to pad his campaign, they will make sure the government will come to their rescue.
In China they shoot bank CEO’s that commit fraud. One of the policies China has that I like.

 

[44nutman]

What got Viva banned?

Fighter bashing

 

[MilesAbove]

lol

TS: How did government fail us in financial crisis
Posters: It was Wall Street.
TS: Hey! I said "How did GOVERNMENT FAIL"

The only failure by the government was letting a fully "free market" do what it always does.... exploit and ruin.

 

[Livermore]

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.

Well in order to panic (privately or publicly), you would have to of believed danger was around the corner and we know from the public comments of economists like Bernanke and economists at the OECD at that time, that they had no idea the biggest financial crises of our life time was eminent. That being said, I've come to the opinion -- and I think there is sufficient empirical research to back up this view -- that the primary driver of the 2008 crises was an unsustainable rise in private debt (in particular household debt), therefore the Fed (in conjunction with the government) should've done something (anything) to slow down this run-a-way growth. Specifically the government could've reviewed and tightened up lending standards and/or forced banks to increase their capital requirements to soften the blow of inevitable defaults. With respect to the Fed, they could've raised interest rates in the run up the crises to help slow down rapid private loan growth.

Of course none of this was considered by the Fed or the government because the economists with the most influence at these institutions apparently don't believe things like private debt play a signficant role (if any) in the economy. This is why IMO, economists deserve a significant amount of blame for the 2008 GFC.

 

[surrealworlds]

Wow, I was just talking to him in that thread. Wtf..

What got Viva banned?

Good question, especially bc of plat status

 

[Jack V Savage]

Well in order to panic (privately or publicly), you would have to of believed danger was around the corner and we know from the public comments of economists like Bernanke and economists at the OECD at that time, that they had no idea the biggest financial crises of our life time was eminent. That being said, I've come to the opinion -- and I think there is sufficient empirical research to back up this view -- that the primary driver of the 2008 crises was an unsustainable rise in private debt (in particular household debt), therefore the Fed (in conjunction with the government) should've done something (anything) to slow down this run-a-way growth. Specifically the government could've reviewed and tightened up lending standards and/or forced banks to increase their capital requirements to soften the blow of inevitable defaults. With respect to the Fed, they could've raised interest rates in the run up the crises to help slow down rapid private loan growth.

Of course none of this was considered by the Fed or the government because the economists with the most influence at these institutions apparently don't believe things like private debt play a signficant role (if any) in the economy. This is why IMO, economists deserve a significant amount of blame for the 2008 GFC.

You were talking about 2007 in the post I responded to. None of that stuff would have made a difference then. I also think you're conflating a couple of different issues, specifically the triggering event and the cause of the crisis. A real-estate bubble deflating is something that would put a little downward pressure on the economy but wouldn't necessarily trigger a major collapse without the rise of an overleveraged shadow banking system (and, as I said, mispriced risk was behind that).

Also, raising rates inappropriately would have just triggered a recession sooner and wouldn't necessarily have had any positives to recommend it.

I think you can blame a subset of economists for pushing deregulation and generally for falling for doctrines that basically said that gov't oversight was unnecessary.

 

[rob mafia]

Why wouldn't they hold no responsibility when it's 100% their fault? They knew these people were eventually going to foreclosures. I don't blame people asking for loans to buy a house one bit.

WAT

your statement makes it clear that you know there are 2 parties, yet you assign 100% of the blame to the ones loaning the funds? ...so everyone who defaulted was at a combined 0% fault?

 

[ElKarlo]

The banks and Wall street is main reason.

But I still see people blaming or crediting past and current presidents for the economic climates over the past 20 years. It's a bit discouraging seeing people throw around "The economy under ___" or "____'s economy."

I think summing it up would be lack of consequences. If ceos were held responsible and other board members. Many things would not have been done so fast and loose.

 

[Senzo Tanaka]

The banks, government and ultimately, unregulated capitalism.

The libertarian argument is that we should have let the businesses fail but the issue is these businesses became too big to fail. It would have devastated the economy even worse than it did and would have caused world-wide issues. Personally, I think we should have let them fail because no one learned from it.

It should have been a wake up call to regulate, break up big businesses into smaller companies and prevent anything like this from happening again. Instead, everyone got bailed out and went right back to what they were doing. Unregulated capitalism leads to greed and the most successful companies dominating the world. Capitalism might be better than communism but it ultimately becomes a problem and why I can't get behind the idea of a free market.

 

[Stoic1]

RIP VivaRev. Take the time spent posting and join Bernies campaign. Be part of the dream.