4 ms·

We had a housing crash that somehow led to hundreds of trillions of dollars missing. Add up the value of every house in the USA. They're not hundreds of trill

by jbooth 9y ago

We had a housing crash that somehow led to hundreds of trillions of dollars missing. Add up the value of every house in the USA. They're not hundreds of trillions of dollars. The banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out.

dcgudeman 9y ago
Hundreds of trillions? The entire wealth of the US is around 88 trillion (https://www.wsj.com/articles/americans-total-wealth-hits-record-according-to-federal-reserve-report-1465488231 https://www.wsj.com/articles/americans-total-wealth-hits-rec...).
lend000 9y ago
> The banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out. You will have to be a little more specific to discredit the economic mal-incentives created by the government and to spin that simple narrative. And the amount of paper wealth lost in '07-08 was actually about 10 trillion, not "hundreds of trillions."
- jbooth 9y ago
  The point stands at 10 trillion, thanks for the correction. I'm not sure what you want with more specificity. You're familiar with the situation, right? You want a book report on what happened? Yes, the government exists, and no, a few extra loans for black people didn't crash the housing market. This was a problem between ratings agencies, salespeople, and financial instrument inventors.
  - lend000 9y ago
    There's no reason a person that does not work in finance should have a deep understanding of the US financial system, but don't try to spin a narrative without knowing what you're talking about. You should read the article I initially posted before replying to it.
    - jbooth 9y ago
      The article you linked is way, way out of the mainstream on the topic. That's fine and all but turning around and accusing the conventional wisdom of 'lacking a deep understanding' is a bit much.
      - lend000 9y ago
        Unfortunately, you are correct about that -- it isn't a mainstream view at all, which is why I share it during relevant discussions. However, the fact that a narrative with political implications is "mainstream" does nothing for its credibility. I try to understand how these things work and while it's a pretty nebulous domain, the factors I presented are what seem to be the most significant I've seen in explaining the behavior of the real estate market, and further, the market at large, in '01-'08. We are both rightfully upset that the crisis "somehow led to trillions of dollars missing" -- while paper wealth and market cycles are inevitable, the magnitude and 'unfairness' of this event is clearly a problem. However, when you then confidently assert the cause: "banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out" without any details or refutation of the explanation I posted, to which you were responding... Well, what I read was "I'm not sure what happened but I don't like it [rightfully so], and this narrative gives me an easy scapegoat -- an evil, shadowy figure, of sorts -- to blame, which seems to absolve me of needing to understand any of the mechanics involved, and which also happens to validate my pre-existing political beliefs."
        jbooth 9y ago
        Funny, I think the same thing about evil, shadowy scapegoats. When we have a market crash caused by private actors trading and someone says "OBVIOUSLY the problem is GOVERNMENT" I think they're arguing backwards from ideology rather than working forwards from observation.
        lend000 9y ago
        Indeed, which is why I made sure to include something different: the technical analysis and mechanics of the issue.
  - yuhong 9y ago
    For comparison, according to Richard Duncan the foreign exchange reserves was raised by $7 trillion for a total of $9 trillion: https://www.richardduncaneconomics.com/currency-manipulators-created-7-trillion-causing-the-global-economic-bubble/ https://www.richardduncaneconomics.com/currency-manipulators...

by jbooth 9y ago

dcgudeman 9y ago

Hundreds of trillions? The entire wealth of the US is around 88 trillion (https://www.wsj.com/articles/americans-total-wealth-hits-record-according-to-federal-reserve-report-1465488231 https://www.wsj.com/articles/americans-total-wealth-hits-rec...).

lend000 9y ago

> The banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out. You will have to be a little more specific to discredit the economic mal-incentives created by the government and to spin that simple narrative. And the amount of paper wealth lost in '07-08 was actually about 10 trillion, not "hundreds of trillions."

jbooth 9y ago
The point stands at 10 trillion, thanks for the correction. I'm not sure what you want with more specificity. You're familiar with the situation, right? You want a book report on what happened? Yes, the government exists, and no, a few extra loans for black people didn't crash the housing market. This was a problem between ratings agencies, salespeople, and financial instrument inventors.
- lend000 9y ago
  There's no reason a person that does not work in finance should have a deep understanding of the US financial system, but don't try to spin a narrative without knowing what you're talking about. You should read the article I initially posted before replying to it.
  - jbooth 9y ago
    The article you linked is way, way out of the mainstream on the topic. That's fine and all but turning around and accusing the conventional wisdom of 'lacking a deep understanding' is a bit much.
    - lend000 9y ago
      Unfortunately, you are correct about that -- it isn't a mainstream view at all, which is why I share it during relevant discussions. However, the fact that a narrative with political implications is "mainstream" does nothing for its credibility. I try to understand how these things work and while it's a pretty nebulous domain, the factors I presented are what seem to be the most significant I've seen in explaining the behavior of the real estate market, and further, the market at large, in '01-'08. We are both rightfully upset that the crisis "somehow led to trillions of dollars missing" -- while paper wealth and market cycles are inevitable, the magnitude and 'unfairness' of this event is clearly a problem. However, when you then confidently assert the cause: "banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out" without any details or refutation of the explanation I posted, to which you were responding... Well, what I read was "I'm not sure what happened but I don't like it [rightfully so], and this narrative gives me an easy scapegoat -- an evil, shadowy figure, of sorts -- to blame, which seems to absolve me of needing to understand any of the mechanics involved, and which also happens to validate my pre-existing political beliefs."
      - jbooth 9y ago
        Funny, I think the same thing about evil, shadowy scapegoats. When we have a market crash caused by private actors trading and someone says "OBVIOUSLY the problem is GOVERNMENT" I think they're arguing backwards from ideology rather than working forwards from observation.
        lend000 9y ago
        Indeed, which is why I made sure to include something different: the technical analysis and mechanics of the issue.
- yuhong 9y ago
  For comparison, according to Richard Duncan the foreign exchange reserves was raised by $7 trillion for a total of $9 trillion: https://www.richardduncaneconomics.com/currency-manipulators-created-7-trillion-causing-the-global-economic-bubble/ https://www.richardduncaneconomics.com/currency-manipulators...