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Not really, that was much more of a systemic issue, so it's difficult to point to one entity responsible. Those problems built up over years. Pump and dumps by

Not really, that was much more of a systemic issue, so it's difficult to point to one entity responsible. Those problems built up over years. Pump and dumps by contrast have a much shorter time frame.

wu-ikkyu 9y ago
So if a pump and dump gets big enough and goes on long enough, it can't be described as such? Even though the price was artificially inflated and investors were fed false information?
- tikkabhuna 9y ago
  In a pump and dump scheme, usually an actor owned the instrument that was being "pumped". In the 2008 crisis, there were a large number of groups that was benefiting from the situation. A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them.
  - wu-ikkyu 9y ago
    >A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them. Right, it wasn't "a guy", it was banks like Goldman Sachs. My question remains: if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"?
    - Goronmon 9y ago
      What would you consider being the "dump" side of the housing market collapse?
      - wu-ikkyu 9y ago
        The housing market itself. All the people who lost their houses, jobs and the lost life savings and pensions which were invested in said market.
    - JumpCrisscross 9y ago
      > if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"? Not every fraud is a pump and dump, and not every stupid investment sale and purchase is a fraud. Most of 2008 was stupidity, not fraud. (Some was plain fraud.) In any case, the pump and dump rules worked. Pump and dumps are trivial to organize. Draconian punishments raise the bar of minimum competence from script kiddies on a message board to LIBOR traders co-ordinating across banks. The complexity of the latter over the former means (a) it's harder to do (b) it's even harder to get away with it and (c) when you get caught, you can be found and fined and jailed. Post-crisis, rules surrounding swaps and securitisations were modernized and re-written. Our financial system has changed in response. (Banks are, largely, more boring.)
    - tikkabhuna 9y ago
      A "pump and dump" scheme is planned around the dump. It is started with the intention that the instrument will be sold with the knowledge that it will have a negative impact on that instrument's price. The group doing the pumping knows what's coming. In 2008 banks didn't want it to happen. They would have happily kept doing what they were doing forever. Home buyers would have been happy buying more houses, real estate agents would have been making commission, mortgage lenders getting interest. Happy days! There was negligence all round and the situation was unsustainable. Do you think the banks wanted it? Some foresaw the collapse and made money out of it but it cost the banks billions, ruined reputations, people lots their jobs. Yes, they got bailed out but they would have preferred to have not needed it in the first place.
- deleted 9y ago
  [deleted]
djkz 9y ago
There is an interesting Twitter thread pointing it to Chrysler as the root cause https://twitter.com/KashannKilson/status/953740344369102848 https://twitter.com/KashannKilson/status/953740344369102848
- FLUX-YOU 9y ago
  >huge twitter thread with tons of gifs Ugh, kill me. But this doesn't line up to me, unless there were real estate companies and banks eager to unload their houses? I didn't think there was an excess of housing built that needed to be sold, but I could be wrong, because that would have pushed prices down. I thought the key failure was people being unable to pay their mortgages, and a bunch of financial products built off of expecting people to pay their mortgages, and ratings agencies giving incorrect ratings for those subprime mortgages. The only connection I can see is people making dumb financial decisions, which is why a rubber stamp for subprime led to a ton of people defaulting. Houses don't really have the same faults as PT Cruisers.

wu-ikkyu 9y ago

So if a pump and dump gets big enough and goes on long enough, it can't be described as such? Even though the price was artificially inflated and investors were fed false information?

tikkabhuna 9y ago
In a pump and dump scheme, usually an actor owned the instrument that was being "pumped". In the 2008 crisis, there were a large number of groups that was benefiting from the situation. A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them.
- wu-ikkyu 9y ago
  >A guy on Wall Street didn't own the houses that were being bought, nor was he directly lending the money for them. Right, it wasn't "a guy", it was banks like Goldman Sachs. My question remains: if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"?
  - Goronmon 9y ago
    What would you consider being the "dump" side of the housing market collapse?
    - wu-ikkyu 9y ago
      The housing market itself. All the people who lost their houses, jobs and the lost life savings and pensions which were invested in said market.
  - JumpCrisscross 9y ago
    > if a pump and dump scales up to where "a large number of groups" benefit, rather than just "a guy on wall street", is it no longer considered a "pump and dump"? Not every fraud is a pump and dump, and not every stupid investment sale and purchase is a fraud. Most of 2008 was stupidity, not fraud. (Some was plain fraud.) In any case, the pump and dump rules worked. Pump and dumps are trivial to organize. Draconian punishments raise the bar of minimum competence from script kiddies on a message board to LIBOR traders co-ordinating across banks. The complexity of the latter over the former means (a) it's harder to do (b) it's even harder to get away with it and (c) when you get caught, you can be found and fined and jailed. Post-crisis, rules surrounding swaps and securitisations were modernized and re-written. Our financial system has changed in response. (Banks are, largely, more boring.)
  - tikkabhuna 9y ago
    A "pump and dump" scheme is planned around the dump. It is started with the intention that the instrument will be sold with the knowledge that it will have a negative impact on that instrument's price. The group doing the pumping knows what's coming. In 2008 banks didn't want it to happen. They would have happily kept doing what they were doing forever. Home buyers would have been happy buying more houses, real estate agents would have been making commission, mortgage lenders getting interest. Happy days! There was negligence all round and the situation was unsustainable. Do you think the banks wanted it? Some foresaw the collapse and made money out of it but it cost the banks billions, ruined reputations, people lots their jobs. Yes, they got bailed out but they would have preferred to have not needed it in the first place.
deleted 9y ago
[deleted]

djkz 9y ago

There is an interesting Twitter thread pointing it to Chrysler as the root cause https://twitter.com/KashannKilson/status/953740344369102848 https://twitter.com/KashannKilson/status/953740344369102848

FLUX-YOU 9y ago
>huge twitter thread with tons of gifs Ugh, kill me. But this doesn't line up to me, unless there were real estate companies and banks eager to unload their houses? I didn't think there was an excess of housing built that needed to be sold, but I could be wrong, because that would have pushed prices down. I thought the key failure was people being unable to pay their mortgages, and a bunch of financial products built off of expecting people to pay their mortgages, and ratings agencies giving incorrect ratings for those subprime mortgages. The only connection I can see is people making dumb financial decisions, which is why a rubber stamp for subprime led to a ton of people defaulting. Houses don't really have the same faults as PT Cruisers.