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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 th

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 allow ignoring customer's income. It caused a $5 trillion in transfer from the wealthy away from the working classes to the investor class in that 2008 Mortgage crisis. The 2008 Mortgage crisis robbed the working classes, and transferred to the investor classes. Homes lost because of unemployment. Savings gone via rigged economy unemployment. Bail outs. Banks offloaded their worthless assets with government buying them. Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. The surpise will come the next time a Financial Crisis comes and the government works to sell out the working class

cheez 8y ago
Not enough people felt the pain the last go around. It will be the same this time.
badbug 8y ago
The working class will be too busy trying to keep up. There won't be time for a revolution.
- busterarm 8y ago
  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.
  - waterphone 8y ago
    Investing in total market index funds is literally investing in the economy as a whole. (Or as much of a whole as the index represents.) So while yes, they will crash with future market crashes, of which there will be many in each of our lifetimes, historically in the U.S. so far the market has always recovered.
    - kolbe 8y ago
      What percentage of 'the economy' do you think is represented by publicly traded corporations?
      - oihoaihsfoiahsf 8y ago
        According to this article [1], public firms account for about 80% of the pre-tax profit in the private sector. That's probably enough, given that public and private company returns are probably at least somewhat correlated. [1]: https://www.forbes.com/sites/sageworks/2012/09/21/private-companies-invest-more-than-publicly-traded-firms/#37a0b25d2536 https://www.forbes.com/sites/sageworks/2012/09/21/private-co...
        kolbe 8y ago
        The P in GDP does not stand for Profit. An economy consists of a lot more than private sector profits.
        oihoaihsfoiahsf 8y ago
        Right. But I'd wager that index fund investors are more interested in profits than GDP, at least as it relates to their investments and the proposition at the top of this thread that index funds will be "ripped" (presumably disproportionately) in the next downturn.
        busterarm 8y ago
        Right. If you have a wide market downturn, all of the "active investors" are going to take their money out as cash and wait to buy and the "passive investors "are going to take a bath. The mistake that index fund adherents make is that there is no such thing as passive investing. Certain market participants have been screaming about this fact to anyone who will listen for 2+ years now.
        8y ago
  - ryandrake 8y ago
    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.
    - busterarm 8y ago
      If you know your history, it's the "middle class" that has directed just about every non-marxist revolution. I guess I should add the clarification that I think most folks who consider themselves middle-class and who are investing and saving money are actually working-class. If you don't own your residence outright or have the liquid assets to purchase it and still make investments, you are working-class. If you live in the valley and can't afford to buy and can't uproot your job to somewhere more affordable to buy while maintaining roughly the same income level, you're working-class too.
      - lsc 8y ago
        >If you know your history, it's the "middle class" that has directed just about every non-marxist revolution. One can make a strong argument (even from marxist sources) that even the marxist revolutions were mostly directed by the middle class; most of the marxists call it the intelligentsia, but these were mostly educated men at a time when that meant more than it does now. (and even now, I think most people consider a good education enough to make you "middle class" even if you don't make that much scratch.) I mean, all this depends on your definition of a "revolution" and of "middle class" - if I define "middle class" as "powerful or educated enough to get something done, while not being super rich" and I define revolution as "overthrow of the government by people who aren't already at the top of the power structure" then it almost becomes tautological; if people are powerful enough to start a revolution, by that definition, you are middle class or better, and if an elite starts a revolution, by that definition, it's then a coup. (I'm not suggesting those are your definitions of revolution and middle class; just that the definition of those two words (and the definition of those two words is kinda fuzzy) makes all the difference in this question)
        8y ago
cycrutchfield 8y ago
So a bunch of folks with poor credit and not enough income took on way more debt than they should have and got caught with their pants down. How exactly did they get robbed?
- losteric 8y ago
  The general public bailed out banks that profited off financial recklessness - banks that simply were not doing their job of managing risk.
- darawk 8y ago
  The robbery was the bailout, not the people who took on irresponsible debt.
craftyguy 8y ago
> The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? If the working class has no tolerance for these things, then it definitely isn't reflected in the people the working class has elected to 'represent' them.
- perfmode 8y ago
  do you really believe that representatives controlling these knobs care about the true concerns of the working class?
- HashThis 8y ago
  The USA government has been selling out US citizens for decades (except the priviliged classes) The US government hasn't fixed it self, and won't.
- phil248 8y ago
  The "current government" is barely functional. I'd point to changes like the unpopularity of tax breaks for the wealthy, the increasing embrace of democratic socialism and the leftward shift of the Democratic party as signs that the American public is going to be far less forgiving the next time around.
- prolikewh0a 8y ago
  >If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? I find your average worker doesn't really pay attention to the day-to-day news/politics (especially regulations & individual votes, media doesn't cover this either and nobody watches CSPAN) but by now knows that in 2008 the bankers & wall street — the people who put us in such predicament in the first place — got an enormous bail out that went to already super rich executive & CEO bonuses, but the working class lost their homes & jobs and received absolutely nothing. I don't think think it will go that way the next time it happens.
FilterSweep 8y ago
I disagree, I find the media quite seasoned at turning the working and middle classes against themselves at this point.
yourbandsucks 8y ago
We already had that surprise in the 2010 and 2016 elections. I'd wager that people upset about this stuff will continue to vote for rah-rah morons who channel their anger while sinking the knife deeper into their back. Happy to be proven wrong.
1001101 8y ago
> Homes lost because of unemployment. The good news is they can be rented back from Wall St firms who have been snapping up rental properties with that windfall.
oihoaihsfoiahsf 8y ago
> It caused a $5 trillion in transfer from wealthy away from the working classes to the investor class in that 2008 Mortgage crisis. This sounds like a made up number. What is your source? > The 2008 Mortgage crisis robbed the working classes How? I.e. what did working class people own that was subsequently taken away by some other entity? > Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. A common misconception. The government did recapitalize various Wall St. entities on favorable terms, and did, via quantitative easing, give owners of some securities more than they might have gotten in the market without intervention. But there were certainly not any "no strings attached" givings of cash to the big financial entities. The other stuff about how working Americans were the ones most hurt by the financial crisis also sounds incorrect to me. If I had to categorize winners and losers, owners of mortgage debt and homeowners would be the biggest losers of the crisis. Working Americans suffered knock on effects, or direct effects to the extent they were in the other categories, but they were not the primary victims.
- yourbandsucks 8y ago
  A lot of Americans have/had home equity as their biggest asset.
  - oihoaihsfoiahsf 8y ago
    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.
    - yourbandsucks 8y ago
      I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.
kolbe 8y ago
This would be wonderful to believe, but I only see the world becoming more controlling of the freedoms that allow people to do anything about it. My guess is that from here on out, the middle class have increasingly irrelevant influence on anything powerful governments or individuals choose to do.
ben_jones 8y ago
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.
- losteric 8y ago
  Police departments are made of individuals with friends and families. Factor in all the bureaucracy and pension cuts, you'll find they are more of a wild-card that will backfire against the elite in many areas.
- LyndsySimon 8y ago
  In most of America (geographically, certainly), the common citizenry are much better armed than law enforcement. I'm not sure that's really relevant in this case, but by the same token, the "increasing militarization" of police departments is probably also not relevant.
- pjmorris 8y ago
  They also have mortgages, medical bills, and friends with mortgages and medical bills.
andrewla 8y ago
> 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.
- mrep 8y ago
  To be fair, lehman brothers was allowed to fail so all those bankers lost their jobs.
ryandrake 8y ago
The 1%, including politicians, will find some other wedge social issue to keep the working and middle classes continually fighting each other, allowing the rich to keep siphoning off the world’s wealth. The day after the crash, headlines will be back to “transsexual bathrooms” and “football stars kneeling” and we will forget that we are losing our jobs and homes again. This play book is not new. My prediction for the next market crash: 1. Working class will lose their jobs 2. Middle class will lose their homes/investments 3. Wealthy class will get huge tax breaks to “stimulate investment” 4. Big companies will get massive bailouts in exchange for empty promises to create jobs that they never will keep What makes you think next time will be any different?
- TomMckenny 8y ago
  The pattern won't repeat forever, eventually the wealth transfer will become an unnoticed constant flow. Regardless of the "it can't happen hear" attitude, the US is clearly following the identical trajectory of about a dozen other countries which have fallen into demagogue led neo-autocracies blaming easy targets for their woes. The only real question is whether we're talking about the future or the present.
rocketpastsix 8y ago
"The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. " I highly doubt this sadly. As long as Americans have their internet, their cable and other comforts, they wont revolt. Its not dire enough.
airstrike 8y ago
> the working class won't tolerate being robbed in the next financial crisis The working class wasn't robbed at all. Maybe they lost the value they thought their homes had, but the reality is that all of that was just inflated. 2008 was an issue of moral hazard and unfortunately Joe Schmuck isn't aware of that going into a mortgage agreement. This will continue to happen forever until people finally learn that when something seems too good to be true, it probably is. If you want to blame 2008 on anyone, you need to spread the blame like peanut butter among lending banks (but not every bank!!!), people who took on mortgages they couldn't pay (if nobody defaulted, the crisis would never have happened) and above all the credit rating agencies who exist for the sole purpose of assessing risk and maliciously failed to do so in order to not piss off their biggest customers (the banks).
- village-idiot 8y ago
  Credit rating agencies illustrate the dangers of both government oligopolies, and conflicts of interest.
- supercanuck 8y ago
  SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets https://www.sec.gov/news/press/2008/2008-211.htm https://www.sec.gov/news/press/2008/2008-211.htm Those banks should have been insolvent, and wiped out investors, it cost Americans an estimated 12.8 trillion dollars by kicking the can down the road https://finance.yahoo.com/blogs/daily-ticker/2008-financial-crisis-cost-americans-12-8-trillion-145432501.html https://finance.yahoo.com/blogs/daily-ticker/2008-financial-...
- dv_dt 8y ago
  By bailing out the originator of the mortgages via QE2/3 purchases of securities, the Fed removed all pressure to accept a two-way reconciliation between the originator and the loaner in mortgage transactions - e.g. by reducing the principal cost of the loan to reduce further erosion of the assets and the market as a whole. Once that incentive was removed, mortgage servicing (often contracted to the same banks) could continue, putting unrelenting pressure on people who had taken out the loans. So what if they lost their loaned properties? Well anyone who had put down a down payment or had equity in their home lost that down and equity. So this ended up being a very one sided transfer of wealth out of the hands of people taking out mortgages, while preserving the profits of banks (they didn't have to accept the losses of the securities bought by the Fed...). To me it looks like the the organizations with the deepest buffers of wealth (banks), got a bailout by the fed, while individual people bore the full pressure of having their wealth systematically reduced. As an alternative, the fed could have risked similar or less money by offering to pay down some slice of the principal of the loans, requiring a refinance/reset to put the security back into balance with the market prices. This would have allowed wealth to stay in the hands of individuals, somewhat insulating the banks, but resulting in less transfer of wealth.
metalliqaz 8y ago
The working class will not only tolerate it, they will cheer being robbed. Their anger will be directed towards China, Europe, Mexico, even Canada.
teddyh 8y ago
“won't tolerate”? How, exactly?
maxxxxx 8y ago
"The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis." They totally will again. The working class will again go against each other over irrelevant issues like guns, race and religion while the .1% will make sure to get ahead. I always like this story : "An immigrant, a worker and a banker are sitting at the table with 10 cookies. The banker takes 9 and then tells the worker "watch out, the immigrant is going to steal your cookie"."

cheez 8y ago

Not enough people felt the pain the last go around. It will be the same this time.

badbug 8y ago

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

busterarm 8y ago
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.
- waterphone 8y ago
  Investing in total market index funds is literally investing in the economy as a whole. (Or as much of a whole as the index represents.) So while yes, they will crash with future market crashes, of which there will be many in each of our lifetimes, historically in the U.S. so far the market has always recovered.
  - kolbe 8y ago
    What percentage of 'the economy' do you think is represented by publicly traded corporations?
    - oihoaihsfoiahsf 8y ago
      According to this article [1], public firms account for about 80% of the pre-tax profit in the private sector. That's probably enough, given that public and private company returns are probably at least somewhat correlated. [1]: https://www.forbes.com/sites/sageworks/2012/09/21/private-companies-invest-more-than-publicly-traded-firms/#37a0b25d2536 https://www.forbes.com/sites/sageworks/2012/09/21/private-co...
      - kolbe 8y ago
        The P in GDP does not stand for Profit. An economy consists of a lot more than private sector profits.
        oihoaihsfoiahsf 8y ago
        Right. But I'd wager that index fund investors are more interested in profits than GDP, at least as it relates to their investments and the proposition at the top of this thread that index funds will be "ripped" (presumably disproportionately) in the next downturn.
        busterarm 8y ago
        Right. If you have a wide market downturn, all of the "active investors" are going to take their money out as cash and wait to buy and the "passive investors "are going to take a bath. The mistake that index fund adherents make is that there is no such thing as passive investing. Certain market participants have been screaming about this fact to anyone who will listen for 2+ years now.
        8y ago
- ryandrake 8y ago
  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.
  - busterarm 8y ago
    If you know your history, it's the "middle class" that has directed just about every non-marxist revolution. I guess I should add the clarification that I think most folks who consider themselves middle-class and who are investing and saving money are actually working-class. If you don't own your residence outright or have the liquid assets to purchase it and still make investments, you are working-class. If you live in the valley and can't afford to buy and can't uproot your job to somewhere more affordable to buy while maintaining roughly the same income level, you're working-class too.
    - lsc 8y ago
      >If you know your history, it's the "middle class" that has directed just about every non-marxist revolution. One can make a strong argument (even from marxist sources) that even the marxist revolutions were mostly directed by the middle class; most of the marxists call it the intelligentsia, but these were mostly educated men at a time when that meant more than it does now. (and even now, I think most people consider a good education enough to make you "middle class" even if you don't make that much scratch.) I mean, all this depends on your definition of a "revolution" and of "middle class" - if I define "middle class" as "powerful or educated enough to get something done, while not being super rich" and I define revolution as "overthrow of the government by people who aren't already at the top of the power structure" then it almost becomes tautological; if people are powerful enough to start a revolution, by that definition, you are middle class or better, and if an elite starts a revolution, by that definition, it's then a coup. (I'm not suggesting those are your definitions of revolution and middle class; just that the definition of those two words (and the definition of those two words is kinda fuzzy) makes all the difference in this question)
      - 8y ago

cycrutchfield 8y ago

So a bunch of folks with poor credit and not enough income took on way more debt than they should have and got caught with their pants down. How exactly did they get robbed?

losteric 8y ago
The general public bailed out banks that profited off financial recklessness - banks that simply were not doing their job of managing risk.
darawk 8y ago
The robbery was the bailout, not the people who took on irresponsible debt.

craftyguy 8y ago

> The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? If the working class has no tolerance for these things, then it definitely isn't reflected in the people the working class has elected to 'represent' them.

perfmode 8y ago
do you really believe that representatives controlling these knobs care about the true concerns of the working class?
HashThis 8y ago
The USA government has been selling out US citizens for decades (except the priviliged classes) The US government hasn't fixed it self, and won't.
phil248 8y ago
The "current government" is barely functional. I'd point to changes like the unpopularity of tax breaks for the wealthy, the increasing embrace of democratic socialism and the leftward shift of the Democratic party as signs that the American public is going to be far less forgiving the next time around.
prolikewh0a 8y ago
>If that's true, then why is the current government working hard to remove any protection (however meager it is/was) to prevent the same mistakes from happening all over again? I find your average worker doesn't really pay attention to the day-to-day news/politics (especially regulations & individual votes, media doesn't cover this either and nobody watches CSPAN) but by now knows that in 2008 the bankers & wall street — the people who put us in such predicament in the first place — got an enormous bail out that went to already super rich executive & CEO bonuses, but the working class lost their homes & jobs and received absolutely nothing. I don't think think it will go that way the next time it happens.

FilterSweep 8y ago

I disagree, I find the media quite seasoned at turning the working and middle classes against themselves at this point.

yourbandsucks 8y ago

We already had that surprise in the 2010 and 2016 elections. I'd wager that people upset about this stuff will continue to vote for rah-rah morons who channel their anger while sinking the knife deeper into their back. Happy to be proven wrong.

1001101 8y ago

> Homes lost because of unemployment. The good news is they can be rented back from Wall St firms who have been snapping up rental properties with that windfall.

oihoaihsfoiahsf 8y ago

> It caused a $5 trillion in transfer from wealthy away from the working classes to the investor class in that 2008 Mortgage crisis. This sounds like a made up number. What is your source? > The 2008 Mortgage crisis robbed the working classes How? I.e. what did working class people own that was subsequently taken away by some other entity? > Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. A common misconception. The government did recapitalize various Wall St. entities on favorable terms, and did, via quantitative easing, give owners of some securities more than they might have gotten in the market without intervention. But there were certainly not any "no strings attached" givings of cash to the big financial entities. The other stuff about how working Americans were the ones most hurt by the financial crisis also sounds incorrect to me. If I had to categorize winners and losers, owners of mortgage debt and homeowners would be the biggest losers of the crisis. Working Americans suffered knock on effects, or direct effects to the extent they were in the other categories, but they were not the primary victims.

yourbandsucks 8y ago
A lot of Americans have/had home equity as their biggest asset.
- oihoaihsfoiahsf 8y ago
  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.
  - yourbandsucks 8y ago
    I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.

kolbe 8y ago

This would be wonderful to believe, but I only see the world becoming more controlling of the freedoms that allow people to do anything about it. My guess is that from here on out, the middle class have increasingly irrelevant influence on anything powerful governments or individuals choose to do.

ben_jones 8y ago

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.

losteric 8y ago
Police departments are made of individuals with friends and families. Factor in all the bureaucracy and pension cuts, you'll find they are more of a wild-card that will backfire against the elite in many areas.
LyndsySimon 8y ago
In most of America (geographically, certainly), the common citizenry are much better armed than law enforcement. I'm not sure that's really relevant in this case, but by the same token, the "increasing militarization" of police departments is probably also not relevant.
pjmorris 8y ago
They also have mortgages, medical bills, and friends with mortgages and medical bills.

andrewla 8y ago

> 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.

mrep 8y ago
To be fair, lehman brothers was allowed to fail so all those bankers lost their jobs.

ryandrake 8y ago

The 1%, including politicians, will find some other wedge social issue to keep the working and middle classes continually fighting each other, allowing the rich to keep siphoning off the world’s wealth. The day after the crash, headlines will be back to “transsexual bathrooms” and “football stars kneeling” and we will forget that we are losing our jobs and homes again. This play book is not new. My prediction for the next market crash: 1. Working class will lose their jobs 2. Middle class will lose their homes/investments 3. Wealthy class will get huge tax breaks to “stimulate investment” 4. Big companies will get massive bailouts in exchange for empty promises to create jobs that they never will keep What makes you think next time will be any different?

TomMckenny 8y ago
The pattern won't repeat forever, eventually the wealth transfer will become an unnoticed constant flow. Regardless of the "it can't happen hear" attitude, the US is clearly following the identical trajectory of about a dozen other countries which have fallen into demagogue led neo-autocracies blaming easy targets for their woes. The only real question is whether we're talking about the future or the present.

rocketpastsix 8y ago

"The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis. " I highly doubt this sadly. As long as Americans have their internet, their cable and other comforts, they wont revolt. Its not dire enough.

airstrike 8y ago

> the working class won't tolerate being robbed in the next financial crisis The working class wasn't robbed at all. Maybe they lost the value they thought their homes had, but the reality is that all of that was just inflated. 2008 was an issue of moral hazard and unfortunately Joe Schmuck isn't aware of that going into a mortgage agreement. This will continue to happen forever until people finally learn that when something seems too good to be true, it probably is. If you want to blame 2008 on anyone, you need to spread the blame like peanut butter among lending banks (but not every bank!!!), people who took on mortgages they couldn't pay (if nobody defaulted, the crisis would never have happened) and above all the credit rating agencies who exist for the sole purpose of assessing risk and maliciously failed to do so in order to not piss off their biggest customers (the banks).

village-idiot 8y ago
Credit rating agencies illustrate the dangers of both government oligopolies, and conflicts of interest.
supercanuck 8y ago
SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets https://www.sec.gov/news/press/2008/2008-211.htm https://www.sec.gov/news/press/2008/2008-211.htm Those banks should have been insolvent, and wiped out investors, it cost Americans an estimated 12.8 trillion dollars by kicking the can down the road https://finance.yahoo.com/blogs/daily-ticker/2008-financial-crisis-cost-americans-12-8-trillion-145432501.html https://finance.yahoo.com/blogs/daily-ticker/2008-financial-...
dv_dt 8y ago
By bailing out the originator of the mortgages via QE2/3 purchases of securities, the Fed removed all pressure to accept a two-way reconciliation between the originator and the loaner in mortgage transactions - e.g. by reducing the principal cost of the loan to reduce further erosion of the assets and the market as a whole. Once that incentive was removed, mortgage servicing (often contracted to the same banks) could continue, putting unrelenting pressure on people who had taken out the loans. So what if they lost their loaned properties? Well anyone who had put down a down payment or had equity in their home lost that down and equity. So this ended up being a very one sided transfer of wealth out of the hands of people taking out mortgages, while preserving the profits of banks (they didn't have to accept the losses of the securities bought by the Fed...). To me it looks like the the organizations with the deepest buffers of wealth (banks), got a bailout by the fed, while individual people bore the full pressure of having their wealth systematically reduced. As an alternative, the fed could have risked similar or less money by offering to pay down some slice of the principal of the loans, requiring a refinance/reset to put the security back into balance with the market prices. This would have allowed wealth to stay in the hands of individuals, somewhat insulating the banks, but resulting in less transfer of wealth.

metalliqaz 8y ago

The working class will not only tolerate it, they will cheer being robbed. Their anger will be directed towards China, Europe, Mexico, even Canada.

teddyh 8y ago

“won't tolerate”? How, exactly?

maxxxxx 8y ago

"The surprise that is coming is that the working class won't tolerate being robbed in the next financial crisis." They totally will again. The working class will again go against each other over irrelevant issues like guns, race and religion while the .1% will make sure to get ahead. I always like this story : "An immigrant, a worker and a banker are sitting at the table with 10 cookies. The banker takes 9 and then tells the worker "watch out, the immigrant is going to steal your cookie"."