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The problem was never with banks failing, it was with some of them being "too big to fail". This news therefore doesn't mean attempts to prevent another 2008-li

The problem was never with banks failing, it was with some of them being "too big to fail". This news therefore doesn't mean attempts to prevent another 2008-like crisis have been unsuccessful. Also, let's the remember the last bailout was a somewhat underrated success: " TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation.". Apart from that, public debt is up considerably in the US (mostly due to tax cuts) but rather flat in the EU. Nothing would preclude another bailout of the same magnitude as the last one. But that's a somewhat silly question. Because if there's one thing we can be sure of, it's that the next crisis will be different than the last one. Italy going bankrupt is a far more imminent danger than private banks, and one that would be too big to contain, for example.

howard941 7y ago
From the bank shareholder's perspective the bailout was a stunning success. For the rest of us debtors, for those who greased the runways for the shareholders with their lost homes and lost savings that went to paying off debts in disinflationary dollars when stimulus and reasonable inflation would have made paying debts off easier, it remains an ongoing disaster.
- IAmEveryone 7y ago
  No, the shareholders of rescued banks got wiped out.
- ChrisLomont 7y ago
  >For the rest of us debtors...it remains an ongoing disaster Taxpayers didn't pay for bailouts. The Fed did. Taxpayers did make a profit form them, however, since the profits the Fed saw from the bailouts were, by law, handed over to Treasury (except for statutory operating expenses), offsetting taxes. >those who greased the runways for the shareholders with their lost homes Most of those those losing homes did so by taking loans they could not pay, and the ripples were felt by those not taking such loans, in their retirement funds. Those who left those funds alone recovered the value and then some after the recession. Those who did not, or could not, did lose value. But don't just blame bankers. Also blame borrowers defaulting.
  - raxxorrax 7y ago
    True, looking forward to blaming a lot of US students for wanting education. While I do think borrowers are partly responsible, I also think there was a strong incentive for lenders to spread loans like candy and they probably de-emphasized the risks. So the correct strategy would have been to take even larger loans and probably bury the money somewhere.
    - ChrisLomont 7y ago
      >True, looking forward to blaming a lot of US students for wanting education. Some perspective: Under 40% of people get any college at all. Of those, 30% of students graduate with no debt. The remaining average $30k in debt. This is not much debt compared to other things they will buy in life. Avg starting salary for a college grad is $50k. Avg new car price is $35k. Some people buy many cars in a lifetime. Median home listing is $279k. ~65% of US is homeowners.
  - pjmorris 7y ago
    > Taxpayers didn't pay for bailouts. The Fed did. The 2+ Trillion dollar expansion of the Fed balance sheet during the crisis costs taxpayers every day that they pay interest on a loan enabled by that 2T+ expansion. Every house that used to be $200K and is now $500K is part of the price people are paying for how the crisis was managed. > But don't just blame bankers. Also blame borrowers defaulting. The core function of a bank is to evaluate risk. Being able to do so correctly enables the bank to make loans at a profit. Being unable to do so means that the people involved should go do something else. Debtors have been defaulting for millennia, it's a well-understood process. The financialization and securitization of housing was the creation of bankers, not borrowers.
    - ChrisLomont 7y ago
      >The 2+ Trillion dollar expansion of the Fed balance sheet during the crisis costs taxpayers every day that they pay interest on a loan enabled by that 2T+ expansion. Taxpayers don't pay interest on Fed assets. You have a fundamental misunderstanding of how monetary policy works. What makes you think your statement true? Did you read it in a explanation of how the Fed works, or did you make it up? >The financialization and securitization of housing was the creation of bankers, not borrowers. This is shortsighted and incorrect. If borrowers didn't default, there would be no crisis. Many were expecting housing to rise forever and were taking out second mortgages as piggy banks, then got in trouble when prices didn't increase forever. High risk borrowers could keep refinancing at higher and higher prices since house prices were climbing. When the prices stopped climbing, this process stopped. >Debtors have been defaulting for millennia, it's a well-understood process. And bubbles from irrational people have been happening for millennia too. Does this simplistic tautology allow me to assign all blame to borrowers?
riffraff 7y ago
> Italy going bankrupt is a far more imminent danger than private banks, and one that would be too big to contain, for example. people don't realize how much italian debt is around, i.e. if you own an EMU sovereign bond ETF it will >30% italian debt. If you own a global government bonds fund, it will be 7-8% italian debt. Yet, total bankruptcy seems unlikely, if anything I guess we'd see some restructuring and a loss of 10-20% which would be bad, but could be bearable for some operators.

howard941 7y ago

From the bank shareholder's perspective the bailout was a stunning success. For the rest of us debtors, for those who greased the runways for the shareholders with their lost homes and lost savings that went to paying off debts in disinflationary dollars when stimulus and reasonable inflation would have made paying debts off easier, it remains an ongoing disaster.

IAmEveryone 7y ago
No, the shareholders of rescued banks got wiped out.
ChrisLomont 7y ago
>For the rest of us debtors...it remains an ongoing disaster Taxpayers didn't pay for bailouts. The Fed did. Taxpayers did make a profit form them, however, since the profits the Fed saw from the bailouts were, by law, handed over to Treasury (except for statutory operating expenses), offsetting taxes. >those who greased the runways for the shareholders with their lost homes Most of those those losing homes did so by taking loans they could not pay, and the ripples were felt by those not taking such loans, in their retirement funds. Those who left those funds alone recovered the value and then some after the recession. Those who did not, or could not, did lose value. But don't just blame bankers. Also blame borrowers defaulting.
- raxxorrax 7y ago
  True, looking forward to blaming a lot of US students for wanting education. While I do think borrowers are partly responsible, I also think there was a strong incentive for lenders to spread loans like candy and they probably de-emphasized the risks. So the correct strategy would have been to take even larger loans and probably bury the money somewhere.
  - ChrisLomont 7y ago
    >True, looking forward to blaming a lot of US students for wanting education. Some perspective: Under 40% of people get any college at all. Of those, 30% of students graduate with no debt. The remaining average $30k in debt. This is not much debt compared to other things they will buy in life. Avg starting salary for a college grad is $50k. Avg new car price is $35k. Some people buy many cars in a lifetime. Median home listing is $279k. ~65% of US is homeowners.
- pjmorris 7y ago
  > Taxpayers didn't pay for bailouts. The Fed did. The 2+ Trillion dollar expansion of the Fed balance sheet during the crisis costs taxpayers every day that they pay interest on a loan enabled by that 2T+ expansion. Every house that used to be $200K and is now $500K is part of the price people are paying for how the crisis was managed. > But don't just blame bankers. Also blame borrowers defaulting. The core function of a bank is to evaluate risk. Being able to do so correctly enables the bank to make loans at a profit. Being unable to do so means that the people involved should go do something else. Debtors have been defaulting for millennia, it's a well-understood process. The financialization and securitization of housing was the creation of bankers, not borrowers.
  - ChrisLomont 7y ago
    >The 2+ Trillion dollar expansion of the Fed balance sheet during the crisis costs taxpayers every day that they pay interest on a loan enabled by that 2T+ expansion. Taxpayers don't pay interest on Fed assets. You have a fundamental misunderstanding of how monetary policy works. What makes you think your statement true? Did you read it in a explanation of how the Fed works, or did you make it up? >The financialization and securitization of housing was the creation of bankers, not borrowers. This is shortsighted and incorrect. If borrowers didn't default, there would be no crisis. Many were expecting housing to rise forever and were taking out second mortgages as piggy banks, then got in trouble when prices didn't increase forever. High risk borrowers could keep refinancing at higher and higher prices since house prices were climbing. When the prices stopped climbing, this process stopped. >Debtors have been defaulting for millennia, it's a well-understood process. And bubbles from irrational people have been happening for millennia too. Does this simplistic tautology allow me to assign all blame to borrowers?

riffraff 7y ago

> Italy going bankrupt is a far more imminent danger than private banks, and one that would be too big to contain, for example. people don't realize how much italian debt is around, i.e. if you own an EMU sovereign bond ETF it will >30% italian debt. If you own a global government bonds fund, it will be 7-8% italian debt. Yet, total bankruptcy seems unlikely, if anything I guess we'd see some restructuring and a loss of 10-20% which would be bad, but could be bearable for some operators.