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>>They nearly took out the real economy in 2008. No they didn't. The government nearly took out the real economy. In the decade before the financial crisis, r

>>They nearly took out the real economy in 2008. No they didn't. The government nearly took out the real economy. In the decade before the financial crisis, regulatory pressure was used to force banks to issue more subprime mortgages. This article from 2000 warns of the consequences: https://www.city-journal.org/html/trillion-dollar-bank-shakedown-bodes-ill-cities-12096.html https://www.city-journal.org/html/trillion-dollar-bank-shake... Government sponsored enteprises, which underwrite 50% of the entire US mortgage market, started massively increasing their subprime loan guarantees at the same time. And then you have Federal Reserve mouthpiece, New York Times columnist Paul Krugman, advocating in this 2002 article that the Federal Reserve create a housing bubble: https://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html https://www.nytimes.com/2002/08/02/opinion/dubya-s-double-di... "To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." This revisionist account of the causes of the financial crisis is just these same powerful forces, who are receiving billions in kickbacks from all of this corruption, pinning the blame for the financial crisis on the mythical deregulation-bogeyman.

nonameiguess 5y ago
The person you're replying to isn't talking about the housing market collapse. The credit crunch that happened after was the much bigger threat to the global economy, and that was entirely caused by businesses operating with zero cash due to the assumption that commercial paper and other types of short-turnaround overnight loans were close to risk free even though they were not.
- CryptoPunk 5y ago
  The housing market collapse is the reason for the misassessment of risk, and the over-extension of credit. Mortgage-backed securities were considered AAA assets, which is why so little in cash reserves were maintained. >>Had Tether been around in '08, it would have been accumulating hordes of that stuff to back itself up. That's irrelevant, because every one, including regulators, would have considered that adequate collateral. There was a systemic misassessment, due to the systemic impact that government intervention had on the housing and sub-prime mortgage market.
  - JumpCrisscross 5y ago
    > Mortgage-backed securities were considered AAA assets, which is why so little in cash reserves were maintained That's fine and irrelevant. Had Tether been around in '08, it would have been accumulating hordes of that stuff to back itself up.
FabHK 5y ago
The narrative you're outlining was known as "the big lie" before Trump came up with an even bigger lie in 2020. > Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault. > Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them. https://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story.html https://www.washingtonpost.com/business/what-caused-the-fina...

nonameiguess 5y ago

The person you're replying to isn't talking about the housing market collapse. The credit crunch that happened after was the much bigger threat to the global economy, and that was entirely caused by businesses operating with zero cash due to the assumption that commercial paper and other types of short-turnaround overnight loans were close to risk free even though they were not.

CryptoPunk 5y ago
The housing market collapse is the reason for the misassessment of risk, and the over-extension of credit. Mortgage-backed securities were considered AAA assets, which is why so little in cash reserves were maintained. >>Had Tether been around in '08, it would have been accumulating hordes of that stuff to back itself up. That's irrelevant, because every one, including regulators, would have considered that adequate collateral. There was a systemic misassessment, due to the systemic impact that government intervention had on the housing and sub-prime mortgage market.
- JumpCrisscross 5y ago
  > Mortgage-backed securities were considered AAA assets, which is why so little in cash reserves were maintained That's fine and irrelevant. Had Tether been around in '08, it would have been accumulating hordes of that stuff to back itself up.

FabHK 5y ago

The narrative you're outlining was known as "the big lie" before Trump came up with an even bigger lie in 2020. > Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault. > Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them. https://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story.html https://www.washingtonpost.com/business/what-caused-the-fina...