2 ms·

What did they do to prop up the market in 08? What would that policy intervention look like today?

ProAm 5y ago
They starting printing money (and have largely not stopped) and not letting banks fail that needed to die.
htrp 5y ago
https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_L... https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investment_Program_for_Legacy_Assets https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investm... Broadly we call this entire period quantitative easing.....
bradleyjg 5y ago
There was a government takeover of the residential mortgage sector. Private companies today largely act as agents for GSEs, the Fed, or other parts of the government. They originate mortgages, package them, and service them but the government sets rates, underwriting rules, and holds the risk. Thus it was very easy for it to reinflate the bubble far beyond where it was in 2007 (check out case-schiller https://fred.stlouisfed.org/graph/?g=It55 https://fred.stlouisfed.org/graph/?g=It55). If prices look like they are about to stall keep an eye out for the introduction of the low rate 50 year fixed rate mortgage. Whatever it takes to keep incumbent homeowners receiving endless windfalls.
throwawaycities 5y ago
Banks were insolvent in 2008, in lieu of them facing the natural consequences of the free market (bankruptcy) the banks were given nearly $2T of tax payer money which the banks used to consolidate through acquisitions/mergers (Chase acquired bear sterns and Washington mutual; BOA acquired Merrill lynch and countrywide; Wells Fargo acquired Wachovia) and tax payer funds paid for years and years of bank foreclosure cases (most of which were done using fraudulent bank documents). Literally the banks couldn’t afford to foreclose on the homes secured by toxic loan and tax payer funds went to foreclosing on tax payers. If the banks were in trouble again, government would bail them out again with tax payer money to the detriment of tax payers. Just like the government did last time they would sweep people under the rug by removing them from unemployment numbers and pretending they never existed.

They starting printing money (and have largely not stopped) and not letting banks fail that needed to die.

htrp 5y ago

https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_L... https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investment_Program_for_Legacy_Assets https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investm... Broadly we call this entire period quantitative easing.....

bradleyjg 5y ago

There was a government takeover of the residential mortgage sector. Private companies today largely act as agents for GSEs, the Fed, or other parts of the government. They originate mortgages, package them, and service them but the government sets rates, underwriting rules, and holds the risk. Thus it was very easy for it to reinflate the bubble far beyond where it was in 2007 (check out case-schiller https://fred.stlouisfed.org/graph/?g=It55 https://fred.stlouisfed.org/graph/?g=It55). If prices look like they are about to stall keep an eye out for the introduction of the low rate 50 year fixed rate mortgage. Whatever it takes to keep incumbent homeowners receiving endless windfalls.

throwawaycities 5y ago

Banks were insolvent in 2008, in lieu of them facing the natural consequences of the free market (bankruptcy) the banks were given nearly $2T of tax payer money which the banks used to consolidate through acquisitions/mergers (Chase acquired bear sterns and Washington mutual; BOA acquired Merrill lynch and countrywide; Wells Fargo acquired Wachovia) and tax payer funds paid for years and years of bank foreclosure cases (most of which were done using fraudulent bank documents). Literally the banks couldn’t afford to foreclose on the homes secured by toxic loan and tax payer funds went to foreclosing on tax payers. If the banks were in trouble again, government would bail them out again with tax payer money to the detriment of tax payers. Just like the government did last time they would sweep people under the rug by removing them from unemployment numbers and pretending they never existed.