4 ms·

The recession in 2008 was never really fixed, we just kicked the can down the road.

upupandup 4y ago
what does this mean exactly? We can't raise the rates anymore without substantial structural shift in our economy? Such as the end of ridiculous earnings-to-price multiples?
- candiddevmike 4y ago
  Pretty much, to me I think the problems facing the US economy entirely revolve around wealth inequality and require significant, painful policy measures to fix.
- anm89 4y ago
  We took a crisis of bank and consumer balance sheets and relocated it to the government balance sheet by artificially generating liquidity backed by government liabilities. We didn't change many of the underlying mechanics (if you believe that the mbs rating schemes and bad mortgages were a symptom and not a cause which I do, we did fix those things) The problems with a debt crisis at the sovereign level is there is only one can left to kick and that's the inflation can. The government says they don't want inflation but if it comes down to real solvency issues, they are going to give in to inflation, if the choice is between that and defaulting. We basically have been playing a liquidity shuffling game since the first tech bubble.
  - user3939382 4y ago
    The Fed will curb inflation with high rates that slow down the entire economy and drive up unemployment, which is exactly what they're doing.
- phil21 4y ago
  "Too Big to Fail" was introduced into our vocabulary. I think beyond that it's too many words to really get into?
nimbius 4y ago
IDK why this is being downvoted...poster is right. QE never ended in 2008 or when it peaked in 2010...and the closest we came to trying was in 2010 which sparked a flash crash and was immediately shelved as an option in favour of three more rounds of QE on the house. from TFA: "The Fed's pandemic actions fueled a housing boom" well thats part of the issue (pulling a mini tarp), but the other half of the story is the extraordinary steps taken way back in 2010 to keep people in their homes in the first place. The government wanted cake and they wanted to eat it too. Banks that over-leveraged and pandered predatory loans were never allowed to crash and burn; they were almost all bailed out through TARP. homeowners in turn who accepted these loans were also often gifted with TARP assistance that kept them in overvalued homes. auto-makers without customers were never made to reform, only a few token concessions and mergers here and there for companies with a track-record of dismal performance, and a well published cosmetic defect when executives from these conglomerates came with dog-eared pockets to congress on private jets. Effectively, when the market ran out of gas, the federal government began expectorating ether into the air scoop of the economy like a wasteland war boy effectively trying to outrun any crash that didnt focus entirely on the poorest members of society.
deleted 4y ago
[deleted]
ethbr0 4y ago
The recession of 2008 was absolutely fixed, in that bank collapses were prevented, highly leveraged products based on bad loans were drained from the balance sheets, underwriting was tightened up, and economic activity rebounded. That fix was just never paid for, in terms of shrinking Fed balance sheets and renormalizing rates.
- aeternum 4y ago
  A good part was paid for. The bank bailouts for example made the Fed some not insignificant amount of money.
- tempfs 4y ago
  You can't halt a bank collapse, but you can postpone it and attempt to reduce the impact with inflation which is exactly what has happened. Additionally, if you don't address the lack of regulation that allowed the collapses in 2008, which we absolutely did not, it will keep happening and those future occurrences will grow in severity. Since now, in order to 'make money', the frauds have to be bigger, faster, and more aggressive.
  - NovemberWhiskey 4y ago
    >You can't halt a bank collapse, but you can postpone it and attempt to reduce the impact with inflation which is exactly what has happened. What does that even mean?
  - king-geedorah 4y ago
    What do you mean you can't halt a bank collapse? That's exactly what we did. There was a solvency issue when panic ensued after MBS's blew up and we were able to limit a domino effect of bank failures after moving fast to inject capital into the system. Do you mean it in a philosophical sense similar to the idea that every company will eventually go bankrupt given enough time? Any major crisis is capable of bringing down banks, its inherently a feature of fractional reserve banking but the benefits have so far outweighed the risks.

what does this mean exactly? We can't raise the rates anymore without substantial structural shift in our economy? Such as the end of ridiculous earnings-to-price multiples?

candiddevmike 4y ago
Pretty much, to me I think the problems facing the US economy entirely revolve around wealth inequality and require significant, painful policy measures to fix.
anm89 4y ago
We took a crisis of bank and consumer balance sheets and relocated it to the government balance sheet by artificially generating liquidity backed by government liabilities. We didn't change many of the underlying mechanics (if you believe that the mbs rating schemes and bad mortgages were a symptom and not a cause which I do, we did fix those things) The problems with a debt crisis at the sovereign level is there is only one can left to kick and that's the inflation can. The government says they don't want inflation but if it comes down to real solvency issues, they are going to give in to inflation, if the choice is between that and defaulting. We basically have been playing a liquidity shuffling game since the first tech bubble.
- user3939382 4y ago
  The Fed will curb inflation with high rates that slow down the entire economy and drive up unemployment, which is exactly what they're doing.
phil21 4y ago
"Too Big to Fail" was introduced into our vocabulary. I think beyond that it's too many words to really get into?

nimbius 4y ago

IDK why this is being downvoted...poster is right. QE never ended in 2008 or when it peaked in 2010...and the closest we came to trying was in 2010 which sparked a flash crash and was immediately shelved as an option in favour of three more rounds of QE on the house. from TFA: "The Fed's pandemic actions fueled a housing boom" well thats part of the issue (pulling a mini tarp), but the other half of the story is the extraordinary steps taken way back in 2010 to keep people in their homes in the first place. The government wanted cake and they wanted to eat it too. Banks that over-leveraged and pandered predatory loans were never allowed to crash and burn; they were almost all bailed out through TARP. homeowners in turn who accepted these loans were also often gifted with TARP assistance that kept them in overvalued homes. auto-makers without customers were never made to reform, only a few token concessions and mergers here and there for companies with a track-record of dismal performance, and a well published cosmetic defect when executives from these conglomerates came with dog-eared pockets to congress on private jets. Effectively, when the market ran out of gas, the federal government began expectorating ether into the air scoop of the economy like a wasteland war boy effectively trying to outrun any crash that didnt focus entirely on the poorest members of society.

deleted 4y ago

[deleted]

ethbr0 4y ago

The recession of 2008 was absolutely fixed, in that bank collapses were prevented, highly leveraged products based on bad loans were drained from the balance sheets, underwriting was tightened up, and economic activity rebounded. That fix was just never paid for, in terms of shrinking Fed balance sheets and renormalizing rates.

aeternum 4y ago
A good part was paid for. The bank bailouts for example made the Fed some not insignificant amount of money.
tempfs 4y ago
You can't halt a bank collapse, but you can postpone it and attempt to reduce the impact with inflation which is exactly what has happened. Additionally, if you don't address the lack of regulation that allowed the collapses in 2008, which we absolutely did not, it will keep happening and those future occurrences will grow in severity. Since now, in order to 'make money', the frauds have to be bigger, faster, and more aggressive.
- NovemberWhiskey 4y ago
  >You can't halt a bank collapse, but you can postpone it and attempt to reduce the impact with inflation which is exactly what has happened. What does that even mean?
- king-geedorah 4y ago
  What do you mean you can't halt a bank collapse? That's exactly what we did. There was a solvency issue when panic ensued after MBS's blew up and we were able to limit a domino effect of bank failures after moving fast to inject capital into the system. Do you mean it in a philosophical sense similar to the idea that every company will eventually go bankrupt given enough time? Any major crisis is capable of bringing down banks, its inherently a feature of fractional reserve banking but the benefits have so far outweighed the risks.