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I somewhat disagree with this on the surface. 2008 was a byproduct of banks holding ratings companies (Moody's and Standard and Poor's) hostage. The banks gave

by kodah 4y ago

I somewhat disagree with this on the surface. 2008 was a byproduct of banks holding ratings companies (Moody's and Standard and Poor's) hostage. The banks gave completely fraudulent ratings to loans, the ratings companies falsified ratings on packages, and eventually the house of cards came tumbling down when enough people tried to pull their money out. There is a way to rate and classify derivatives appropriately, you just can't hold the ratings people hostage. I don't think there's a way to do that with crypto.

highwaylights 4y ago
This. The banks weren’t to blame for 2008 any more than were the hoardes of FOMO buyers - in that they were both pretty culpable but neither of them were the real problem. Lax regulation of the rating agencies was the real smoking gun. I’m not even sure it was ever addressed given all the banker witch hunts that ensued, and will next time too. Dave Chappelle was on Saturday Night Live this past week and did a bit in the monologue about why we can’t have good regulations. Worth checking out: https://m.youtube.com/watch?v=_m-gO0HSCYk https://m.youtube.com/watch?v=_m-gO0HSCYk (Starts at 8:50)
- fortran77 4y ago
  A lot of those "FOMO Buyers" lied on their mortgage applications and suffered no repercussions. In fact, many of them ended up doing quite well despite crying "Boo Hoo! I lost my house." The spent their HELOC and never had to pay it back, they took the "first time homebuyers tax credit", and many of them lived in the house they "bought" for a year or two without paying any mortgage payment until the bank finally took it back. They never paid income tax on any forgiven debt, and they never paid income tax on the imputed income from living in a nice house for a couple of years rent-free until the bank finally was able to take possession of it.
hestefisk 4y ago
It was also a function of banks bundling and rebundling junk debt into “synthetic products”; hence the good observation on banks repackaging the same assets in different ways. The same as happened in crypto, in an even more sophisticated way that few people (at least retail investors) can’t really grasp.

by kodah 4y ago

highwaylights 4y ago

This. The banks weren’t to blame for 2008 any more than were the hoardes of FOMO buyers - in that they were both pretty culpable but neither of them were the real problem. Lax regulation of the rating agencies was the real smoking gun. I’m not even sure it was ever addressed given all the banker witch hunts that ensued, and will next time too. Dave Chappelle was on Saturday Night Live this past week and did a bit in the monologue about why we can’t have good regulations. Worth checking out: https://m.youtube.com/watch?v=_m-gO0HSCYk https://m.youtube.com/watch?v=_m-gO0HSCYk (Starts at 8:50)

fortran77 4y ago
A lot of those "FOMO Buyers" lied on their mortgage applications and suffered no repercussions. In fact, many of them ended up doing quite well despite crying "Boo Hoo! I lost my house." The spent their HELOC and never had to pay it back, they took the "first time homebuyers tax credit", and many of them lived in the house they "bought" for a year or two without paying any mortgage payment until the bank finally took it back. They never paid income tax on any forgiven debt, and they never paid income tax on the imputed income from living in a nice house for a couple of years rent-free until the bank finally was able to take possession of it.

hestefisk 4y ago

It was also a function of banks bundling and rebundling junk debt into “synthetic products”; hence the good observation on banks repackaging the same assets in different ways. The same as happened in crypto, in an even more sophisticated way that few people (at least retail investors) can’t really grasp.