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The 2008 stock market crash famously reduced inequality. Definitely didn't increase inequality by leaving the average person (via government bailouts) holding t

• swiftcoder 2y ago
  The 2008 crash was also famously centred around mortgages, rather than pure stocks
  • __loam 2y ago
    [flagged]
  • keernan 2y ago
    Mortgages that were packaged into mutual funds that traded on the stock exchanges. Meanwhile, the insiders who knew what was going on (that the packaged mortgages were super high risk) insured their risk through new financial products - specifically 'credit default swaps' marked by AIG. The gimmick there was that AIG designed the swaps in a way that avoided insurance reserve regulations - and thus AIG had no money set aside in the event of default. So when the shit hit the fan taxpayers coughed up close to 200 billion dollars to cover the 'swaps' sold by AIG that were backed by ... nothing. A fair number of billionaires rose out of the ashes of those shenanigans. None were ever charged. That's how 'capitalism' works in the gold old USA. Always has. Always will.
    • actionfromafar 2y ago
      The funny thing is, 200 billion seems like pocket change compared to what is about to happen with the Republican budget now.
• stuaxo 2y ago
  Indeed, the bailout if banks in multiple countries is the biggest transfer from the rest of us, to the rich there has ever been. Absolutely enormous amounts of money.
  • jajko 2y ago
    All major banks paid back all those loans with interest. That was actually net income for governments that lended those money. Who really lost money directly were all those speculators who had 10 mortgages on them and just kept taking more and more. Look, I am all for hatin' the big man when he deserves it and he often does, but lets be a bit smart and not just throw random angry spits without checking the facts, shall we? Do you even realize that during covid globally money lost some 20-30% of their purchasing power? That's real burning cash of regular folks right in front of you and everybody else.
    • timewizard 2y ago
      [flagged]
      • jajko 2y ago
        Not sure why the personal attacks, I believe you can and should do better. Also please stop incorrect claims about what I am doing. Also you switch goalposts, I've reacted to parent's claims and not ones you are making up as you go. And so on.
      • vkou 2y ago
        Whether they deserved the loans or not is irrelevant to whether the loans were paid back. Which they were, I'm not sure why people keep repeating the lie that they didn't.
    • pjmlp 2y ago
      No they didn't, some of them went bankrupt anyway, while others used that money in corruption schemes, which is why in Portugal many people nowadays avoid any kind of offers their bank advisors propose.
• lmpdev 2y ago
  Only in the US and some other countries I’m still “waiting” for the GFC to correct the Australian housing market…
• weatherlite 2y ago
  I'm assuming sarcasm here. The 2008 crash was immediately offset by huge rounds of QE that most of them went to bail out financial institutions and inadvertently further inflated the prices of most assets. It may have been necessary, I don't know, but the bottom line is the stock market (and all assets generally) was inflated with huge sums of new money.
  • raziel2p 2y ago
    so how does this align with your opinion/idea that a stock market crash today would reduce inequality? more likely the same thing would just happen again.
    • weatherlite 2y ago
      Its probably not easy but I think a policy that protects the workers instead of a policy that protects the corporations / shareholders. You can let corporations go bankrupt - thus causing shareholders to get wiped out, and compensate by protecting the workers and poorer people with government checks until they can find new employment. Banks are probably the only exception , I don't think you can let the banks fail without risking an economic collapse.
      • sharemywin 2y ago
        if the government had a sovereign wealth fund it could have bought all the failing companies and "divested" when the market recovered. instead of being massively in debt it could have probably come out on top. granted that incentivizes the government to cause market crashes but there no perfect system.
      • from-nibly 2y ago
        That would massively slow the economy and the people at the top will never do that.
        • weatherlite 2y ago
          True , but inflating an endless assets and debt bubble in the hopes A.I will come to save us is also probably not sustainable.
• bawolff 2y ago
  Similarly, the great depression was not a great time to be poor. [Edit:to be clear income inequality did go down, but poor people got a lot poorer, which seems like a pretty bad outcome]
  • carlob 2y ago
    The great depression in itself wasn't, but the combined effect of WWI, GD and WW2 was. We razed Europe rather than redistribute.
    • insane_dreamer 2y ago
      Also ended up with all of Europe's gold by the end of WW2, making the dollar the global reserve currency
      • dredmorbius 2y ago
        Both facts may be true without the causal link being present. Establishing the US as the global reserve currency had little if anything to do with where gold was stored, and far more to do with US economic and military power generally in the post-war era.
        • insane_dreamer 2y ago
          That’s incorrect. It had a lot to do with it because it represented the fact that Europe’s governments had little to no wealth after WW2 while the US had it all (thus economic and military dominance).
          • dredmorbius 2y ago
            And wealth, as Mr. Smith says, is "the produce and labour of the nation", which is to say, economic activity, as noted in my GP comment.
            • 2y ago
• roenxi 2y ago
  In fairness; there is an ongoing strategy of printing money and distributing it to asset owners. That may also be contributing to asset owners accounting for most spending.
  • ty6853 2y ago
    This is basically what happened during the covid low interest mania. Not realizing what had happened, in three years I went from "almost enough to buy a house in the city in cash" to "have to buy vacant rural wasteland then develop it myself from scratch." The latter worked out, but cost me two years of my life of hard labor. Those two years of manual labor more or less represent what home owners took from non owners via the central bank.
    • willvarfar 2y ago
      Do you mean you developed vacant rural land from scratch? Ignoring the meta economy lessons etc, how was it? Do you love what you've done? How did you do it? Where is it? What was surprisingly hard and what was surprisingly easy? Etc etc etc, please tell all! Love this kind of stuff :D (An HNer just embarking on a house self-building project)
• vkou 2y ago
  The bailouts were paid back with interest. QE was not, but, you know, everyone who owns assets or had a job turned out to be a beneficiary of it.