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You say that as if it hasn't been going on for at least decades. I'd wager that there's some perspective that could argue it's a default mode of society and fin

You say that as if it hasn't been going on for at least decades. I'd wager that there's some perspective that could argue it's a default mode of society and financial systems, that occasionally is hard to notice during rapid increases in prosperity.

tehjoker 2y ago
I mean, I guess it did peak in 2008, and also in the S&L scandal in the 80s, but still bitcoin serves no conceivable practical purpose. At least CDOs in principle were supposed to get people homes even if they were mostly a scam.
- chews 2y ago
  No, a CDO by definition is a rehypothecation of an asset that really didn't need it, it was just a means to let others bet on what seemingly was a sure thing until it was not. Not only was the underlying security, it's derivative, and an insurance product to boot, that's why insurance companies also got bailouts. This massive failure is what created the need for bitcoin, a means in which to trap energy (you need to spend money to make bitcoin) and store/move it digitally, then you get the benefit of a visible record of transfers and stores. As a silvergate, signature, and SVB customer they didn't hedge their t-bill duration risk properly, experienced a co-ordinated bank run and had to sell their assets off at a discount, making them insolvent.
  - mmooss 2y ago
    CDOs allowed more finance to flow to housing, which in itself is a good thing - we need more housing. The problem was that the investments were highly risky - to the point of almost certain disaster - and regulators and most of the financial industry overlooked it. But securitizing housing finance isn't in itself a bad thing. > This massive failure is what created the need for bitcoin How did the 2008 financial crisis create a need for cryptocurrency? How does it solve the problem of unregulated, high risk financial activity? How does it stop those things from tanking the whole economy? It would seem to make regulation even harder. > rehypothecation ?
    - o11c 2y ago
      > CDOs allowed more finance to flow to housing, which in itself is a good thing - we need more housing. There's a big leap in that statement. Money is made up and "doesn't matter" (except that we choose to structure our society to pretend it does); what matters is actual productivity. If you want to solve the housing problem, you have to produce more houses; if you just throw money at the problem, the market will expand to consume all available money.
      - mmooss 2y ago
        I understand the philosophical concepts about money, fiat, productivity, etc. I don't understand what you mean beyond that: It seems like - maybe I misunderstand - you are dismissing money as a store of economic value; a means of liquidity of resources; and its essential, overwhelmingly powerful role in productivity, including real estate development. In this case, the CDOs provided liquidity to mortgages, and that reduces the cost of buyer financing and increases demand for housing. In particular, they financed mortgages for people with poorer credit - generally less well-off people, the people for whom housing is an issue. Increased demand should attract resources to homebuilding, and result in more homes and lower prices for that market. > the market will expand to consume all available money Yes! We want the housing market to expand. ?
        o11c 2y ago
        In some respects it is similar to the student loan industry: when the system makes money readily "available" but it's hard to actually increase the supply, prices rise radically; since this is a loan rather than a handout that means making people actually worse off. Or in other words, it mainly just steals (the industry term is "extracts value from") the productivity gains from other parts of the economy, rather than actually adding productivity. I'm not trying to make a philosophical point really - just pointing out that you can't get a honest picture of economic concerns if you think from the perspective of the finance industry.
        mmooss 2y ago
  - hcknwscommenter 2y ago
    "need for bitcoin" I don't get this. There is no need for bitcoin. You can have a visible record of transfers and stores without bitcoin. Heck we already do. Any old database will do. You can even write in COBOL or ALGOL
mmooss 2y ago
It hasn't been going on for decades. Prior banking crises were because of holes in regulation (and of course bad behavior by banks) that were unknown to the public, regulators, and most of the banking industry. Regulators didn't give the green light to participate in highly risky activities that the public was already aware of. There is always risk - everyone takes some risks - but the matter of degree is everything. Some people risk crossing the street against the light, some people go skydiving, some people climb in Yosemite without a rope.
- FloorEgg 2y ago
  I wasn't talking about risk, I was talking about fraud. There's a lot of fraud going on, and probably always has been and always will be. It becomes obvious when the pie is shrinking, and it's hard to notice when the pie is growing rapidly. You're using a straw man about risk to argue against my point instead of addressing it directly. Sure the fraud methods evolve, but the idea that it's some new recent phenomenon is what I'm arguing against.
  - mmooss 2y ago
    It's the same mistake misconceiving of fraud rather than risk: The issue isn't its existance - of course there will be some somewhere - but the degree. It's like saying it rains everywhere - which is true - so everywhere is the same in terms of drought, floods, etc., and we shouldn't build dikes, storm sewers, water storage, etc. It's nonsensical. The argument also fails logically: If there is all this fraud, why would we be seeking more? Someone just told me the US should invade Mexico because there has always been warfare. Same bizarre argument. Let's minimize fraud and warfare, not increase them dramatically (because there has been fraud and warfare before).
    - FloorEgg 2y ago
      I'm not arguing that because there has always been fraud we shouldn't fight it. I'm arguing that I don't think there's substantially more fraud now than there always has been.

tehjoker 2y ago

I mean, I guess it did peak in 2008, and also in the S&L scandal in the 80s, but still bitcoin serves no conceivable practical purpose. At least CDOs in principle were supposed to get people homes even if they were mostly a scam.

chews 2y ago
No, a CDO by definition is a rehypothecation of an asset that really didn't need it, it was just a means to let others bet on what seemingly was a sure thing until it was not. Not only was the underlying security, it's derivative, and an insurance product to boot, that's why insurance companies also got bailouts. This massive failure is what created the need for bitcoin, a means in which to trap energy (you need to spend money to make bitcoin) and store/move it digitally, then you get the benefit of a visible record of transfers and stores. As a silvergate, signature, and SVB customer they didn't hedge their t-bill duration risk properly, experienced a co-ordinated bank run and had to sell their assets off at a discount, making them insolvent.
- mmooss 2y ago
  CDOs allowed more finance to flow to housing, which in itself is a good thing - we need more housing. The problem was that the investments were highly risky - to the point of almost certain disaster - and regulators and most of the financial industry overlooked it. But securitizing housing finance isn't in itself a bad thing. > This massive failure is what created the need for bitcoin How did the 2008 financial crisis create a need for cryptocurrency? How does it solve the problem of unregulated, high risk financial activity? How does it stop those things from tanking the whole economy? It would seem to make regulation even harder. > rehypothecation ?
  - o11c 2y ago
    > CDOs allowed more finance to flow to housing, which in itself is a good thing - we need more housing. There's a big leap in that statement. Money is made up and "doesn't matter" (except that we choose to structure our society to pretend it does); what matters is actual productivity. If you want to solve the housing problem, you have to produce more houses; if you just throw money at the problem, the market will expand to consume all available money.
    - mmooss 2y ago
      I understand the philosophical concepts about money, fiat, productivity, etc. I don't understand what you mean beyond that: It seems like - maybe I misunderstand - you are dismissing money as a store of economic value; a means of liquidity of resources; and its essential, overwhelmingly powerful role in productivity, including real estate development. In this case, the CDOs provided liquidity to mortgages, and that reduces the cost of buyer financing and increases demand for housing. In particular, they financed mortgages for people with poorer credit - generally less well-off people, the people for whom housing is an issue. Increased demand should attract resources to homebuilding, and result in more homes and lower prices for that market. > the market will expand to consume all available money Yes! We want the housing market to expand. ?
      - o11c 2y ago
        In some respects it is similar to the student loan industry: when the system makes money readily "available" but it's hard to actually increase the supply, prices rise radically; since this is a loan rather than a handout that means making people actually worse off. Or in other words, it mainly just steals (the industry term is "extracts value from") the productivity gains from other parts of the economy, rather than actually adding productivity. I'm not trying to make a philosophical point really - just pointing out that you can't get a honest picture of economic concerns if you think from the perspective of the finance industry.
        mmooss 2y ago
- hcknwscommenter 2y ago
  "need for bitcoin" I don't get this. There is no need for bitcoin. You can have a visible record of transfers and stores without bitcoin. Heck we already do. Any old database will do. You can even write in COBOL or ALGOL

mmooss 2y ago

It hasn't been going on for decades. Prior banking crises were because of holes in regulation (and of course bad behavior by banks) that were unknown to the public, regulators, and most of the banking industry. Regulators didn't give the green light to participate in highly risky activities that the public was already aware of. There is always risk - everyone takes some risks - but the matter of degree is everything. Some people risk crossing the street against the light, some people go skydiving, some people climb in Yosemite without a rope.

FloorEgg 2y ago
I wasn't talking about risk, I was talking about fraud. There's a lot of fraud going on, and probably always has been and always will be. It becomes obvious when the pie is shrinking, and it's hard to notice when the pie is growing rapidly. You're using a straw man about risk to argue against my point instead of addressing it directly. Sure the fraud methods evolve, but the idea that it's some new recent phenomenon is what I'm arguing against.
- mmooss 2y ago
  It's the same mistake misconceiving of fraud rather than risk: The issue isn't its existance - of course there will be some somewhere - but the degree. It's like saying it rains everywhere - which is true - so everywhere is the same in terms of drought, floods, etc., and we shouldn't build dikes, storm sewers, water storage, etc. It's nonsensical. The argument also fails logically: If there is all this fraud, why would we be seeking more? Someone just told me the US should invade Mexico because there has always been warfare. Same bizarre argument. Let's minimize fraud and warfare, not increase them dramatically (because there has been fraud and warfare before).
  - FloorEgg 2y ago
    I'm not arguing that because there has always been fraud we shouldn't fight it. I'm arguing that I don't think there's substantially more fraud now than there always has been.