6 ms·

Anger about the 2008 bailout makes sense. Yen carry unwind deserves attention. However, the trading call to action fails on market structure. Key counterpoints

Anger about the 2008 bailout makes sense. Yen carry unwind deserves attention. However, the trading call to action fails on market structure. Key counterpoints: - Global FX turnover runs near $9.6T per day (BIS, April 2025). A retail wave of calls will not move USD/JPY in a durable way at that scale. - /6J options settle on /6J futures. When you buy calls, you mostly push dealer delta hedging into futures, then dealers unwind as exposure changes. No sustained spot yen demand comes from that flow. - FXY calls track an ETF wrapper, not spot. - “Widowmaker trade” most often refers to repeated losses from shorting Japanese government bonds, not a long-yen crowd squeeze.

dist-epoch 8mo ago
That $9.6T is mostly back and forth non-directional HFT. Otherwise it would not take a day to swap $500 mil for commercial reasons (think buying a couple Boeing plane with Euros) to avoid too much market impact as documented in multiple interviews with currency dealers stating it takes them 1 day to "work" a $500 mil order. Retail can move FX, if it piles into one pair. But unlike the Boeing order they will also need to exit the trade at some point, which makes them vulnerable.
bandrami 8mo ago
> Anger about the 2008 bailout makes sense Does it? It cost the taxpayers nothing (in fact it made us money), it destroyed 4 of the 5 largest investment banks in the US, and it sent over 200 bankers, brokers, and auditors to jail. What part of that are people mad about, and why?
- tired-turtle 8mo ago
  If I had to guess, Americans say they dislike the 2008 bailouts to mean they dislike how Wall Street banks caused a recession.
  - bandrami 8mo ago
    I think most people think that TARP cost the government money (rather than the opposite) and that "only one banker went to jail" is still true (it hasn't been true since 2013). Which is honestly a pretty shocking indictment of the news media.
    - momoschili 8mo ago
      Nobody that mattered went to jail. A few lackeys might have been thrown to the wolves, though it seems only 1 spent significant time in jail. Meanwhile the board members, C-suite of Lehmann, Bear Stearns, WaMu, etc didn't spend a second in jail. What's really shocking is you burying the lede.
      - bandrami 8mo ago
        There are dozens of people still in jail, including C suite officers. Like I said the media just absolutely dropped the ball on this.
        momoschili 8mo ago
        Can you name any of them? As far as I know none of the CEOs of the major banks spent any time in jail. They tried to get the CEO of Wamu but he successfully countersued (LOL) to get the Feds to drop the charges? edit: it's unfortunate that you can't bring up any actual evidence to support your assertion
        bandrami 8mo ago
        The TARP inspector general used to have a database of everybody they jailed but unfortunately it got DOGEd. It wasn't anybody famous but kind of the whole point of doing illegal things is that you try not to be high-profile when you do them.
        elliotec 8mo ago
        It's also incredibly bizarre they'd go on such defense like this beyond zero evidence. Why on earth would someone make this shit up 18 years later?
- roenxi 8mo ago
  > It cost the taxpayers nothing (in fact it made us money) Pull the other one, it has bells on it. If the government is involved in a financial transaction it is because nobody in the private sphere with money wants to be involved. That means either the return wasn't commensurate to the risk or there was dodgy accounting going on that nobody would actually thought represented a reasonable real return. If there was actually a prospect of making a reasonable return, money would have been found. Even the creditors might have been willing to make deals. I bet the average taxpayer would much rather have the money given to them in their capacity as an individual and would have profited off it more than the hypothetical return the US government may claim it made. > What part of that are people mad about, and why? The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke. It is a terrible idea to be printing money to prop up asset owners. If that is the basic plan anyway, it shouldn't be mandatory to have incompetents mediating the handout process. And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food. Maybe set up a special welfare system for people who lost their life savings if something has to be done, but for heavens sake, taking (and I repeat myself) known, verified incompetents and guaranteeing them ongoing control of the financial system is wildly stupid. It is on par with a scheme like mandating people all buy in to cryptocurrencies.
  - bandrami 8mo ago
    > either the return wasn't commensurate to the risk It's because the markets were frozen up; I was actually alive then and you can't really gaslight me about this
    - n_u 8mo ago
      what does "frozen up" mean?
      - bandrami 8mo ago
        Corporate bonds were simply not being bought, at any price. Same with commercial paper. Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.
- Aurornis 8mo ago
  The people angry about the 2008 bailout usually have little interest in the facts. I’ve had countless conversations where I’ve tried to tell people that the bailouts were a net positive or that people were, in fact, sent to jail. Outside of people familiar with finance, most people refuse to believe it. A lot of people I’ve talked to about it weren’t even adults when the bailout happened. They weren’t watching the news and didn’t care at the time. They only know it through pop culture and from fiery speeches from politicians and influencers. The idea of a bailout has become synonymous with the government handing hard-earned tax dollars over to banks, no strings attached. The facts don’t really matter.
  - boxed 8mo ago
    Even more fun: people are mad about the bailout here in Sweden. But none of the Swedish banks took any bailouts! Not a single one.
    - stefanfisk 8mo ago
      I can’t really remember hearing a Swede complain about bank bailouts in relation to the 2008 crisis. The 90s crisis and related bailouts are however often referenced when complaining about the banks making huge profits these days. Whether that’s reasonable or not is another question.
  - momoschili 8mo ago
    None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?
    - bandrami 8mo ago
      Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century (and there have been some pretty huge ones competing with it)
      - 8mo ago
- n_u 8mo ago
  > It cost the taxpayers nothing (in fact it made us money) I was surprised to learn that the "bailout" was in fact a loan that was repaid with interest for a "net profit of $121 billion" [1] rather than just giving the banks money. After learning this, I polled many people around me and few had understood the terms of the transaction. So I think there may be significant public misunderstanding there. Even if people do understand it was a loan, there's an argument to be made that the money could have been spent in better ways (e.g. early education improvement, preventative healthcare etc. that also give long term returns in preventing crime and reducing healthcare costs). If you believe not giving the loans would have caused the total collapse of the economy and worsened of all of those things (crime, healthcare, education etc.), then it seems a worthwhile investment. But not everyone may share that perspective. > What part of that are people mad about, and why? Another element of the controversy was the payment of $218 million of bonuses to the executives of AIG which was being bailed out and effectively run by the federal government [2]. Apparently the government allowed the bonuses because Geithner said there was no legal basis for voiding the bonus contracts.[3] Some people think controversy over government mortgage relief spawned the Tea Party movement based on this speech by Rick Santelli [4] about his dissatisfaction with the government's bailing out the "losers" who couldn't afford their mortgages. Some people also feel there could have been more regulation of the financial sector or breakup of big banks [5] or more stipulations attached to the loans. Just some suggestions based on my understanding of the history. [1] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#Impact https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#... [2] https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy [3] https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079 https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079 [4] https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023 https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023 [5] https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendment https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendmen...
  - rcxdude 8mo ago
    It seems only the very simplified narrative actually sticks, especially when it is convenient for anti-establishment types to do so (and realistically, approximately no-one really _likes_ Wall Street). But I think it's important to consider that while probably the government didn't go as far as it could, it did for the most part help prevent the crisis from getting worse for those who were not responsible while for the most part not doing much for the people working in finance, especially those that they could nail for outright fraud.
- m101 8mo ago
  When you lend money at 1% but market rates are 30% then you are, in fact, losing money. Except under your definition you are not losing money.
- snapcaster 8mo ago
  That "special" people got access to credit while normal people have their lives destroyed duh
- MonkeyClub 8mo ago
  > (in fact it made us money) And caused a global recession along the way. The loan repayment interest didn't (and couldn't possibly) cover even a fraction of the backlash, which includes lives destroyed world-wide. Externalities?
  - pjc50 8mo ago
    Need to be clearer about "it" here: the crash caused the recession, not the bailout. The recession was inevitable because some of the growth was illusory, based on leveraged gains from house prices.
  - duxup 8mo ago
    >And caused a global recession along the way. They're talking about the bailout. I think the bailout came after the cause of the recession.
- dumah 8mo ago
  This is one of the most sustained bad-faith arguments I’ve seen on HN. The idea that 4 of the largest investment banks in the US were destroyed is not just utterly false, it’s hard to imagine how one could interpret the outcome in this manner. Why would anyone be happy that the government offered handouts that were stolen, low-level criminals prosecuted, meanwhile every single principal who was culpable went unpunished? I don’t need to hear from you how this is off-base or I’m misunderstanding. I’m close to principals involved in the crisis and worked for years in the response to it, and have heard what went on in the meetings dramatized afterwards.
  - pjc50 8mo ago
    > every single principal who was culpable went unpunished? Who, specifically, was culpable for what? I appreciate that anger is not a charge sheet, but .. we could actually do with a more enumerated list of who specifically did which specific illegal act, in order to have a proper discussion.
- bschmidt700 8mo ago
  [dead]
- shimman 8mo ago
  People are mad because the government bailed out banks over people, the last time this happened FDR bailed out people over the banks. If you can't understand why people are angry that the government continues to give away large amounts of corporate welfare without protecting people, then I'd definitely read up on people movements because a few are brewing across the country and all of them want blood.
- pragmatic 8mo ago
  https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much-2008-bailouts-really-cost https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much... What's your source?
dash2 8mo ago
More generally, be very suspicious when someone offers you investing advice dressed up as a call for solidarity and revolution. It’s intellectually dishonest and emotionally manipulative.
BobbyTables2 8mo ago
What about the car companies bailed out… Now they act like they’re doing us a favor by negotiating to sell a vehicle only a little above sticker price. Excuse me while I vomit…
- cindyllm 8mo ago
  [dead]

dist-epoch 8mo ago

That $9.6T is mostly back and forth non-directional HFT. Otherwise it would not take a day to swap $500 mil for commercial reasons (think buying a couple Boeing plane with Euros) to avoid too much market impact as documented in multiple interviews with currency dealers stating it takes them 1 day to "work" a $500 mil order. Retail can move FX, if it piles into one pair. But unlike the Boeing order they will also need to exit the trade at some point, which makes them vulnerable.

bandrami 8mo ago

> Anger about the 2008 bailout makes sense Does it? It cost the taxpayers nothing (in fact it made us money), it destroyed 4 of the 5 largest investment banks in the US, and it sent over 200 bankers, brokers, and auditors to jail. What part of that are people mad about, and why?

tired-turtle 8mo ago
If I had to guess, Americans say they dislike the 2008 bailouts to mean they dislike how Wall Street banks caused a recession.
- bandrami 8mo ago
  I think most people think that TARP cost the government money (rather than the opposite) and that "only one banker went to jail" is still true (it hasn't been true since 2013). Which is honestly a pretty shocking indictment of the news media.
  - momoschili 8mo ago
    Nobody that mattered went to jail. A few lackeys might have been thrown to the wolves, though it seems only 1 spent significant time in jail. Meanwhile the board members, C-suite of Lehmann, Bear Stearns, WaMu, etc didn't spend a second in jail. What's really shocking is you burying the lede.
    - bandrami 8mo ago
      There are dozens of people still in jail, including C suite officers. Like I said the media just absolutely dropped the ball on this.
      - momoschili 8mo ago
        Can you name any of them? As far as I know none of the CEOs of the major banks spent any time in jail. They tried to get the CEO of Wamu but he successfully countersued (LOL) to get the Feds to drop the charges? edit: it's unfortunate that you can't bring up any actual evidence to support your assertion
        bandrami 8mo ago
        The TARP inspector general used to have a database of everybody they jailed but unfortunately it got DOGEd. It wasn't anybody famous but kind of the whole point of doing illegal things is that you try not to be high-profile when you do them.
        elliotec 8mo ago
        It's also incredibly bizarre they'd go on such defense like this beyond zero evidence. Why on earth would someone make this shit up 18 years later?
roenxi 8mo ago
> It cost the taxpayers nothing (in fact it made us money) Pull the other one, it has bells on it. If the government is involved in a financial transaction it is because nobody in the private sphere with money wants to be involved. That means either the return wasn't commensurate to the risk or there was dodgy accounting going on that nobody would actually thought represented a reasonable real return. If there was actually a prospect of making a reasonable return, money would have been found. Even the creditors might have been willing to make deals. I bet the average taxpayer would much rather have the money given to them in their capacity as an individual and would have profited off it more than the hypothetical return the US government may claim it made. > What part of that are people mad about, and why? The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke. It is a terrible idea to be printing money to prop up asset owners. If that is the basic plan anyway, it shouldn't be mandatory to have incompetents mediating the handout process. And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food. Maybe set up a special welfare system for people who lost their life savings if something has to be done, but for heavens sake, taking (and I repeat myself) known, verified incompetents and guaranteeing them ongoing control of the financial system is wildly stupid. It is on par with a scheme like mandating people all buy in to cryptocurrencies.
- bandrami 8mo ago
  > either the return wasn't commensurate to the risk It's because the markets were frozen up; I was actually alive then and you can't really gaslight me about this
  - n_u 8mo ago
    what does "frozen up" mean?
    - bandrami 8mo ago
      Corporate bonds were simply not being bought, at any price. Same with commercial paper. Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.
Aurornis 8mo ago
The people angry about the 2008 bailout usually have little interest in the facts. I’ve had countless conversations where I’ve tried to tell people that the bailouts were a net positive or that people were, in fact, sent to jail. Outside of people familiar with finance, most people refuse to believe it. A lot of people I’ve talked to about it weren’t even adults when the bailout happened. They weren’t watching the news and didn’t care at the time. They only know it through pop culture and from fiery speeches from politicians and influencers. The idea of a bailout has become synonymous with the government handing hard-earned tax dollars over to banks, no strings attached. The facts don’t really matter.
- boxed 8mo ago
  Even more fun: people are mad about the bailout here in Sweden. But none of the Swedish banks took any bailouts! Not a single one.
  - stefanfisk 8mo ago
    I can’t really remember hearing a Swede complain about bank bailouts in relation to the 2008 crisis. The 90s crisis and related bailouts are however often referenced when complaining about the banks making huge profits these days. Whether that’s reasonable or not is another question.
- momoschili 8mo ago
  None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?
  - bandrami 8mo ago
    Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century (and there have been some pretty huge ones competing with it)
    - 8mo ago
n_u 8mo ago
> It cost the taxpayers nothing (in fact it made us money) I was surprised to learn that the "bailout" was in fact a loan that was repaid with interest for a "net profit of $121 billion" [1] rather than just giving the banks money. After learning this, I polled many people around me and few had understood the terms of the transaction. So I think there may be significant public misunderstanding there. Even if people do understand it was a loan, there's an argument to be made that the money could have been spent in better ways (e.g. early education improvement, preventative healthcare etc. that also give long term returns in preventing crime and reducing healthcare costs). If you believe not giving the loans would have caused the total collapse of the economy and worsened of all of those things (crime, healthcare, education etc.), then it seems a worthwhile investment. But not everyone may share that perspective. > What part of that are people mad about, and why? Another element of the controversy was the payment of $218 million of bonuses to the executives of AIG which was being bailed out and effectively run by the federal government [2]. Apparently the government allowed the bonuses because Geithner said there was no legal basis for voiding the bonus contracts.[3] Some people think controversy over government mortgage relief spawned the Tea Party movement based on this speech by Rick Santelli [4] about his dissatisfaction with the government's bailing out the "losers" who couldn't afford their mortgages. Some people also feel there could have been more regulation of the financial sector or breakup of big banks [5] or more stipulations attached to the loans. Just some suggestions based on my understanding of the history. [1] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#Impact https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#... [2] https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy [3] https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079 https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079 [4] https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023 https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023 [5] https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendment https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendmen...
- rcxdude 8mo ago
  It seems only the very simplified narrative actually sticks, especially when it is convenient for anti-establishment types to do so (and realistically, approximately no-one really _likes_ Wall Street). But I think it's important to consider that while probably the government didn't go as far as it could, it did for the most part help prevent the crisis from getting worse for those who were not responsible while for the most part not doing much for the people working in finance, especially those that they could nail for outright fraud.
m101 8mo ago
When you lend money at 1% but market rates are 30% then you are, in fact, losing money. Except under your definition you are not losing money.
snapcaster 8mo ago
That "special" people got access to credit while normal people have their lives destroyed duh
MonkeyClub 8mo ago
> (in fact it made us money) And caused a global recession along the way. The loan repayment interest didn't (and couldn't possibly) cover even a fraction of the backlash, which includes lives destroyed world-wide. Externalities?
- pjc50 8mo ago
  Need to be clearer about "it" here: the crash caused the recession, not the bailout. The recession was inevitable because some of the growth was illusory, based on leveraged gains from house prices.
- duxup 8mo ago
  >And caused a global recession along the way. They're talking about the bailout. I think the bailout came after the cause of the recession.
dumah 8mo ago
This is one of the most sustained bad-faith arguments I’ve seen on HN. The idea that 4 of the largest investment banks in the US were destroyed is not just utterly false, it’s hard to imagine how one could interpret the outcome in this manner. Why would anyone be happy that the government offered handouts that were stolen, low-level criminals prosecuted, meanwhile every single principal who was culpable went unpunished? I don’t need to hear from you how this is off-base or I’m misunderstanding. I’m close to principals involved in the crisis and worked for years in the response to it, and have heard what went on in the meetings dramatized afterwards.
- pjc50 8mo ago
  > every single principal who was culpable went unpunished? Who, specifically, was culpable for what? I appreciate that anger is not a charge sheet, but .. we could actually do with a more enumerated list of who specifically did which specific illegal act, in order to have a proper discussion.
bschmidt700 8mo ago
[dead]
shimman 8mo ago
People are mad because the government bailed out banks over people, the last time this happened FDR bailed out people over the banks. If you can't understand why people are angry that the government continues to give away large amounts of corporate welfare without protecting people, then I'd definitely read up on people movements because a few are brewing across the country and all of them want blood.
pragmatic 8mo ago
https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much-2008-bailouts-really-cost https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much... What's your source?

dash2 8mo ago

More generally, be very suspicious when someone offers you investing advice dressed up as a call for solidarity and revolution. It’s intellectually dishonest and emotionally manipulative.

BobbyTables2 8mo ago

What about the car companies bailed out… Now they act like they’re doing us a favor by negotiating to sell a vehicle only a little above sticker price. Excuse me while I vomit…

cindyllm 8mo ago
[dead]