
Another take on the causes and significance of the 2008 financial collapse - dgudkov
https://business.financialpost.com/opinion/terence-corcoran-dont-blame-rich-bankers-for-the-2008-global-crash-blame-socialism
======
mikestew
It's hardly the either/or the author makes it out to be, and the writer tried
way too hard to wrap it up with "damned poor people, it's _always_ their
fault, innit?". Without doubt, yes, policy decisions contributed heavily to
the collapse. That does not absolve the finance industry of creating
instruments such as CDOs, and the tom-foolery that followed. In the end, there
are few clean hands in a system built on greed top-to-bottom, from the home
buyers buying more house than they can afford, to the banks that lend to them,
and ending with a finance industry creating financial instruments in search of
a greater fool.

------
GaltMidas
The author makes a case against “corporate giganticism” being a cause and
blames a “government agency” namely The Fed. It’s hard to take anything the
article says seriously if they can’t recognize that The Fed isn’t a government
agency and is what many people hold to be the epitome of “corporate
giganticism”.

The author seems very confused between the structure of the Treasury Dept and
The Fed

------
wrycoder
It seems to me that this recent book got it mostly right. The root of the
credit collapse was improper or missing underwriting of mortgages resulting
from heavy pressure by Congress and activist organizations to expand home
ownership. The financial sector then did what it's good at, laying off risk
through repackaging of mortgages into structured bonds and marketing them
around the world.

There was also a good deal of greed involved including manipulation of the
markets and the regulatory organizations by the likes of Hank Paulson. And yet
few were punished. The fines imposed were small compared to the profits
extracted. People in government who were responsible for the debacle were
conveniently put in charge of the clean up.

Lehman should not have been allowed to fail. That failure destroyed confidence
in the system and triggered the panic.

There have been a number of excellent books written over the years describing
the complex events from different perspectives. Enough time has elapsed to
produce an even-handed re-evaluation.

The book makes the point that Dodd-Frank has made the financial sector more
brittle than it was before by removing flexibility.

"Future crises are inevitable, says Ball, but “under these rules, future Fed
leaders may be helpless to counter runs on financial institutions,” even when
rescues can be backed by collateral."

~~~
kwillets
As I originally heard it the Fed or HUD(?) started moving towards guaranteeing
subprime mortgages, and the AAA rating idea took off from that. The Fed issues
bonds that are risk-free, so brokers extrapolated government buying of a few
subprime mortgages to low risk for all of them.

------
aalleavitch
This doesn’t strike me as empirical. It strikes me as a narrative.

------
yuhong
I am already focusing on how the debt-based economy currently works and its
problems.

------
llcoolv
there are some very good points there, but this is a rather wrong place for
criticising socialism :)

