
Ten years after the crisis, the contagion has spread to democracy itself - walterbell
https://www.huffingtonpost.com/entry/financial-crisis-10-years-later-ben-bernanke-hank-paulson-timothy-geithner_us_5b9d7dc8e4b04d32ebf92396
======
BenjaminBlair
It's a bit terrifying how "alive" the crisis of 2008 still is. 10 years have
passed and it doesn't look like the economy has recovered, not by a long shot.
There are strong points in this article, I can't recall exactly, but I think
it was the idea of Slavoj Zizek, that the strongest point of ideology is to
define something as "non-ideological". Exactly how the crisis was
communicated, like something natural, a hurricane or something. Not the
ideological mechanisms that allowed for the bankers to take huge risks in
their loans, for sure not Henry Paulson with his bank bailout. The link to the
far-right seams scary too, thanks for sharing.

~~~
Amygaz
I feel like it’s like that everywhere. The status quo is to convenient for
upper management, while adopting sustainable policies within large companies
is too cumbersome and not valued.

------
settsu
I couldn’t finish the article.

It dredged back up the insecurities and feelings of personal and professional
failure in the aftemath of the financial crisis from watching my home value
being decimated and small businesses tanking, those being the bread and butter
of my growing freelance design & development.

All the time, financial, and emotional investments completely sunk while
watching the rich, entitled Wall St set have their billions of dollars in
gambling debts paid off with my tax dollars.

(And then to come to the realization that I probably had that home to begin
with largely thanks to the real estate gambles they were making back in ‘02…)

~~~
josefresco
I've composed 3 lengthy replies to you describing my all-too-similar
experience but deleted each because of the pain, and mountain of venting that
can't be conferred in a simple comment.

All I can say is that - I feel you brother. Been there, was screwed, my wealth
was transferred (via real estate) to an older generation. I was left to
rebuild my life and have yet to full recover.

The one thing that remains in my head 10 years later: "Markets can remain
irrational for longer than you can remain solvent" -John Maynard Keynes

~~~
akudha
Is there a solution to this at all? What can a normal person do to protect
themselves and their loved ones? I am not talking about voting, running for
office etc, though that is probably the correct, long term fix. But short
term?

~~~
e40
When I got my mortgage in 2001, I was offered 3x the debt I would take on.
_Three times the debt._ I told the broker that was insane, and she just said
it was very, very common. Nope, not going to do that, I said. She thought I
was silly.

About 5 years later (not due to the 2008 crisis), I would have lost my home
had I done the 3x. As it was, I was able to weather the storm.

In financial matters, be very conservative. That is my advice.

~~~
eftychis
This. Always consider what happens if you lose your investment/ what is your
worst liability. Be skeptical about assuming that events (e.g. different kinds
of securities crashing) are independent. That is one of the usual assumptions
asset managers persuade the world and perhaps themselves that has been a
factor in multiple crises. Finally, I am a big proponent of Graham's approach
that the risk you can take is proportional to your time investment and focus,
i.e. analysis and research you have done. Markets change. The idea is to be
able to survive the russian roulette in the process. You might be able to
afford some debt now, but will you be able to in the future, if e.g. your
currency crashes? For instance, several profitable Turkish businesses are on
the hook now, as they signed U.S. dollar based loans.

Tip1: If a position on a security appears hot now, and people commonly buy it,
it is probably overvalued.

Tip2: Learn to skip opportunities. Invest in areas where you have done your
research and know.

Tip3: Assume the person in front of you always has a financial interest in
convincing you to buy or sell -- except if they have a fiduciary
responsibility to you by law (and still pick advisors carefully).

------
dredmorbius
Several key highlights for me here: (de)politicisation of, and power dynamics
of finance. Attacking trust in institutions. And this:

 _Financial crises foment authoritarianism. In 2015, a trio of German
economists studied financial panics in 20 advanced economies dating back to
1870, and concluded that they almost always result in major gains for “far
right” political parties after a lag of a few years. The most pressing
question for policymakers facing a banking meltdown is not, “How do we restore
our banks to profitability?” but, “How can we prevent social collapse?”_

~~~
def_ConGame
Facing a banking meltdown, no one's mind is fixed on what the political winds
might turn into, after the seams burst, and the clean-up effort hoses off the
sidewalks and sweeps the remains into the gutter.

It's survival mode, not even women and children first. So before the dust
settles, or even earlier when the economy is clearly imbalanced, unstable and
listing off to one side, they expect people to think about the extremists this
is going to bake over the next half decade. Never going to happen.

Business people, accountants, financial operators, their minds do not work
this way.

But there's easily multiple folds or layers that all add together to produce
such an effect. And part of it is age brackets. If this is a fifteen year
cycle, it's partly generational, and as much about the ritual of hand-off as
it is about who is actually landing in the driver's seat.

But the roughest part is the polluter's mindset of those who set up the
meltdown. They're definitely there to say: _not my problem; so long, suckers!_

Immediately prior to that there's probably some mild discussion about
incentives driving performance. Why perform at all, if not to reap rewards?
And immediately prior to that, there's probably a period with a good record of
following the rules, aging out and retiring uneventfully.

So, if the process seems to havea natural rhythm, it's probably because human
mortality means good teams eventually kick the bucket, and upstarts fill their
shoes with less integrity. The faces change, but the story doesn't.

~~~
dredmorbius
Banking and monetary regulators, and others, should and do look at long-term
risks, though. That's part of the job.

As is noting perverse incentives and adverse selection.

------
ben_w
I remember reading an article (which I unfortunately can’t remember the title
of) whose thesis was that there are two types of economic crisis, major and
minor; that minor crises happen fairly often (every 8 to 15 years or so),
while major crises happen every… I think it was 40 to 80 years; and all the
major crises are followed by radical political transformation. French
Revolution, replacement of the Tsars with communism, fall of the Whigs and the
UK’s Liberal party, the end of the Weimar Republic, the fall of the Soviet
Union, that sort of thing.

It furthermore claimed that the major political upheaval only became apparent
at the next _minor_ economic crisis, because political scenes reacts to a
major or a minor crisis by switching between two dominant schools of thought,
and once both schools of thought are shown to be incapable of dealing with the
situation, society forces them to be replaced with a different dichotomy.

This certainly pattern-matches what’s going on in the UK at the moment. I’m
not sure about the USA — although most of the Americans I know think poorly of
Dem and Rep alike, that’s a massive sampling bias on my part because my
American partner is a volunteer for the Green Party.

~~~
carlmr
>all the major crises are followed by radical political transformation

Personally I think the last economic crisis was major, but there was no great
political upheaval after it. The bad actors were propped up with bailouts, the
advisers that really drive politics remained in power.

Which makes me think the next crisis will be even more major, because we
haven't solved any of the underlying problems. This is kind of like with a bug
caused by technical debt. We implemented a workaround that will cause much
bigger failures than the last one instead of refactoring.

------
rustyboy
Great read, the cancer of de-regulated financial services still hasn't been
addressed, and might not ever if Trump and his richest cabinet in history
continue to hold power.

Wall Street continues to take on obscene amounts of debt from the government
for essentially no interest, see Quantitative Easing, so that they can avoid
paying even more taxes on their even greater profit. This is also fueling
bubbles in other wealthy assets as everything is actually just leveraged debt.
The prospects of another financial crisis is just as real as it was 10 years
ago and again the lower-middle class will be left to hold the tax bill while
the fat cats get fatter.

~~~
segmondy
Hah, if that was the issue it won't be bad. Wall Street taking debt is no
concern really.

The real issue is the extraction of wealth from citizens by Wall Street, Wall
street builds nothing, absolutely nothing. They claim they provide liquidity,
but yet when things look bleak, that liquidity dries up as they run and
tighten up on credit. When they going is good, it's all about wealth
extraction, they extract it from 401k, pension funds and from every day
transaction between average investors trying to make an investment. The entire
world of HFT is a joke. They have turned the market into something worse than
a casino. In Vegas, you really know your odds, at wall street some of the
instruments that are being pedaled shouldn't even be allowed in a video game.

~~~
rustyboy
They're both the same issue, a lack of regulation creates an entire web that
makes everything it touches super fragile.

When Lehman Brother's tanked they were one of the highest leveraged at 38:1,
and current legislation allows 20:1 which many were originally operating at.
If you look at any wealth asset, real-estate, wine, art, etc. these are all
artificially high making the leverage crisis exponentially worse because when
it comes time to shore up accounts these people don't actually have the value
their writing in their books.

Most of these retirement funds have to prove some basic stress solvency, but
they're doing it with leveraged funds and debt. Thus when a downturn happens
and it comes time to pay back the middle class we will have to bail them back
out. We're paying twice! Student loans almost certainly will be the next
bubble, Wall Street already sells these as an asset backed security (see
SLABS). At over a trillion in value with the rules written against students
when mass defaulting happens the whole system will come down again with
individuals having absolutely no protection, and no one willing to fight for
them.

------
manicdee
The contagion is merely a symptom of the presence of one of the vampire-
squid’s blood funnels attempting to extract all possible economic value from
this new market.

------
everyone
Can someone post plaintext?

The oath family popup is awful.. Either agree or 'manage options' which leads
to a load of crap. I'm not agreeing, or drilling into all those options.

Also, when you hit back, it brings you to the same page.. Thats some dodgy
shit.

~~~
walterbell
[https://outline.com/uagYRs](https://outline.com/uagYRs)

