I used to be surprised when I would read articles about this mythical legislative process which can and will protect lowly plebians like me. I'm not sure why so many people are under the impression legislation will be able to keep up with perversely motivated individuals or groups. Who are these legislators with motives so pure that they will never be bribed to only look out for my interests? Let's never forget there is only one person in jail for the 2008 crash this article is trying to convince us was the result of too little regulation. There was never enough incentive to protect us from the people who created that market crash.
> I'm not sure why so many people are under the impression legislation will be able to keep up with perversely motivated individuals or groups.
Because overwhelmingly it does each and every day.
[edit] This bias comes down to the same issue as folks in infrastructure roles have in the tech world demonstrating their impact. How do you demonstrate impact avoiding SEVs when, if you're successful, the SEV never happened? It's very hard to count the number of things that don't happen.
> This bias comes down to the same issue as folks in infrastructure roles have in the tech world demonstrating their impact. How do you demonstrate impact avoiding SEVs when, if you're successful, the SEV never happened? It's very hard to count the number of things that don't happen.
The problem is the "bias" runs in both directions.
If you pass a bunch of laws after 9/11 and then another 9/11 does not happen, does that mean you actually need all of those laws, or that it's all overreach and bear-repelling rocks and all you really needed was to tell the passengers on planes to resist hijackers?
> It's very hard to count things that don't happen
Interesting problem.
Just thinking about this particular issue, maybe some options are:
1) counting time and then expressing success as the longest period of time during which the bad events didn't happen,
2) letting it happen initially to have a base "bad rate", then taking action to bring that rate down, and continuously make an effort to keep the occurring rate down
People preventing accidents at industrial sites have good experience doing this.
Although the incentives are a bit different when it comes to law enforcement, as in the US it's quite common for those who hold all of the discretionary authority in invoking the criminal justice system - prosecutors and sheriffs and Attorneys General - to be elected positions, and at the same time, the continued existence of their bailiwick in the same size and with the same funding requires a show of at least some evident criminal behavior that they're preventing, whether that actually corresponds to actual crimes or not is sometimes entirely incidental. Innocence Projects around the country have found a significant percentage of those freed by their efforts to not only have not committed a crime, but also no crime had taken place in the first place. Coercive plea bargaining makes actually going to trial to hold the state to its burden of proof an exceedingly rare practice. On some level it is a performative exchange and has always been. Criminal statutes are also written in ways that don't necessarily fit what we generally imagine a word means. A burglary in many states simply mean the commission of a felony while trespassing. A conspiracy requires usually no more than two participants, a meeting of minds, and a substantial step in preparation. Accidents in industrial sites are, in comparison, far more objective and far harder to game for various interests. Crime, on the other hand, really represents much more abstract sets of guidelines applied to alleged conduct and state of mind, and much easier to game in terms of numbers.
let's consider an example. Better to do this experiment on popular social media platforms for US audience.
Consider gun related crimes in Australia before gun buy backs ("bad rate") and gun related crimes in post. You would have a solid number of averted deaths and injuries.
Now let's wait for thoughtful opinions from US users regarding the topic of gun regulation :)
>There was never enough incentive to protect us from the people who created that market crash.
There absolutely was, it's just been a LONG time since actual progressive policy had any traction in the US, and quite frankly it's sad how many people are eager to throw away their own best interests.
Stop calling it progressive if you want it to get traction. It’s a meaningless word in this context that prevents further consideration for many people.
There was widespread fraud (of the criminal variety) in the run-up to 2008. A number of journalists, particularly Matt Taibbi, have written extensively about this.
Bitcoin was created by people who were so peeved at the regulator's interventions in the '08 crisis that they decided that bypassing the entire financial system was the best option. Forever immortalising "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" just as a reminder of why they were doing what they did [0].
We don't need better regulation. We need, when financial firms muck up on a global scale, to replace the people who run those firms with different people. There is an easy way to do that, let them go broke.
The biggest problem in the room is that the regulators have bought in to the idea that some companies are "too big to fail". That is a stupid idea, fundamentally unfair, completely throwing out the best part of capitalism which is that recognised idiots aren't allowed to be in charge. That problem will certainly not be solved by giving the regulators more power.
It's not that simple. When the government let Lehmann Brothers fail, all hell broke loose. That is the fundamental difficulty of financial regulation, moral hazard: You have to convincingly say that you won't bail out anyone, and then when things go awry, you have to bail them out. And that makes regulation and monitoring imperative. Well understood and studied.
Well if we had a stable store of value then we wouldn’t really care about the investment assets crashing. Force people into 401k and yeah, now we’re a helpless part of the machine.
"We need, when financial firms muck up on a global scale, to replace the people who run those firms with different people."
I don't really disagree, but he with gold makes the rules. Attempting to limit their power will result in a backlash. Yellen's testimony can be seen as that, but in truth, it is not a new stance. Crypto was merely tolerated until now.
Bitcoin was created in context to "Transparency and Accountability": a campaign motto not coincidentally found in the title of the "Federal Funding Accountability and Transparency Act of 2006".
> The Federal Funding Accountability and Transparency Act of 2006 (S. 2590)[2] is an Act of Congress that requires the full disclosure to the public of all entities or organizations receiving federal funds beginning in fiscal year (FY) 2007. The website USAspending.gov opened in December 2007 as a result of the act
Sen. Obama's office is the origin of this bill; which was fronted by Sens Coburn and McCain, who had the clout.
https://usaspending.gov/ creates a mandatory database with budgetary line item metadata. Where money actually goes is something that is far more transparent and accountable with bitcoin and other public ledgers than any existing ledger covered by bank secrecy laws.
For context, in 2008-09, global financial systems were failing as a result of the American economy: housing bubble burst, HFT "flash crash" that we didn't have CAT or big data tools to determine the cause of, DDOS attacks and cyber security losses increasing YoY, credit default swaps had been rated as AAA securities (they sold bundled bad debt like it was worth something, and then wrote down losses), Enron energy speculation amidst rolling blackouts that were leaving hospitals in the dark, on gas generators, government investments in renewables had been paltry since the Carter administration had put solar panels on the roof of the White House before the whole oil price shock, and oil commodity speculation had driven the price of oil to like 2-4x the 2000 price (with resultant price effects on most CPI inflation/PPP basket goods); but electricity consumption was down in 2008 and renewables hadn't reached production volumes necessary to reach the competitive price point that renewables now present: cheaper than nonrenewables.
Who would have thought that the speculative price would continue to exceed the production cost. incentives or penalties?
Externalities per dollar returned per kWh is one way to assess the total costs of electricity production methods.
"Buy Gold" was the refrain of the day: TV commercials, signs out in front of piano stores (a somewhat-arbitrary commodity, sales of which are observed to be a leading indicator of economic health), signs on the road. And the message was "take your money out the market and put it in gold" which drives up the prices for chips and boards and medical equipment that rely upon that commodity as a material input. Gold is necessary for tropical spec components in high-humidity environments: gold hinges are prized, for example.
But, "look, there's water flowing from the chocolate fountain; so you can go ahead and go" and "you know you want to put it back in there, in that market" we're the appropriate messages given our revenue at the time.
IIRC, there was a production metric-priced grid system developed around Seattle/Vancouver called "Gold" (?) that was built on Xen and is likely a precursor to metric-priced Cloud services like EC2 and S3 (which now simplify calculations for how much a 51% attack against a Proof of Work txpool with adaptive tx fees costs with n good participants in the game) which incentivize efficiency by penalizing expensive operations.
Code bloat was already a thing: how is everything getting slower when Moore's Law predicts the growth rate in transistor density? Are there sufficient incentives for code efficiency when there seem to be surplus compute resources just idly depreciating.
MySQL primary/secondary replication was considered a viable distributed database system, but securing replication depends upon cert exchange and (optionally), PKI, DNS, and IP tunnels of some sort. And then who has root, write to the journal and tables and indexes on the filesystem, UPDATE, and DELETE access in an inter-organizational distributed systems architecture with XML, Web Services, our very own ESB to scale separately from the database replication and off-site backups that nobody ever checks against the online data, and fragmented and varyingly-implemented industry standards that hopefully specify at least a sufficient key for the record that's unique across ledgers/systems/databases.
BitTorrent DHT magnet: links were extant.
Linden Dollars in Linden Lab's Second Life (there's a price floor on land, which is necessary to sell digital assets/goods/products/services)
and accumulated avatar value in e.g. EverQuest and WarCraft (for which there were secondhand markets).
ACH was ACH: GPG-signed files over SFTP on the honor of the audited bank to not allow transfers that deposit money that doesn't exist.
There was no common struct for banking APIs (as apparently only e.g. Plaid, Quicken, and Mint solve for): ledger transactions have a fixed width text field that may contain multiple fields concatenated into one string, and there's no "payee URI" column in the QIF or CSV dumps of an account ledger.
To request more than e.g. the past 90 days of one's own checking account ledger, one was expected to parse tables out of per-month PDFs with e.g. PDFminer at $20 apiece, and then think up ones own natural key in order to merge and lookup records because (2008-01-01,3.99) and (2008-01-01,3.99,storename) are indistinct as a natural key (and when hashed). If you loan a your bank money (for them to now freely invest in the other side, since GLBA in 1999), wouldn't you think that the least they can do is give you `SELECT * WHERE account_id=?` as a free CSV without any datetime limitation in regards to what's offline and what's online.
"Audit the Fed", "Audit DoD" were being chanted by economically-aware citizens amidst severe correction and what was then the most severe recession since the Great Depression: the "Great Recession" it was called, and payouts to essential cronies (who hadn't saved wheat for the famine) were essential.
Overdraft was an error charged to the customer, who didn't build an inconsistent system (CAP theorem) that allows spending money that doesn't exist (at interest charged to the consumer/taxpayer).
"Catch Me If You Can" (2002) described the controls for bank fraud at the time. Why are fees so high?
"Office Space" (1999) described penny-shabing / salami-slicing attack: "fractions of a penny".
"Beverly Hills Ninja" (1997) detailed the story of the Great White Ninja and Tanley! (fistpalm)
"Swordfish" (1999) described a domestic disaster and bank transfers confirmable in seconds.
Right, yeah, just very incredibly super duper inefficiently.
I don't disagree that wasting an entire country's worth of electricity is a novel and unique way of solving the byzantine generals problem up to 7 transactions per second. I just don't think it should be used in the real world, certainly not as a currency.
I think it's worth separating my appreciation for Bitcoin in the strictest, most technical sense. I get it, it's neat, it's got that allure of being challenging and having many perceived potential use cases. It solved a legitimate hard problem. I think the tool is fascinating. I think the use cases though, just aren't.
> Although Bitcoin mining strains the power grid, experts say it’s not the real reason behind Iran’s electricity outages and dangerous air pollution. The telecommunications ministry estimates that Bitcoin consumes less than 2% of Iran’s total energy production.
Yup, we totally trust government sources from Iran. It's usually decades of mismanagement + bitcoin + UH6 centrifuges used to create weapons grade uranium in their case.
I've lived in the Eastern block, used to do homework at candle light so the regime could export goods under market price and earn hard currency. It's from the same playbook.
Republicans like to say they aren't Keynesian, but that is wrong. Keynes says deficit spending should occur when a bubble (business cycle) bursts, in order to force full employment when mass unemployment would happen.
But in the USA in the last 50 years, politicians deficit spend every year. They deficit spend in all stages of bubbles. They deficit spend when there is already full employment. "Politician macroeconomics" is far more deficit spending than Keynes.
This includes Republicans. They just do it with tax cuts and increased defense spending to create deficit spending.
You’re completely correct that Republicans fret and complain about the deficit when a Democrat president is in office and social spending and aid for the poor is concerned, and then turn around and institute huge gratuitous tax cuts when they’re in power (the deficit be damned), and empirically increase the deficit more than Democrat presidents.
I’d call that hypocrisy though, not principled and appropriate Keynesianism. Remember for example the opposition to the Obama stimulus after the financial crisis, which promptly resulted in a stimulus package that was too small and needlessly slowed recovery, followed by Trump’s tax cut for corporations and the wealthy.
Keynes calls for anti cyclical spending, not indiscriminate one.
In the decade before the financial crisis, regulatory pressure was used to force banks to issue more subprime mortgages. This article from 2000 warns of the consequences:
Government sponsored enteprises, which underwrite 50% of the entire US mortgage market, started massively increasing their subprime loan guarantees at the same time.
And then you have Federal Reserve mouthpiece, New York Times columnist Paul Krugman, advocating in this 2002 article that the Federal Reserve create a housing bubble:
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
This revisionist account of the causes of the financial crisis is just these same powerful forces, who are receiving billions in kickbacks from all of this corruption, pinning the blame for the financial crisis on the mythical deregulation-bogeyman.
You are propagating the false narrative money manager Barry Ritholz calls “the Big Lie” (which was an apposite name before Trump’s recent antics), namely the idea that it was government regulation (specifically forcing the poor innocent banks to give mortgages to “those people”) that caused the GFC. I’d say that story has been roundly refuted.
And for what it’s worth, that Krugman quote is out of context. Krugman is not calling for a housing bubble there, he is explaining Greenspan’s motivation in keeping rates so low for so long. Frankly, I find that disingenuous misrepresentation telling.
I don't think a group setting out to deceive the public would be:
a) planting stories 8 years before the crisis, warning about the far-reaching effects of the Community Reinvestment Act
b) recruiting Democrat/Wall-Street/public-sector darling Krugman to plant a story in the NYT 6 years before the crisis, urging the Federal Reserve to "create a housing bubble" via low interest rates (which is exactly what the Fed did)
>>And for what it’s worth, that Krugman quote is out of context.
It seems pretty clear to me he is strongly endorsing a bubble in that quote, and that's when looked at in context too.
Krugman is a major believer in Keynes' demand-side economic theories.
Keynes argued that the government planting banknotes in the ground during a recession would be net-positive, because people expending resources to dig them up would create economic activity that would get money circulating:
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Krugman argued something similar, when arguing that an announcing a non-existent alien attack would be economically beneficial, for the same reasons Keynes gave:
When looked at in this context, it's obvious why he'd think a bubble during a recession would be a good policy.
But now of course the historical revisionism starts, and Krugman's clear endorsement of a bubble is reintepreted as prediction, so that the public-sector/Democrats' chief economic spokesman is not discredited.
So, you're bringing up many points; I'd prefer if we could stick to a few, but I'll briefly address them.
A) I claimed that a major factor in the 2007/08 GFC was deregulation. You countered that it was too much regulation, specifically mandatory lending to disadvantaged communities. That theory, floated by a few AEI (American Enterprise Institute) people, has been called "The Big Lie" by Ritholz, and largely rejected, I think. [1]
B) > a group setting out to deceive the public
I don't know what group or conspiracy you are referring to.
C) I'll address your contention that Krugman called for a housing bubble in 2002. I think that is wrong, when you look at his writing in context. Krugman's argument was as follows:
a) Under normal circumstances, when the economy heats up too much (inflation), the Fed raises rates and cuts off the excesses. b) This causes a typical post-war slump. c) That slump can be fixed by the Fed by lowering rates, creating a snap-back of consumer and business spending. d) HOWEVER, the slump in 2001 was not a typical post-war slump: Lowering rates did not bring back business spending. e) Therefore, if the Fed wanted to fight the slump with monetary means, it "needed" to engineer a housing bubble (and basically replace the .com stock bubble with said housing bubble).
Krugman didn't endorse the bubble.
Here's Krugman in 2003 decrying the housing bubble, and also noting that the "banana-republic policies now being followed in Washington won't just drive up interest rates; they'll probably generate a full-blown fiscal crisis one of these years.":
Here's Krugman in 2005 decrying the housing bubble and "signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble":
Here's Krugman in 2006 decrying the housing bubble, predicting its end, and saying that "If anyone is to blame for the current situation, it’s Mr. Greenspan, who pooh-poohed warnings about an emerging bubble and did nothing to crack down on irresponsible lending."
D) > Krugman is a major believer in Keynes' demand-side economic theories.
Yes, Krugman is Keynesian, of course, and argues for stimulus via fiscal policy (taxes and spending) and monetary policy (rates and money supply), when and as appropriate.
And yes, if the economy is stalled because of lack of demand, and monetary policy is ineffective because the zero lower bound, then fiscal policy (spending) would be effective (thanks to the multiplier), even if the money is pumped into fairly inefficient ventures, as long as the money goes to people that spend it (rather than saving it). (So, tax cuts for the rich are not good.)
That is not to say that a Keynesian would advocate a less efficient over a more efficient stimulus; rather, Krugman was making the point that any stimulus (to people with high propensity to consume) is better than none.
That Wikipedia page does not really make a case for any explanation.
There was a Congressional study on it that absolved regulations, but the government, cannot be expected to do an objective study to expose the failures of government. Their institutional interests are completely opposed to that. They are largely rent-seeking institutions whose interest is in propagating the idea that central economic planning is in the public interest, and lessening the government's intervention in the economy, via deregulation, is harmful.
To examine the Washington Post article you linked, which was written by Director of Progressive Thought, Mike Konczal:
>>"From 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50 percent to just under 30 percent of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10 percent to about 40 percent over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans."
That in no way disproves the arguement that the GSEs precipitated the crisis. If you look at the literature produced by the GSEs, they explain that their goal is to increase liquidity in so-called under-served markets, and thereby reduce the risk for private lenders to lend in that market.
See this 1999 article about how they started to expand their subprime lending:
>>''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
This kind of statement, and commitment to expanding the liquidity of the subprime mortgage market, from the CEO of the most powerful institution in the US residential housing market, will have a massive impact on market sentiment, and will cause the frenzy seen in the early 2000s.
>>Here's Krugman in 2003 decrying the housing bubble, and also noting that the "banana-republic policies now being followed in Washington won't just drive up interest rates; they'll probably generate a full-blown fiscal crisis one of these years.":
I don't see any mention of the housing bubble in this article. Can you point it out to me?
>>Here's Krugman in 2005 decrying the housing bubble and "signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble":
This doesn't sound like criticism of the policy of creating a housing bubble. It sounds more like Krugman arguing that a new bubble would be needed to replace it:
"As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.
Now the question is what can replace the housing bubble."
>>Here's Krugman in 2006 decrying the housing bubble
That only shows the instinct for revisionism that I mentioned earlier. In 2006 the dangers could be more clearly seen, and that's when Krugman is seen changing his tune about creating a bubble with low interest rates.
He repeatedly advocated low interest rates, and repeatedly said it would boost the housing market:
>>"KRUGMAN: I think frankly it's got to be -- business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).
>>DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she -- or I should say he and she, can they bring back this economy?
>>KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don't know"
>>"KRUGMAN: I'm a little depressed. You know, inventories, probably that's over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven't fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It's not a happy picture."
>>"Consumers, who already have low savings and high debt, probably can't contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery.... But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates -- and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1.... Sooner or later, of course, investors will realize that 2001 isn't 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.
>>"Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.
>>In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package"
>>"The good news about the U.S. economy is that it fell into recession, but it didn't fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed's dramatic interest rate cuts helped keep housing strong even as business investment plunged."
Even in late 2004, after he had already stated that low interest rates could create a housing bubble, he was advocating to keep interest rates low:
>>Oh, and on a nonpolitical note: even before Friday's grim report on jobs, I was puzzled by Mr. Greenspan's eagerness to start raising interest rates. Now I don't understand his policy at all.
And going back to the quote from the original article, which you claimed I provided out of context, let's look at it in more detail and with more context, including the follow-up paragraph:
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging."
So he writes that Greenspan "still thinks he can pull that off". The "that" is the creation of the housing bubble, mentioned in the preceding paragraph.
In the sentence that follows that, Krugman expresses pessimism about the prospect of Greenspan being able to pull "that" off: "But the Fed chairman's crystal ball has been cloudy lately".
What this is saying is that since the Fed's predictions had been off recently, it calls into question whether the Fed's belief that it can pull "that" off is credible.
So the only pessimistic sentiment Krugman expresses in this article is about Greenspan's ability to fuel a housing bubble using low interest rates.
Not only did he suggest in this article that lowering interest rates could create a housing bubble that would fight the recession, but on repeated occasions from 2001 to 2004, he advocated that the Fed lower interest rates.
The context is absolutely damning for your defense of Krugman.
>>And yes, if the economy is stalled because of lack of demand, and monetary policy is ineffective because the zero lower bound, then fiscal policy (spending) would be effective (thanks to the multiplier), even if the money is pumped into fairly inefficient ventures, as long as the money goes to people that spend it (rather than saving it). (So, tax cuts for the rich are not good.)
If an economy is suffering a recession, it's only proximally due to "lack of demand". The lack of demand is a necessary property of the process of recovery. The fundamental cause of a recession is a readjustment that has to play itself out, as failing/over-leveraged industries are divested from, new opportunities are identified, and as prices adjust downward in reaction to the contraction in the money supply as loan volumes decline.
Creating more unproductive economic activity distracts from this readjustment process. It's harmful central economic planning that misallocates economic resources, and thereby disrupts the process of capital formation.
Many, many people filled out fraudulent loan applications. Many, many people took "first time home buyers tax credits" they weren't entitled to. But the Government decided it would look bad to prosecuted hundreds of thousands of small-time tax cheats and fraudsters.
According to this story, 50% of people getting the first-time home buyers tax credit in 2008 weren't entitled to it.
The IRS itself estimates that over 50 percent of the individuals claiming the first-time credit will not be complying with that requirement to supply proof that they actually purchased a home.
Madoff became a convict because of the crash, not because he was liquidating massive amounts or had a large portfolio of collateralized debt that would exacerbate a crash.
