The economic crisis and downturn are all the signs of 2008 market crash 2.0, so my question is do I still save in the US dollar or is it okay to move all emergency and savings to precious metals?
Keeping some gold is usually a wise decision. You would be better off keeping away from equities for a bit or, even better, seeking advice from an expert given the current market conditions and everything that is at risk with the current economy.
I consider gold investment to be dependable and intend to increase my holdings to recoup losses. While silver is also a promising investment, it differs from my collectibles. Having clear investment goals and acquiring knowledge in the field are essential. I collaborate with Laurel Dell Sroufe, a financial consultant regulated by the SEC. Through modest initial investments, I have gradually accumulated nearly $799k over time.
@@darnellcapriccioso After locating her, I composed an email and arranged a phone conversation. I'm optimistic that she will reply, and my goal is to conclude 2023 on a financially successful note.
I wonder if people that experienced the 2008 crash had it easier because this market conditions are driving me to insanity, my portfolio has lost over $27000 this nov. alone my profits are tanking and I'm don't see my retirement turning out well when I can't even grow my stagnant reserve
Even in this whirlwind, there are chances to be had, thus an increase in volatility is not always a bad thing. You have an opportunity to rebalance thanks to volatility. In order to help you diversify your portfolio, you must hire a financial counselor or broker.
I'll suggest you create a diversification strategy because building a good financial-portfolio has been more complex since covid. Recently my colleague advised me to hire an advisor, surprisingly I have accrued over $120K under the guidance of my coach during this crash. She figured out Defensive strategies to protect my portfolio and make profit from this roller coaster market.
@@duane_29 I’m new to all this, heard it's a good time to buy and basically I've just got cash sitting duck in the bank and I’d really love to put it to good use seeing how inflation is at an all time-high, who is this coach that guides you, mind I look them up
@@berkrix4312 All of this happened in less than a year after ‘Christine Jane Mclean’ told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
Brian Wesbury, July 26, 2007 “The current financial environment does not reflect conditions normally associated with a credit crunch. The bottom line is that fears about the underlying health of the economy and financial markets are more about hypochondria than reality.”
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
Yep this is some of the best Replys I've ever read o UA-cam. This guys BS would almost be funny if so many people didn't get hurt form the Banks washing of their hands of the whole sisituation. The govenment needs to be held to account as no one in the financial circles copped the peolpes roth.
Yes, I've stopped at a green light before. When the road ahead is full and I would block the intersection if I went forward. Just because the light is green doesn't mean you're justified to ignore all circumstance.
@@missinformed4269 why would he block the intersection? If he is saying the big semi banks are blocking the intersection, then that makes him a turtle stuck in traffic. That's why turles get squashed, and trucks get where they need to go. Be a truck or be a turtle. A wise person told it to me in a different way of saying it. Turkeys flock, Bald Eagles don't. Don't be a Turkey.
@@andrewropp2525 But he could easily have been talking about driving a truck. A typical truck driver would be more concerned than a car driver, not to block the intersection.
Interestingly, people are getting stupider; where I live, they've taken to painting a yellow grid across the middle of major intersections to "remind" all morons not to stop there. With an urgent sign ahead of time to explain the yellow grid. 🤔
@@Jabranalibabry Thoughts without a sound foundation or sound logic are not thoughts at all. They are ramblings of word salads. Please refer to the so-called "Community Reinvestment Act"
@@victordonavon292 brother, I just like that people are putting forth their thoughts in that manner. I don't expect the comment section to be as rigorous as maybe you do but I see people trying. I'm hopeful some of these ramblings represent true passion in someone who may lead us to some good and that includes you. I'd definitely look into the act you've referred, I like to learn, and peace brother. May we look forward to better days.
Transfer of wealth usually occur during market crash, so the more stocks drop, the more I buy, in the meanwhile I'm just focused on making better investments and earning more as recession fear increases, apparently there are strategies to 3x gains in this present market cos I read of someone that pulled a profit of $350k within 6months, and it would really help if you could make a video covering these strategies.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money or you could hire a financial expert.
Yeah, financial advisors could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and I return at least $30k ROI, and this does not include capital gain.
I knew the end was near when I went into a bank in 2005 in anticipation of a purchase. We pre-qualified for an amount that was 3x more than I could ever conceivably be able to pay. I looked at my wife, then the loan officer and told him he is out of his mind to qualify us for that amount. He just looked at me dumbfounded and didn't understand why we wouldn't borrow that much.
Recession, crash, inflation-it's depressing. I have $100K in an emergency fund and want to benefit from the stock market to avoid inflation eroding my savings. What stocks should a newbie invest in to safely grow their money?
It's best to buy growth, blue-chip, or large-cap stocks. As a newbie, it's advisable to work with an investment advisor to set up a well-structured portfolio.
The issue is most people have the “I want to do it myself mentality” but not equipped for a crash that comes afterwards. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 300%, summing up nearly $1m, since covid outbreak to date
Amber Michelle Smith has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
After 19min of waiting, he gave a very short sighted answer to the banking crisis of 2008. The accounting rule "Mark-to-Market", which he blames for the crisis, is in fact highly useful and necessary to keep banking loans responsible. It forces banks and consumers to keep their feet on the ground as opposed to living in the clouds. By removing the rule in 2009, we re-introduce the dangers of over-stimulating an economic bubble that could kill our world economy. Money was only created to help the ebb and flow of goods and services. That is why regulation is necessary to prevent our economy being built on the sands of speculation and derivatives. Do not watch this video as it will waste your time.
Agreed and no mention of credit raters slapping misleading low default probabilities on subprime loans (for their own monetary gain) when they got sliced up and injected into CDOs which proceeded to invisibly infect the whole financial sector. Irreversibly entangled cash crashes set off by the first defaulters.
Agree 100%. See my posting as well. I think Wesbury's kind of over simplification is a huge disservice and in some ways dangerous since I'm sure a number of people will think he is correct. He is not.
I think you are being very generous. This guy is a sickening apologist for the bankers of Wall Street who scammed billions of billions of dollars in bonuses in the leadup to the 2008 Financial Crisis. And when the whole system was on the verge of total collapse when the Government allowed an insolvent Lehman to fail, the Government had to rescue the bankers of Wall Street with a massive bailout, using public money, Very few even of the most egregious people responsible even had to give back a part of their ill gotten gains and I think just one went to jail. That's America where the big end of town is always allowed to privatize their gains and socialise their losses. Nothing has changed. The stock market recently reached heights of overvaluation never seen before, fueled by massive money printing and interest rates pretty well at zero. All that has now changed with inflation raging. A plethora of obscenely overvalued loss making companies are crashing to earth now the tap of free money has been turned off. Yet again, the insiders and execs at these companies have walked away with vast fortunes while countless thousands of bag holders are left to pick up the tab.
@@KillroyX99 n his story about the house in front of the hurricane, what he fails to mention is that 20 years earlier the place was worth a LOT less, but with the loose lending rules and rampant speculation to catch the high returns the value went up to $500k. Assets that are never written down can't be considered true assets which creates its own set of problems While I find this perspective interesting, and I hate more government control, I am not convinced that free market capitalism can work without a little bit of control from a higher power.
So the argument is... because interest rates were low, people took out loans they couldn't afford, because that's what you do. Well, the banks are supposed to perform a risk assessment on that individual to determine if the loan should be given in the first place. The bank employees involved in mortgages used to have Masters degrees in finance and statistics and accounting. The bank is the "check" on that. So if the loans defaulted, it's the banks fault. It's that simple. The reality is the banks were writing as many loans as possible. I applied for a mortgage during this period and the mortgage officer didn't want/need/ask for any W2's, income statements, anything to prove my income - even an attitude of "just put anything down". Never mind the repackaging and derivatives which amplified the solution. It's as if the bank has given up any moral/ethical/financial responsibility to do it's job. Your talk seems to prove that the banks are at fault.
Francis Geck I disagree mostly. The individual is the one who is ultimately taking the loan. The banks aren’t forcing them. More importantly, the Clinton administration guaranteed that Fannie Mae and Freddy Mac would pay the bad loans to the banks if the individual failed. Face it, everyone got greedy and got what they deserved.
Senator Frank and Senator Dodd, the two watch dogs in the senate over the mortgage industry along will Bill Clinton,wanted every American to own a home. They passed laws to force Fannie Mae and Freddie Mac to create the liar loans you talked about and the government was all in on the purchase of those closed mortgage loans. The banks were following government policy and yes, it was easy money for the banks but the government created the rules and forced the banks to follow.
Yeah sure, always blame the bankers. When will the people of this world's financial institutions finally catch a break! Poor, poor Allen Greenspan, that modern day Robin hood... Of course, loans are supposed to be backed by collateral, the bank's investors rely on that, but because they weren't everything went down the crapper and the gov't wrote them a huge check out of our taxes, so I guess we were both wrong.
@@Victor-zw8tb The banks should have a self interest in not making bad loans, and the technical experise to do so. Yet, they engaged in predatory practices to convince people with low sophistication that they could indeed afford the loans. That in and of itself undermines the "moral failings of the borrower" argument, at least to some extent. But it got worse. Those same banks created derivative products, ballooning the magnitude of the problem far beyond the risk of the underlying loans, and sold those products to their customers while misrepresenting the risk of those products. To put most of the blame on people who took out loans they couldn't afford is to miss that the crash was about so much more. In fact, many of the people who did default could have afforded their loans by conventional measures, were it not for the time bomb created by the banks that led to those people losing their jobs as companies went under, or their houses going underwater as massive foreclosure pushed their house values down.
Comparing the banking crisis in the early '80s to 2008 is apples-to-oranges. In the '80s banks and investment firms were completely separate entities, whereas by 2008 they were in many cases indistinguishable. 2008 wasn't a "banking" crisis -- it was a "financial" crisis. The movie (and book) The Big Short gives a pretty good picture of how things got so messed up. Wall St. investment practices basically evolved to the point where Federal Reserve and SEC rules (mainly crafted decades earlier) no longer protected against huge risks.
Yes he makes it seem as if commercial banks and investment banks are the same thing (I know Glass-Steagall was repealed, but it was the investment banks that bundled that bad loans and made it a systemic crisis).
Thank you! This is the truth! Not the nonsense spin that Brian is trying to weave to deflect from who the culprits really were. This is a perfect example of how someone can cherry-pick disconnected facts and weave a completely false narrative.
Things are strange right now. The US dollar is becoming less valuable because of inflation, but it's getting stronger compared to other currencies and things like gold and property. People are turning to the dollar because they think it's safer. I'm worried about my retirement savings of about $420,000 losing value because of high inflation. Where else can we keep our money?
Personally, I would say have a mentor. Not sure where you will get an experience one, but if your knowledge of the market is limited, it seems like a good bet.
Well I recommend you make a diversification plan because it's been harder to build a good financial portfolio since COVID. My colleague suggested I hire an advisor, and I've actually made over $120K with their help during this market crash. They used defensive strategies to protect my portfolio and make profits despite the ups and downs.
My Financial adviser is ‘’Helene Claire Johnson’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
In 2008 I was in my mid twenties and focused on finding a career opportunity. A skilled craft seemed like a good idea for a long while. My parents at the time both got laid off from they're professions. I worked as hard as I could to try and keep the home for us. The adjustable rate mortgage payments had gone from $1300 to over $4000 a month. Then the job industry I was recruited for had more mass lay offs. Even though there were so many campaign promises at the time for jobs. So many started living in cars, and trucks. To some, Getting to work wherever it was, was more important then if you had the comfort of a home. Almost a year later when work picked up a little. I met travelers that insisted living in a tent was the best way to afford living. My grandparents who survived the great depression said many family's lived out of cars when they had to. It's an economical hardship. Just don't give up trying to find a way.
I think you had a negative amortization loan where the payments would change after a number of years. These are very bad loans to take out. They're designed for young doctors and lawyers whose income would jump substantially after a few years.
I had an adjustable mortgage loan, it could only go up 1 percent per year. I watched as my mortgage started to go up, so I refinanced to a15 year mortgage. Took responsibility.
I think if you want to get close to "what really happened" it's best to have a discussion of an expert panel, instead of just one person sharing his opinion. Simply because it's statistically unlikely that one single person makes no mistake in his/her analysis. Some errors may not be obvious to him/her, but to other people who focused on other sources. This is a good video and I like his contribution, but I am not convinced.
@ Guido - "it's best to have a discussion of an expert panel' - Given the poor quality of most conventional education systems in most countries, where the population is deliberately "dumbed down" to be more easily controlled, I have VERY little faith in 'experts" as most are little better than "superior idiots". By which I mean that while they may have 'higher" education, they have a poor grasp of reality !
So 1 person being bias with no financial benefits dosnt convince you, but a group of oveusly bias people who are paid to vote based upon their success in the past would convince you. That's OK, but it dosnt me. This Ted talk isn't supposed to convince you. Most people fell asleep in the first 15 minutes. His goal is to first, open people's eyes to go research this idea. And second for those of whom will listen fully to him, he will have somone to talk to. The reason he wants to be heared, is because he loves to hear himself talk. I feel like we all can agree on that haha.
There was a time when we " made it here", we had jobs for everyone and the products were of high quality, then the 1% wanted everything. Now Inflation drives prices up and if Inflation is high and jobs disappear by the millions we are in a recession and maybe headed for a Depression…So be careful with your money. It may take decades to get back on pay again. Luck to all.. I've seen folks make huge 7figure profit in a crashing market and pull it off much easily in a bull market Unequivocally the crash/recession is getting somebody somewhere rich...
On occasion you can beat the market with blind luck, but I wouldn't depend on it. Having a science background there is a saying, 'Luck favors the informed', I've found it to be true, allowed me in great part to retire early...
@@gracesdonny1532 Well politicians for certain are gaining off the crash, and true the average individual could profit off a crash but such high-grade investing come with equal risk which can only be managed by a proper pro or expert…
@@tradekings5433 Yes, the idea of a portfolio-coach used to sound generic, but new study by investopedia actually found that demand for portfolio-coaches sky-rocketed by over 41.8% since the pandemic and based on firsthand encounter, I can say for certain their skillets are topnotch…I’ve raised over $1.3m from an initially stagnant reserve of $180K in less than Two Years
@@emilybrown2719 I've actually been thinking of reaching a portfolio-adviser, my 401k and stocks been losing everything it's gained since 2019, mind if I looked-up this one coach you use?
@@FeliciaJudge Sure, the Invëstmënt-Advisër that guides me is "SUSAN AGNES HANCOCK" and she's renowned and has quite a following. So it shouldn't be a hassle finding her. Just look her up.
I worked for a company involved in the subprime mortgage business back in 2006, because I needed the money to pay my rent. What I saw when I did so were thousands of loans given out with no possibility of them being paid back. And at least some subprime companies were collapsing as early as then, because I was among those laid off in the wake of Ameriquest Mortgage going belly-up. The only way those home loans made the slightest bit of sense is if the middlemen were lying to the people on both sides of the transaction. The available evidence is that borrowers and investors alike were both being defrauded by the only people who knew what was really going on, namely the middlemen. They should have gone to jail, but didn't because regulators in both the Bush and Obama administrations looked the other way. It had approximately f-all to do with the Federal Reserve.
@@Capellofficial I'm guessing a big difference today is the financial markets no longer underestimate the risk associated with subprime mortgages, so they are no longer likely to overinvest even with fraud.
I heard a different not-so-nice story about the 2008-crisis: Banks , for instance Goldman-Sachs offered too-good-to-be-true loans to lower middle-class families who would like to live in a house with a garden for the children. If the house cost 100-thousand then the mortgage-secured loan this family was offered was 125-thousand i.e. 125 % so there was even money left for a new car. The installments on the loan were ridiculous easy. But only for the first two years. The fine "gotcha" print at the end of the loan-contract said that after two years, the installments would become REALISTIC. So Goldman-Sachs knew they had two years to get rid of these ticking-bomb subprime mortgages. Financial firms packaged these mortgages into bundles the so called CDO's ironically called Criminal-Debt-Obligation's. Somehow Goldman-Sachs managed to convince some back yard rating companies to give these bundles phony-baloney ratings AA or AAA , the same as for German or Norwegian state bonds. This fraudulent rating made it easy for Goldman-Sachs to sell these CDO's to unsuspecting pension plans and banks all over the world. German Hypo Real bank spent billions of euro on this and after two years these billion-euro bundles suddenly became worthless ( because millions of American houses were sold in execution for very low prices ) and the bank had to be rescued by German taxpayers. More than nine million American families lost their homes. No wonder that Donald Trump says that he wants to repeal banking regulation, he had top people from Goldman-Sachs in his government.
@@0118uhauha The point I want to emphasize is that *anybody* who actually saw the terms of the loans and understood anything about finance knew that they were absolute nonsense. So those who were trading these loans around to investors knew full well that they were polishing junk to try to sell it off before it collapsed, as you describe. But that was the second part of the scam. The first part of the scam was to convince a borrower that these loans were sane. One of the common strategies for doing this was to say "Sure, the payments will go up in 2 years, but we can refinance again before then so you won't actually have to pay it". Also relevant here is that the loans were structured so that the originator collected a bunch of fees up front, the borrower paid interest only during most of those 2 years, so they weren't going to be paying down their actual principle at all. As I said in my original comment, the middlemen were ripping people off in both directions.
The federal reserve is important in this. Where do you think the “middle men” aka the lenders get the money to lend on loans that go bad. From the secondary market they sell the loans into. The fed buys those bonds from the secondary market. Trillions of dollars worth. A bad loan doesn’t get funded without that.
The problem with blaming low interest rates as a major contributor to loan defaults is that the argument can easily be tested by comparing the US default rates to those of other Countries (eg Canada, UK, Australia) all of whom were operating under comparable interest rates at the time. Australia and Canada had essentially zero spike in defaults in the period leading up to the crisis in 2008 despite low interest rates.
Cause is not coincidence. Arbitrarily selected statistics are not science but the pre-scientific mentality of primitive man. Science is a theoretical organization of concrete knowledge, not concrete knowledge or theoretical knowledge alone. Statistics, to be scientific, rather than arbitrary or dishonest, must be selected by pre-statistical knowledge from common human experience. Economies are complex and, historically, combinations of freedom and govt control. A govt controls destructive effect may be contradicted by freedoms productive effect. Australia and Canada msy have had freedom in parts of the economy that the US controlleed. Further, "low" is contextual w/contextual effects. The same "low" rate may be caused by productive freedom in one economy and destructive govt controls in another economy. In 2008, finance and nuclear power were the most govt-controlled industries. Some banks had hundreds of govt regulators working INSIDE the bank. Blaming the recession on capitalism is scientific fraud, not an honest error. Mans independent mind, protected by individual rights, is the basic method of production. Sticking a gun in the faces of productive people does not increase production. Govt looting from producers and then giving to non-producers or lesser producers does not increase production. Your hidden moral context is altruist sacrifice of some people to allegedly benefit others. Altruism rationalizes scientific fraud which rationalizes govt controls. Water falls. Fire burns. Altruists lie. The first altruist sacrifice is of mans independent mind. After that, all other sacrifices are easy. Altruism is the pseudo-morality of the enslaved mind ,of the moral coward afraid to focus his mind onto an indifferent reality that will not provide fishes and loaves or a Garden Of Eden. Look out at reality, not inward. Focus your mind.
You’re forgetting that those countries didn’t not engage heavily in the derivatives pushed *by* gov’t to ensure home ownership continued to increase in the US. This is multivariate; rather than univariate.
It really is hard to believe Alan Greenspan was so damn incompetent. He ignored all the red flags and standard reactions to those red flags. Negligence to that degree is malicious, even if it wasn't premeditated. But, I do believe the bubble and collapse was premeditated. It was the largest transfer of wealth (theft) ever, by far.
In 2007-2008 I was laid off I could not find a job for the first time in my life even though I was employed steadily as a mechanical engineer since graduating in 1980 Finally in 2008 I finally got a job....selling vacuums at Sears for $11 hour.....part time. Long story short, 3 years after being laid off I lost my house to foreclosure and was technically homeless until I could secure an apartment. The bank physically put my belonging on the street and kicked me out of my house with a foreclosure that was eventually ruled as illegal. At Sears I was working with architects, mortgage brokers, and computer programmers. Now forward 10 years and since 2020 I have been working at Amazon as a repair contractor now at $32.50 hr. and the company I am working for can not find enough people to work and request I work overtime every week. Lesson learned....certainly don’t trust the government to care for working class except to take taxes every year.
I didn't understand how your personal story lead up to not trusting the government. Can you please elaborate on the wisdom you obtained from such experiences
Did low interest rates cause Goldman Sachs to hoodwink AIG into selling credit default swaps aka insurance policies that paid off if the bonds failed with no reserves to pay and then buy those credit default swaps themselves to bet against the very bonds they were marketing as triple A ?
It did they were using easy credit to speculative buy and sell housing bonds for enormous fees that fed the gluttony in the CDS market because remember the holders of CDS had to pay premiums. The FED is the catalyst for greed.
J Romeo - First of all, I'm no fan of Goldman Sacks, but no one hoodwinked AIG. If AIG (or anybody in such influential position in our financial system) is "hoodwinkable" they shouldn't survive one more day. On the subject of interest rates you're totally ignoring how the entire financial infrastructure works if you try to claim that keeping interest rates low for too long doesn't have and adverse effect on the economy. That is, in an of itself, probably a subject for a full hour video.
Jason Williams you are right AIG should not have survived one more day and they would not have without the massive government bailout. Banks underwrote these loans knowing there was no viability because they could instantly sell them as bond fodder because Goldman Sacs would buy them as backing for their bonds. Have you heard of NINJA loans? No income no assets.
It's actually really simple. FED prints money out of thin air and lends it to government. Then the taxpayer has to pay back the loan. Some people have literally umlimited funds while the poor get poorer. It's made to look very compliated, because it really is nothing but a scam, but in fact it's just that simple.
@@pierrevillemaire-brooks4247 Yeah, they all printing money and taking loans like crazy :D It's obviously time for change so that's what happening. Not the first time empires have fallen. Since this one is worldwide, it's fall is gonna be epic to witness :D
If you want to understand economics watch peter schiff on yt. Hes a very contraversial figure because he tells it how he sees it and is very intelligent.
In his story about the house in front of the hurricane, what he fails to mention is that 20 years earlier the place was worth a LOT less, but with the loose lending rules and rampant speculation to catch the high returns the value went up to $500k. Assets that are never written down can't be considered true assets which creates its own set of problems While I find this perspective interesting, and I hate more government control, I am not convinced that free market capitalism can work without a little bit of control from a higher power.
We read news in the media that doom and gloom is coming and we just accept it, doom and gloom doesn’t always have to be coming, I’ve read numerous success stories of people that are pulling off tremendous gains of up to $250K within weeks in this crazy market and I just want to learn how to achieve such figures.
Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.
Greed is what you describe. The practice of giving mortgages to people who clearly could not afford them is outside your 'a normal person would buy a bigger house with low interest rates' description. Also bundling these toxic loans and selling them as an asset is not what 'any person' would do. This was/is corporate greed. You are an apologist for these executives who get bailed out then pay themselves a bonus with the money.
He presents as if he is speaking to a group of high school dropouts. Wesbury is pulling a fast one here. He presents the stock market as a proxy for the health of the business community. The stock markets are a reflection of INVESTOR CONFIDENCE. Investor confidence often lags business health coming out of a significant downturn. His story about mark-to-market is accurate but drops short of the reality of all of the terrible loans that lax regulations allowed to be funded and were about to be defaulted on and the enormous number of derivatives that had been pushed throughout the world's financial systems using those loans as the revenue source.
Barney Frank's committee might have changed the mark-to-market accounting rule that helped ameliorate the financial crisis, but Barney Frank was instrumental in causing the financial crisis. He was the congressman who arrogantly said he was perfectly comfortable "rolling the dice" - i.e. maintaining relaxed lending standards and capital requirements in the early 2000s so high risk borrowers could purchase homes. Then, after the crisis hit, he did a 180 and began castigating banks for the "predatory lending" that he encouraged all along (and Fannie and Freddie implicitly mandated). He was never held to account for this (as politicians rarely are) and is now comfortably retired. Ironically, the man who was always talking about "fairness" helped create a plethora of financial injustice for the millions of innocent victims who lost their shirts in the 2008 financial crisis. Life certainly ain't fair.
It will _never_ be fair either. My dad always said, if you cant afford this with the next 6 paychecks, this is not for you. Americans are just weird, period. We dont buy a car unless we have 70% of the money for it and at least 50% of a house. I lived 3 years in usa, making 220k a year, and I was still poor compared to a 1/5 of that paycheck back home.
In all fairness I heard Bill Clinton say in an interview that the lowered standards for home loans only applied to community-based banks and those weren't the ones that sold the mortgages that got bundled up by Wall Street and passed along. I've heard commercial banks say they did the same thing in order to compete, but I'm not sure I believe their story (they have many other major sources of revenue and wouldn't have necessarily gone out of business).
Barney Franks also stood in front of the American people before the collapse and said the home loan market was strong, and that there was nothing to worry about. This was after Bush warned us that banks were engaged in too risky loans.
It was government that fixed the rule (Mark-to-Market) through elimination of it. Why was a rule that had been abandoned in 1938 because it was seen to be bad brought back anyway? I suspect the elimination of Glass-Steagall in 1999 was in some way a contributing factor. Banks should go back to being boring like they were from 1932 to 1999.
2008 crash started well before canning Glass-Steagall. You could argue it was started with the carter and REAGAN RMBS reforms, carter admin the one that started the new foundation, Reagan admin coming in and "no, no no, like this. This is how you build a new foundation to Capitalism". Carter mixed up a bag of concrete, threw a little around. Reagan came in with 10,000 dump trucks and turning it into the bedrock of the American Finical System. Which all Dodd-Frank was re-establishing the carter/REAGAN system, and a few other things. Like the Julian 365.25 Calander, and the Gregorian 365.2425 Calander The main culprit of the 2008 collapse was the reforms of the Clinton era and the refusal of ALL sides to act to stop the clearly unfolding train crash that caught everyone's attention in 2002. The collapsing Housing Market was a core George Bush 2004 issue, and nobody, left or right would budge, until it was inevitable.
Investors need to understand where and how to allocate funds to hedge against downturns and still make profits. if you can't navigate the market you should consult with an expert advisor
Working with a financial advisor has been a game-changer for me. They provided invaluable insights and tailored strategies that aligned perfectly with my risk tolerance and financial objectives. With their support, I've seen significant growth in my investments and gained confidence in my financial future.
i find it fascinating that the leveraging of mortgage lending was not discussed. all he talked about was the mortgage loans, but the crash was not due to the default of the loans, it was due to the cascading, collateralized securities based on those loans that like dominoes fell. if the interest rates had been high as he claimed at 5:10 indeed lending would have been lower, and likely secured only by those absolutely capable of affording such high interest rates. but as a consequence, home ownership would be lower, and yes mortgage lending would not have been as risky, and thus likely not attractive for collateralized securities, but the market would have found a way! just as he is willing to apply 'free market' principles to mortgage lending and how it would have not been attractive for secularization due to its very low risk (because affordability would have been tested more robustly), and thus most of the loans made would be very stable, because we have evidence that affordability tests were compromised, there is no reason to believe that they would not have been compromised had the lending not been as robust. yes, instead of 50 million new home purchases, there would have been 10-15 million home purchases, but there is no reason to believe that suddenly the lending officers would be practicing more vigilance, especially if they had an incentive to approve loans. the market collapsed due to a cascade of errors, which included cascading securities. it was not just one weak link, it was multiple levels of incompetence or convenience. people should not be too attached to finding simple solutions. that is a fallacy in itself.
aliesneo lower home ownership would have been a good thing. If interest rates were not kept artificially low the way they were, the housing market would have corrected earlier and banks would not have had the opportunity to abuse the fed' s "free money".
The incentive to provide sub-prime loans was a combination of the low interest rates themselves and CRA threatening banks if they didnt lend to low income or minority groups.
"It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble." - brian s. westbury, 2008
Pretty insane argument alright. His argument is that the truth killed the stock market and lies brought it back. Maybe, but if so, it was obviously a market (or system) that needed to die.
Times change. In the early 70's my father bought a house, which included a huge lot size, for $10,000. Today, it is replaced with two houses that each are of a value that is above 2 million dollars. So that's over a 4 million dollar total value. So after 47 years it went from a one house lot which has a $10,000 value, to two one house lots which have a total of over a 4 million dollar value. WOW !
Interest rates and loose approval rules brought huge numbers of buyers into the market who should not have been purchasing homes. The banks, the government and the Federal Reserve all had a hand in this catastrophe.
I think he missed a key factor. Frank a few years before pushed through a federal program to encourage home loans to people regardless of ability to pay. That's what loaded up the sub prime market for problems.
Yes but supposedly that only applied to community-based banks which weren't the ones that created the bad mortgages that got turned into toxic assets by Wall Street (commercial banks claim that they had to lower their standards in order to compete with the community-based banks, although I'm not sure I believe that).
@@watching99134 oh no. The community banks were selling the loans as soon as they closed the deals. Outfits like American equity mortgage did too if I recall.
If there is no job security, there is no way to afford a mortgage. No matter how long you pay a mortgage, if you lose your job and can't pay it off, and the equity is not enough to buy another house, you lose everything. Been there, and so have many others in 2008.
Notice he never mentions the levels of private debt which is the real reason why the economy collapsed, private debt had reached 170% of gdp where as in the 1980's it was much lower.
@@cointomato9768 interest rates were not low before the 2008 crisis, I know because I took on a mortgage in 2008 just before they cut interest rates right down.
11:00- extremely suspect correlative argument-and it’s really his first big one that TARP made things worse. He’s 11 minutes in and just starting....and it’s a super rocky, unconvincing start.
Exactly where I paused it - he doesn't even acknowledge, let alone address, the obvious question of what would have happened without TARP - and as for "the free market doesn't have a press spokesman" - erm, it's called Fox News among other things
I would recommend Matt Taibi's work on this subject. I believe he was with Rolling Stone at the time. Matt is a straight up, honest journalist. I cant say that his is the definitive word because I am painfully uninformed on the subject. He does illuminate some activities by the institutions that this speaker seems to omit. Regardless, much appreciation for all involved in allowing me to listen and learn. God Bless❤
there are plenty of indicator believed to explain how the economy will pan out, yet only the most certain indicator is long-short yield spread. either 10yr-2yr or 10yr-3m predicted it bubble, financial crisis and even the pandemic. the fact that the yield curve has been inverted and stayed that way gives a glimpse of where the economy's heading once the curve circles back to the normal stage. brace for the impact, cause it creeps in bit by bit and the fallout eventually will burst out crippling the mkt. a crisis repeats, but in a different form.
This is only a part of the story. One tiny aspect of the event. Told from a traditional economist point of view. The low interest rate was just part of the cause. Most people in this comments section seem to know more about happened. Maybe they should be on Ted Talks.
There are a couple of mis-leading oversimplifications in this talk. As a CPA myself, and at least a reasonable stickler for accounting rule changes, I'd question whether pointing the blame at the change to re-implement Mark-to-Market, which he cites in 2007, is completely correct. For one thing, Mark-to-Market was used at least since de-regulation in the 1990's, and of course, perhaps figured most prominently with Enron, which went belly-up in 2001. So, there's that. But also, trying to blame either just Barney Frank or Tim Geithner, is a misdirection. Putting aside disputes between Mr. Frank and other regulators on the right & left, the rule was changed on 04/02/2009 by the FASB (Financial Accounting Standards Board). ...One could argue that the House Subcommittee headed by Mr. Frank held lots of hearings to try and persuade the FASB, but that's about as much as you could say. ...We could also perhaps argue about Geithner, or Hank Paulson, or whomever, but there's only so much you can blame the bureaucrats for, especially after the fact. There's plenty of blame to share for the 2008 crisis, but after all these years of discussion & analysis, to try and pin the whole "real truth" on accounting rule changes is uninformed & disingenuous at best. ----> en.wikipedia.org/wiki/Mark-to-market_accounting
It is worth observing that a reduction in the rate of interest on a mortgage loan will not necessarily lead to the ability to purchase a larger, more amenity rich residential property. The reason for this is simple. The initial increase in borrowing capacity will be capitalized into higher land prices and, therefore, higher prices for all residential properties.
Ronald Reagan said “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’” It's as old as the hills and as true as the day is long.
The government is all that stands between you and your boss who stands to gain unimaginable wealth by physically chaining you to your post for a 12-hour 7day shift paying just enough to keep you from starving faster than he can replace you. The reason we know that is because that is what happened to people for quite a long time as a rule before they fought for a better lot which only democratic government could secure into law and enact.
This guy is a spin artist and a shill for the banksters. If anyone even remotely understood math and how the 14% increase in value has no relation to the 1% COMPOUND INTEREST that these fancy math tricksters use to keep their game going
Major insurance companies use Mark to market when it comes to tracking the book value of their derivative transactions through hedging, and they've introduced regulations to lessen the impact on capital from the fluctuation in markets.
robbedontuesday - so you're one of those who wants the government to "hold accountable" anyone who says something that disagrees with your view of the world... Wake up and smell the coffee hominid, you're living in an alternate universe.
@@jasonwilliams9485 wise up. I want everyone to be accountable for their actions, specially bshitters like the lecturer. Who said anything about government?
The Economy is fine because it is ALWAYS over-leveraged and f&cked up. Over time if the Government (FED) doesn't screw it up based on other agenda from Gov, the markets regulate themselves. Bankruptcies are normal. People who can't pay their bills and have their chit repossessed are normal. NONE of the factors the Media cites has anything to do with anything really.
I think that our problem began when Congress repealed Glass-Steagall signed into law by BillClinton and allowed the banks to gamble with their funds. That there was both carelessness and malfeasance in the financial industry because of it and we were ruined because of it. No, I wouldn't place all the blame on the Board of Governors, but I would place a great deal of blame on Congress and our President for not realizing the effects of their actions.
Glass-Steagall was the repeal of a law that kept the investment side of a bank separate from the commercial side. In the long run it had very very little to do with the crash of 2008.
Sir, you're correct, but allow me to add another point. Glass Steagall did separate commercial banking from investment banking, and it is the fact that commercial banks create money out of thin air by means of the ledger method. What is that? When you go to a commercial bank to get a loan, you sign a debt contract. You have created a security, a debt instrument. By law, banks do not make loans and do not take deposits. Banks are in the business of buying securities. That loan contract goes on the bank's ledger as an asset and a liability appears on the bank's ledger which is the amount owed to you. The bank then tells you that there is money in your account. They cannot tell you that they deposited it there because they would be lying 🤥. All the banks recognized this and straighten things out by clearing. This making up money creation is what causes bubbles. Unlimited money chasing limited supply, assets, whether it's stocks or real estate. Glass Steagall did not allow speculators access to this money. The stock market was relitively stable until Glass Steagall was chipped away at in the Eighties until it was totally repealed in 1999.
Correct. Most everybody missed the point of why banks and mortgage lenders took these unparalleled risks- they thought that the government would bail out the next guys upline, that the government would bail out FANNIE MAY and FREDDIE MAC. In other words, the government ensured the moral hazard.
MTM GAAP accounting is a result, not the driver. It doesn't explain: High concentration in credit risks (subprime) High amount of leverage (100% LTV loans). High amounts of fraud. High amounts of speculation, also leveraged. Prices accelerating well past any kind of intrinsic value (land value + rent payments). Derivatives, CDOs or other off-balance sheet liabilities. Folks that HAD good credit but lost employment (propensity - credit score is not capacity - debt ratio).
He's right about one thing: the government system needs to be fixed.... but he's wrong about why. The government system needs to be fixed to increase oversight on banking practices to prevent banks from practicing the predatory loan schemes and allowing investment on loans that brought about the 2008 crash in the first place. Capitalists are gonna capitalist unless there are regulations, and ethics and standards in place to control their worst impulses and protect the people most affected by an economic crash - which are the banking consumers - not the banks themselves.
We saw this in the Hoover administration as well and at that time everyone was looking at the "Own You Own Home" program, a government program similar to what Clinton pushed for, deregulating lending for mortgages. It wasn't the actually cause as Wesbury explains, but it compounds when integrated into an existing accounting practice. He should have explained that QE isn't simply increasing the supply of money as many think that's where inflation starts, it's scaling the balance sheet to increase assets as well as liabilities, so yes it increases the "supply" of money, but it does it through debt. And it gets worse, the root cause of inflation is inefficiency on the supply side to meet demand. This inefficiency is bad enough on its own, but when its financed through debt it brings along an interest rate. Since ultimately this debt is our national debt there is most certainly an interest rate on that, otherwise nobody would consider buying it. This is why the federal reserve really doesn't want raise the interest rate, it would consume even more of our deficit each year. Congress has indeed raised the ceiling on spending, but they know they're running out of time. The only way to reverse this is to lower taxes, rely on the velocity of money to scale tax revenue up which it always has, use that to pay down the national debt as quickly as possible so that eventually someday we can raise interest rates again and everyone can grow wealth in saving not just investing. Given how long it will take to do this, and that a term for a president is only 4 years, 8 at most but not reliably we can safely assume this will never happen. We were doomed as a nation in the 1970's and didn't even know it. It would take an incredible effort on the part of our leaders to set aside their political ambitions and unite on an economic understanding we once had to solve this. I don't think it's possible. But creating money, i.e. growing the economy purely off debt that exposes every single citizen to such a liability is the antithesis of how this nation was intended to function, the idea was to minimize the effect of government decisions on the people. Should we be surprised that centralizing decision making does this? That is what the Federal Reserve is.
There are people in this world who have no qualms about killing civilization,but for as long as civilization continues these people want to be on top.Thats it,thats all you need to know.
Regardless of how much you agree/disagree it as to be said we (the public) were at least complicit. The bankers may (were) have been greedy and pushed too far, the government could have done more to hold them back and regulate but we aren't just innocent bystanders. Over-reliance on debt for unaffordable purchases, living beyond our means and short term thinking were rampant prior to the collapse and we certainly played our part.
I always thought that it was when the banks were de-regulated in the 1970's that the troubles started along with the selling and trading of worthless credit swaps and the big finance companies knowing that they were selling worthless stock. Films like 'The Big Short' and 'The Wolf of Wall Street' taught people like myself what really happened and what is even more shocking is that very few people have even been jailed for what they did.
You could read the book "A Fighting Chance" from 2014 where senator Elizabeth Warren tells about her life and corruption in banks and politics. About the financial crisis in 2007 there is a chapter page 120 titled "Who Goes to Jail" I quote: ". . . Where were the full-scale public investigations ? Where were the armies of auditors seizing hard drives and poring over the financial statements ?"
@@tomaricotube Are you saying that CDO's didn't exist in the mid 2000's? Or that they were such a small part of the whole real estate market that their collapse didn't exacerbate the problems of the housing crisis because people were betting on the housing market with significantly larger amounts of money than the actual value of all of the home loans?
The title of this presentation should be : How far from the real truth... In my opinion it is the Greed what causes it and it will again at some point. There is no government or any good will that can control it. There is no broker no bank no feds and no insurance to regulate Greed. And all of them share the same denominator. It is a simple overvaluation and high payments for the consumers to pay and afcource took the toll. The market always will find the right price. In this situation the right price was highly multiplied by the Greed factor and uncontrolled played by the banks.
Just think about it: How does a bank survives at least medium term by giving credit to people that cannot pay it? It doesnt, it ONLY survives if the government says it is going to pay when the credits are not paid, and thats WHAT HAPPENED So, bear with me: Without manipulated interests rates and this free bail out by the government, the banks that would survive long term would not be able to do such irresponsible credit lending
This man likes the free market: The result of a "compleet free market" is a drama for the common man and a blessing for the super rich. In particular, what each one depends on should not be in the hands of a company. (hospitals, electricity supply, schools, etc.)
On the bright side, this talk was better organized than most TEDx talks, in that within the first couple of minutes you actually have some hint about what it is he's going to be arguing. But beyond that it's not *much* better than most TEDx talks in that he tackles a deep subject at a level you could get by talking to a random person at a cocktail party. If you want to hear an insightful take on the financial crisis, look for just about any talk by Mark Blyth. There are many of them and they are all more knowledgeable and more engaging than this.
@Dave Park Why yes. Because I don't think we're having the same conversation at all. I thought all this was obvious but let me spell it out: the quality of TEDx talks is typically abysmal. People get tricked into thinking they will be good because TED is in the name. My original comment suggested that as bad as this is, it is probably still better than the average TEDx talk because you can at least tell what it's about. Then I went on to say some negative things about this talk. You seem to have interpreted that as me meaning that this talk was good.
As a bankruptcy lawyer: his story about the Texas house is false, the mortgage is a contract and cannot be changed unless either party agrees. So his analogy is FALSE.
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Chad Bentoski hey Chad, I know him personally and he is not a banker. He’s an economist. He deals in facts and reality. I was there on 3/09/09. The announcement of the accounting change and just watching the market take off like a rocket. I received two messages from independent $$ managers, “throw everything you have in now!” On that day. Look it up yourself!
@Burt Gummer Bankers have what they call lending standards and they're supposed to be well regulated. So clearly they were engaging in criminal activity.
This issue with the 2008 financial crisis wasn't Marktomarket accounting but an incorrect risk assessment of the bond market. Banks and financial institutions use AAA bonds as "cash equivalents", which means an asset that is so liquid and stable in value that it can be turned into a predictable cash amount. As we all know today, MBS products were actually much riskier than models predicted. This is because the loans that composed them were not rated accurately. When default rates began to rise, the MBS products began to fail and subsequently drop in value. Since these assets made up a sizeable portion of the banks' and financial institutions' "cash reserves" they suddenly found that they had much less money than they thought. So when people went to withdraw their money, or when institutions faced margin calls, banks and financial institutions found they didn't have enough liquidity to pay up. But the key thing to note is that this was a liquidity crisis and not a solvency crisis. In other words, the banks had enough assets to cover their debts, but not the cash on hand to pay everyone at once. This is why Lehman was eventually able to pay back all its creditors given enough time. An argument can be made that the government's desire to increase homeownership rates by facilitating mortgage lending was ultimately to blame, or that it was the fault of people who took out loans that they knew they wouldn't be able to pay back, or the rating agencies that incorrectly rated the loans. Ultimately though it was giving the banks the liquidity needed to keep up with expenses, and most importantly to reassure creditors, which undeniably prevented a complete collapse of the banking sector. Which would have cascaded into an economic collapse. The minimum reserve requirements put in place by governments since then is also what prevents such a situation from occurring again.
corelation does not equal causation his point is valid only so far the market crashed every 15 year until the regulation after the depression for 70 years we were ok then when regulations were weakened we started having problems.
Weve had minor ones. The great depression was just the last one in a series. With regulation, the wild swing s stoped. With deregulation, the wild swings are back. Wall street and banksters have fought reregulation. We have no safeguards to stop another recession or even a depression. I am a pessimist . I have become dept free and started a garden. I give our economy only a ten percent chance of not having a great swing in the next decade
Tom Robertson The Dot Com Bubble, Black Monday, the 1970's Misery Index with stagflation were far from minor economic downturns. We have a recession every 8-10 years. We are excepted to have another recession in the next year or two. This goes back to the saying "who watchers the watcher?" Are government officials somehow more intelligent and deity like than any other person? What is government? Government is just society, you and me.
Dot Com was after deregulation Same with black Friday Same with s and l. Any thing since Regan is because of deregulation Banks were never allowed to do naked derivitivex. Banking was a very boring occupation. It was safe. No more The firewall between services is no longer in place. Dems tried to make financial counselor tell customer who they represented. Rebs struck that down. With libertarian in your handle, I know your basic belief system. I'm 60. I have watch all this unfold with intrest Regan stopped enforcing the Sherman anti trust act. No other president has either since then. In my youth, I could be kidnapped and dropped anywhere in the USA And I would know exactly where I was. No more. The same corporate names are everywhere. All the regional chains are gone. I am pessimistic because citizens united states the corperations are real people and money equals free speech We have the koch brothers spending a billion dollars on this election. How much are the other billionaires spending? How much are corperations spending. Citizens united said congress had the right to for e transparency Dems put a bill up Rebs blocked it. I see bernie having a chance to stop the slide. I see clinton as a place holder, neither good our bad. I see disaster under any other republican Trump is even worse.
Tom Robertson President Bill Clinton is the one who deregulated the banks. President Ronald Reagan had nothing to do with that at all. Do you know unions have donated more money to politicians and super pacs than 1% or corporations? The Sherman Anti-Trust Act has done very little for anyone in the long run.President Regan actually used anti-trust on AT&T. Then in 2001 Microsoft had antitrust put up against it. Did you know the anti-trust act against Standard Oil that oil prices had dropped and the supply filled the markets, Microsoft had it used on it as well. Microsoft had lowered PC prices and had made it available to everyone.
The cause: Every person and institution in this sequence was complicit: Borrowers who lied or knew better but let greed win, mortgage brokers who lied and encouraged lying while they profited, lenders who knew there were lies in the system yet profited, institutional lenders who knew there were lies yet passed the buck while profiting, the final investors who knew there were lies yet profited but only for a time. Every person/institution involved could have told the truth and stopped it.
It is true till the point: "the final investors who knes there were lies..." No i don't think so. They believed the lies. They paid a hefty price for this.
@@peterlustig8778 I agree, mostly, since some investors DID know. I guess I was too focused on the investors that did know, or should have known, but in truth probably only 20% knew. In my zeal, after noticing the overarching worldwide blind spot of greed, I neglected to focus on massive losses experienced by super responsible investors like a German retirement fund I read about. Frontline interviewed Fidelity. While Fidelity promotes their funds as good investments, Fidelity employees typically avoid those funds and choose spiders and other low/no-fee, broad-market funds. Greed. It’s timeless. So always watch for it before it blinds you too.
simplistic view. glib, vapid. sophomoric. this is like saying "war is caused by the pride of all those involved in starting and fighting it! if all men were fair and just, there would be no war" and leaving it at that
Bull, the banks allowed people they knew could not afford to borrow money to borrow money, interest rates were irrelevant, they are called liar loans for a reason.
Thanks friendly one. I got three and a half minutes before I discovered that what this guy was selling is fit only for fertilizing the garden. The comments were awesome.
Why the comments are so negative! He identified the true architects of Finacial collapse and that is The Federal Reserve Bank which is in most part a Private entity that controls the money supply and the interest rated. since the 1913 Federal Reserve act and not long after the stock market crashed and of course the depression, the main cause of the crash was the policies of The Federal Reserve Bank, as he mentioned the same pattern reappears between 2002 to 2005, lowering interest rate below inflation which means cheap money for banks to borrow and lend out at very low-interest rate then the interest rate shoots up very quickly, and on top of that there's the reintroduction of MARK TO MARKET ACCOUNTING and why? this an accounting tool that was pretty much abolished in the 1930s, and the reintroduction of it can only devaluate hard assets like housing against an uncertain economical and political background, like the Iraq war or the aftermath of the first world war in Europe ....Now a banking crisis turns into a economical crisis. If the pattern repeats itself with the same result, then it is the causation. In the case of banks and financial institutions, they knew no one is going to go to prison. The whole this a Ponzi scheme.
All things being equal, a drop in mortgage interest rates will be capitalized into higher property (i.e., land) prices. The economics are simple: every parcel of land yields some potential (i.e. imputed) rental value, capitalized by market forces into a selling price for land. The lower the effective rate of taxation imposed on this rental value, the higher is the net imputed rent to be capitalized. Thus, capitalized land rents represent a primary, inflationary driver in any economy. What happened to make the 2008 land market crash worse than in previous recessions was the high level of fraud associated with the private label mortgage-backed securities issued by the banks and sold to investors by Wall Street.
@@Zone47. Just noticed your comment. There is well-documented evidence that the residential mortgage loans pooled as collateral for private-label MBS were characterized by a high degree of fraud and misrepresentation of borrower income, credit and the assigned value of the subject properties. There may have been similar problems with the underwriting associated with commercial properties. I simply have not researched the issue.
@@davrsch Yes, of course. Interest only loans are for the most part an effect of a property inflation that has reached a high level of stress on borrower ability to qualify for a full amortizing loan. But, then, higher asking prices for property becomes a market reaction to this and all measures that maintain demand at a high level.
@@nthperson over about five years the price of 'a house' increased until they fell off the cliff. Because the higher prices meant higher tax revenues, higher mortgage portfolio valuations etc everyone was onboard- Government national and local, the industry of builders and the banks including the FOMC and FDIC. This is/was a classic bubble and burst scenario.
When the entire world gets to watch the WAR CASTLE series, you will ALL understand completely what's been going on, not only behind your backs, but right in front of your very eyes!!
The economy failed because the financial industry, thanks to deregulation, was able to commoditize bad mortgage debts that they knew would never be repaid.
Although that is true, you have to ask yourself why were the banks inclined to make these deals mortgages in the first place. Goes back a lot farther than you might think.
@@thienhoang1001 Because the private Bank the FED which is controlled by bankers and not the government sets the rates that they play the game with. those rate only aplly to them and they know it. They crash the economy all the time and then whine that they are over regulated every time. Notice that in the 80's the whole economy did not crash. Why? Because they had not been deregulated yet and had to use their own money to gamble with. Only the savings and loans crumbled because they were covered by different rules. then Clinton repealed glass steagall and the glut was on/ lets make as much as we can as fast as we can. and when it all fell apart they came crying to the taxpayer to bail them out.
Not taking sides here, but the data presented seems insufficient for making sound conclusions. Did the increase in FR meetings make matters worse or did the developing crisis require more meetings ? I also find it difficult to conclude efforts by FR and GVT did not help given the data. For example how long does an economic decision take to have an impact. More questions- isn't the financial sector a bigger % of economy than in the 80's? Still have lots of questions
My frustration with people like this guy is they always cover just a small portion of the causes of the event and lead you to believe there's no more investigating to be done. The 2008 crisis was a perfect storm with many key contributing factors. Covering just a few is insufficient and leads people to have a false sense of understanding and confidence. This is worse than if someone knew nothing. It's like having a faulty speedometer in your car.
It's weird that he mentions the FR meetings at all, I think. I came to the conclusion that he only mentions it so that he can argue he did us a favor by reading them all.
To put it as Sherlock Holmes would you need motivation and opportunity. Motivation = Greed of Banks, Rating agencies, common man’s greed to make a quick buck on real estate Opportunity = Low interest rates, banks lending with less due diligence, you can walk away from your debt with no recourse
Live within personal means and build in adequate financial buffers to weather economic storms. Likely storms about to hit once again late 2022 and early 2023.
He is technically right that mark-market caused the mess, but he is utterly disingenuous about it. By providing home values as the example, he is trying to set it up that this was going on in the sub prime mortgage market that was the catalyst for it. Rather, it was mark-to-market of the Derivatives market that was going on. He also seems to think that the rules suddenly allowed them to in banks to take advantage of hapless homeowners that led to it; not only does this not make any sense at all in the mortgage industry (a bank literally can't call in all of its debt), but nobody forced anyone to employ these shady accounting standards in the derivatives market in the first place and the law enacted following Enron actually was supposed to curtail this behavior by enforcing stricter accounting standards on assets. The problem was the derivatives market was a nebulous space that often didn't have direct market value, so they had to figure out "fair" market value. Amd more often than not, the "fair" market value was propped up with fraud and lies, and the bag was passed onto hapless investors through fraudulent credit ratings. So, he is technically correct, but presents it in a massively misleading manner that obfuscates the problem.
The Wall Street Journal, Jan 28 2008, "The Economy is Fine (really)" by Brian Wesbury: "It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble."
He also never mentions that Mark to Market started much earlier than 2008. Anyone remember a little called Enron that caused a lot of problems. They were the kings of Mark to Market.
The Financial Accounting Standards Board (FASB) released its Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157) in September 2006. FAS 157 became effective for fiscal years beginning November 15, 2007 and thereafter. His Ted talk is correct with the effective date
He's leaving out the biggest problem. banks were bundling loans and passing them off to investors. Banks were encouraged to just sell more properties regardless of weather or not the loan was a good bet. Loans were just traded as a stock option. It wasn't the average person buying more then they could afford. It was banks encouraging people to buy outside their means. Only in the crash did the buyer find out. Their house loan was not really theirs. It was bundled. So who gets stuck with the bill for all the cooked books. The American taxpayer. Because the banks are to big to fail. It happened in 29. Again in 08. Banks / wall street need strong regulations.
Reminds me of the South Park episode where everyone is blaming everyone. It was greed among US Consumers, it was greed among investment bankers, it was ineptitude by the government and it was robbery by the Fed. Blaming one institution for the problems of 2008 is wrong on so many levels.
Theseus Titan - Not really... He clearly indicated that the worst part of the collapse came right after TARP. Remember what TARP was? I'm not sure I agree with his view of mark-to-market though. It's true that it collapsed the stock prices of most financial institutions with large holdings of mortgage-based assets, but removing it made the balance sheets of those institutions totally fictitious, as they continued to claim those Real Estate assets in their balance sheets at prices that were sometimes twice as much as their actual market value,
"The Big Short" is full of manipulation, misdirection and outright lies. The former: practically no mention is made of Fannie Mae and Freddie Mac, which made the lending out of huge sumes for bad mortgages possible. The latter: only one banker was jailed, in fact, dozens were.
Read “Hidden in Plain Sight” by Peter Wallison and watch this again. And remember that Big Short was written by a guy that had a couple years as a trader on Wall Street and then wrote books on a bunch of other things like baseball and compare that to Wallison, who was a fellow in Financial Policy Studies and was a White House Counsel and then Wesbury, and who is on the advisory council on the Fed Bank of Chicago and determine who you should believe...
@@sctrojan84 "The BIg Short" is typical liberal elite Hollywood whitewash. In the film, practically no mention is made of Fannie Mae and Freddie Mac, which made the lending out of huge sums for bad mortgages possible and these were institutions created by the federal government. The brainwashing of the American public continues unabated.
@@ivanlozowy Nice Charlie Kirk rebuttal. What do you say to the three big rating agencies that slapped the AAA rating on subprime mortgage bonds? What about the banks that gave away mortgages like they were free candy to people they KNEW couldn’t pay them back? Would love to hear your defense to why repealing Glass-Steagall didn’t inadvertently turn our banking industry into several giants that literally became “too big to fail”.
Greed is what caused the 2008 financial crisis, living on more and more borrowed money to get higher and higher profits until the entire house of cards comes crashing down because it cannot be sustained. If you borrow more and more money, there will come a time when the debt collector comes knocking on your door ..
The economic crisis and downturn are all the signs of 2008 market crash 2.0, so my question is do I still save in the US dollar or is it okay to move all emergency and savings to precious metals?
Keeping some gold is usually a wise decision. You would be better off keeping away from equities for a bit or, even better, seeking advice from an expert given the current market conditions and everything that is at risk with the current economy.
I consider gold investment to be dependable and intend to increase my holdings to recoup losses. While silver is also a promising investment, it differs from my collectibles. Having clear investment goals and acquiring knowledge in the field are essential. I collaborate with Laurel Dell Sroufe, a financial consultant regulated by the SEC. Through modest initial investments, I have gradually accumulated nearly $799k over time.
@@tatianastarcic How can i reach her, because I’m seeking for a more effective investment approach on my saving.
@@darnellcapriccioso Laurel Dell Sroufe maintains an online presence that can be easily found through a simple search of her name on the internet.
@@darnellcapriccioso After locating her, I composed an email and arranged a phone conversation. I'm optimistic that she will reply, and my goal is to conclude 2023 on a financially successful note.
I wonder if people that experienced the 2008 crash had it easier because this market conditions are driving me to insanity, my portfolio has lost over $27000 this nov. alone my profits are tanking and I'm don't see my retirement turning out well when I can't even grow my stagnant reserve
Even in this whirlwind, there are chances to be had, thus an increase in volatility is not always a bad thing. You have an opportunity to rebalance thanks to volatility. In order to help you diversify your portfolio, you must hire a financial counselor or broker.
I'll suggest you create a diversification strategy because building a good financial-portfolio has been more complex since covid. Recently my colleague advised me to hire an advisor, surprisingly I have accrued over $120K under the guidance of my coach during this crash. She figured out Defensive strategies to protect my portfolio and make profit from this roller coaster market.
@@duane_29 I’m new to all this, heard it's a good time to buy and basically I've just got cash sitting duck in the bank and I’d really love to put it to good use seeing how inflation is at an all time-high, who is this coach that guides you, mind I look them up
@@berkrix4312 All of this happened in less than a year after ‘Christine Jane Mclean’ told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
@@duane_29 She appears to be well-educated and well-read. I just ran a Google search for her name and came across her website; thank you for sharing.
Brian Wesbury, July 26, 2007
“The current financial environment does not reflect conditions normally associated with a credit crunch. The bottom line is that fears about the underlying health of the economy and financial markets are more about hypochondria than reality.”
It's a mistery the fact anyone can possibly believe this bag full of lies.
Doesn’t mean he’s wrong; just means that, at the end of the day, the market can stay irrational longer than anyone can stay solvent.
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
How can I reach this person?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Skip the talk; read the comments. Lots of very smart, well-educated people watched, and then shared their insights and experiences.
YUP!
Yep this is some of the best Replys I've ever read o UA-cam. This guys BS would almost be funny if so many people didn't get hurt form the Banks washing of their hands of the whole sisituation. The govenment needs to be held to account as no one in the financial circles copped the peolpes roth.
The inmorality of 2008 crisis is... I CAN'T even come up with words to describe it.
Not really lol
No thanks I can think for myself
Yes, I've stopped at a green light before. When the road ahead is full and I would block the intersection if I went forward. Just because the light is green doesn't mean you're justified to ignore all circumstance.
Great analogy. Everyone should appreciate people like you who don’t block the intersections.
@@missinformed4269 why would he block the intersection? If he is saying the big semi banks are blocking the intersection, then that makes him a turtle stuck in traffic. That's why turles get squashed, and trucks get where they need to go. Be a truck or be a turtle. A wise person told it to me in a different way of saying it. Turkeys flock, Bald Eagles don't. Don't be a Turkey.
@@andrewropp2525 But he could easily have been talking about driving a truck. A typical truck driver would be more concerned than a car driver, not to block the intersection.
Interestingly, people are getting stupider; where I live, they've taken to painting a yellow grid across the middle of major intersections to "remind" all morons not to stop there. With an urgent sign ahead of time to explain the yellow grid. 🤔
Touché!
The comment section here deserves a prize for economics prowess. Awesome, guys! Faith in humanity restored!
The comment section in here seems uneducated and bias to anti capitalist rhetoric.
@@Camulus777 why don't you respond to them, brother? I'd love to see how. I'm just happy people are putting forward their thoughts in such a manner.
@@Camulus777 facts
@@Jabranalibabry Thoughts without a sound foundation or sound logic are not thoughts at all. They are ramblings of word salads. Please refer to the so-called "Community Reinvestment Act"
@@victordonavon292 brother, I just like that people are putting forth their thoughts in that manner. I don't expect the comment section to be as rigorous as maybe you do but I see people trying. I'm hopeful some of these ramblings represent true passion in someone who may lead us to some good and that includes you. I'd definitely look into the act you've referred, I like to learn, and peace brother. May we look forward to better days.
Transfer of wealth usually occur during market crash, so the more stocks drop, the more I buy, in the meanwhile I'm just focused on making better investments and earning more as recession fear increases, apparently there are strategies to 3x gains in this present market cos I read of someone that pulled a profit of $350k within 6months, and it would really help if you could make a video covering these strategies.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money or you could hire a financial expert.
Yeah, financial advisors could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and I return at least $30k ROI, and this does not include capital gain.
Would you mind telling me how to contact this specific coach using their service? You seem to have the solution, as opposed to the rest of us.
Her name is. 'RACHEL SARAH PARRISH’. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
I knew the end was near when I went into a bank in 2005 in anticipation of a purchase. We pre-qualified for an amount that was 3x more than I could ever conceivably be able to pay. I looked at my wife, then the loan officer and told him he is out of his mind to qualify us for that amount. He just looked at me dumbfounded and didn't understand why we wouldn't borrow that much.
yup was there also .....got a million dollar loan with 4 peices of paper and n o income varification
And yet today you'd be borrowing twice as much, or else spending 4x as much on renting.
@@dfjpr no, you just buy less house.
@@tonynelamichael That's right my man. Some houses are way too big anyway.
@@aurimasdzezulskis3180 Proper size is contextual ,not a fact independent of knowledge and choice.
Recession, crash, inflation-it's depressing. I have $100K in an emergency fund and want to benefit from the stock market to avoid inflation eroding my savings. What stocks should a newbie invest in to safely grow their money?
It's best to buy growth, blue-chip, or large-cap stocks. As a newbie, it's advisable to work with an investment advisor to set up a well-structured portfolio.
The issue is most people have the “I want to do it myself mentality” but not equipped for a crash that comes afterwards. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 300%, summing up nearly $1m, since covid outbreak to date
Amber Michelle Smith has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
5% LI
10% GLD and GDX
15% TSLA
10% COIN
10% HOOD
15% UBER
10% DUOL
15% AMD
10% cash
Thank me later. :)
Put your money in fresh sausage meat.
After 19min of waiting, he gave a very short sighted answer to the banking crisis of 2008. The accounting rule "Mark-to-Market", which he blames for the crisis, is in fact highly useful and necessary to keep banking loans responsible. It forces banks and consumers to keep their feet on the ground as opposed to living in the clouds. By removing the rule in 2009, we re-introduce the dangers of over-stimulating an economic bubble that could kill our world economy. Money was only created to help the ebb and flow of goods and services. That is why regulation is necessary to prevent our economy being built on the sands of speculation and derivatives. Do not watch this video as it will waste your time.
Agreed and no mention of credit raters slapping misleading low default probabilities on subprime loans (for their own monetary gain) when they got sliced up and injected into CDOs which proceeded to invisibly infect the whole financial sector. Irreversibly entangled cash crashes set off by the first defaulters.
Thanks
Agree 100%. See my posting as well. I think Wesbury's kind of over simplification is a huge disservice and in some ways dangerous since I'm sure a number of people will think he is correct. He is not.
Thanks I could see his bias in the first few minutes as he set up a classic straw dog
Thanks for saving me 20 minutes of my life.
SUMMARY: When investment bankers explain to you an investment product that doesn.t make sense, it's a scam.
This is incredibly simplistic, I can't believe TED allowed this guy to speak
I think you are being very generous. This guy is a sickening apologist for the bankers of Wall Street who scammed billions of billions of dollars in bonuses in the leadup to the 2008 Financial Crisis. And when the whole system was on the verge of total collapse when the Government allowed an insolvent Lehman to fail, the Government had to rescue the bankers of Wall Street with a massive bailout, using public money, Very few even of the most egregious people responsible even had to give back a part of their ill gotten gains and I think just one went to jail. That's America where the big end of town is always allowed to privatize their gains and socialise their losses.
Nothing has changed. The stock market recently reached heights of overvaluation never seen before, fueled by massive money printing and interest rates pretty well at zero. All that has now changed with inflation raging. A plethora of obscenely overvalued loss making companies are crashing to earth now the tap of free money has been turned off. Yet again, the insiders and execs at these companies have walked away with vast fortunes while countless thousands of bag holders are left to pick up the tab.
What is your criticism?
Agreed
@@KillroyX99 n his story about the house in front of the hurricane, what he fails to mention is that 20 years earlier the place was worth a LOT less, but with the loose lending rules and rampant speculation to catch the high returns the value went up to $500k.
Assets that are never written down can't be considered true assets which creates its own set of problems
While I find this perspective interesting, and I hate more government control, I am not convinced that free market capitalism can work without a little bit of control from a higher power.
@@KillroyX99 its an oversimplification of the problem. The lower interest rates encouraged lending. It didnt encourage criminality.
So the argument is... because interest rates were low, people took out loans they couldn't afford, because that's what you do. Well, the banks are supposed to perform a risk assessment on that individual to determine if the loan should be given in the first place. The bank employees involved in mortgages used to have Masters degrees in finance and statistics and accounting. The bank is the "check" on that. So if the loans defaulted, it's the banks fault. It's that simple. The reality is the banks were writing as many loans as possible. I applied for a mortgage during this period and the mortgage officer didn't want/need/ask for any W2's, income statements, anything to prove my income - even an attitude of "just put anything down". Never mind the repackaging and derivatives which amplified the solution. It's as if the bank has given up any moral/ethical/financial responsibility to do it's job. Your talk seems to prove that the banks are at fault.
Francis Geck I disagree mostly. The individual is the one who is ultimately taking the loan. The banks aren’t forcing them. More importantly, the Clinton administration guaranteed that Fannie Mae and Freddy Mac would pay the bad loans to the banks if the individual failed. Face it, everyone got greedy and got what they deserved.
Senator Frank and Senator Dodd, the two watch dogs in the senate over the mortgage industry along will Bill Clinton,wanted every American to own a home. They passed laws to force Fannie Mae and Freddie Mac to create the liar loans you talked about and the government was all in on the purchase of those closed mortgage loans. The banks were following government policy and yes, it was easy money for the banks but the government created the rules and forced the banks to follow.
Yeah sure, always blame the bankers. When will the people of this world's financial institutions finally catch a break! Poor, poor Allen Greenspan, that modern day Robin hood... Of course, loans are supposed to be backed by collateral, the bank's investors rely on that, but because they weren't everything went down the crapper and the gov't wrote them a huge check out of our taxes, so I guess we were both wrong.
@@Victor-zw8tb much more involved.
@@Victor-zw8tb The banks should have a self interest in not making bad loans, and the technical experise to do so. Yet, they engaged in predatory practices to convince people with low sophistication that they could indeed afford the loans. That in and of itself undermines the "moral failings of the borrower" argument, at least to some extent.
But it got worse. Those same banks created derivative products, ballooning the magnitude of the problem far beyond the risk of the underlying loans, and sold those products to their customers while misrepresenting the risk of those products.
To put most of the blame on people who took out loans they couldn't afford is to miss that the crash was about so much more. In fact, many of the people who did default could have afforded their loans by conventional measures, were it not for the time bomb created by the banks that led to those people losing their jobs as companies went under, or their houses going underwater as massive foreclosure pushed their house values down.
This guy reminds me of every one of my Econ professors ... they loved to hear themselves talk. That's about all they were good for.
BINGO
You are correct.
yeah this is just common knowledge and the guy sounds like he thinks he is exhaling gold
Comparing the banking crisis in the early '80s to 2008 is apples-to-oranges. In the '80s banks and investment firms were completely separate entities, whereas by 2008 they were in many cases indistinguishable. 2008 wasn't a "banking" crisis -- it was a "financial" crisis. The movie (and book) The Big Short gives a pretty good picture of how things got so messed up. Wall St. investment practices basically evolved to the point where Federal Reserve and SEC rules (mainly crafted decades earlier) no longer protected against huge risks.
What was the name of the movie ? I can’t find it
@@brandongranados5569 Ummm... as I said, "The Big Short"
@@rogerscott529 I know I just wanted it on my comment notice for tomorrow to search the movie😂 I didn’t know how to save it sorry 😂
Yes he makes it seem as if commercial banks and investment banks are the same thing (I know Glass-Steagall was repealed, but it was the investment banks that bundled that bad loans and made it a systemic crisis).
Thank you! This is the truth! Not the nonsense spin that Brian is trying to weave to deflect from who the culprits really were. This is a perfect example of how someone can cherry-pick disconnected facts and weave a completely false narrative.
Things are strange right now. The US dollar is becoming less valuable because of inflation, but it's getting stronger compared to other currencies and things like gold and property. People are turning to the dollar because they think it's safer. I'm worried about my retirement savings of about $420,000 losing value because of high inflation. Where else can we keep our money?
Personally, I would say have a mentor. Not sure where you will get an experience one, but if your knowledge of the market is limited, it seems like a good bet.
Well I recommend you make a diversification plan because it's been harder to build a good financial portfolio since COVID. My colleague suggested I hire an advisor, and I've actually made over $120K with their help during this market crash. They used defensive strategies to protect my portfolio and make profits despite the ups and downs.
My Financial adviser is ‘’Helene Claire Johnson’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
Personally I do research into the elements used in electric car batteries, nothing is certain about EV's future but it's worth looking into
In 2008 I was in my mid twenties and focused on finding a career opportunity. A skilled craft seemed like a good idea for a long while. My parents at the time both got laid off from they're professions. I worked as hard as I could to try and keep the home for us. The adjustable rate mortgage payments had gone from $1300 to over $4000 a month. Then the job industry I was recruited for had more mass lay offs. Even though there were so many campaign promises at the time for jobs. So many started living in cars, and trucks. To some, Getting to work wherever it was, was more important then if you had the comfort of a home. Almost a year later when work picked up a little. I met travelers that insisted living in a tent was the best way to afford living. My grandparents who survived the great depression said many family's lived out of cars when they had to. It's an economical hardship. Just don't give up trying to find a way.
I think you had a negative amortization loan where the payments would change after a number of years. These are very bad loans to take out. They're designed for young doctors and lawyers whose income would jump substantially after a few years.
I had an adjustable mortgage loan, it could only go up 1 percent per year. I watched as my mortgage started to go up, so I refinanced to a15 year mortgage. Took responsibility.
@@glennalford8634 Same here. ARMs have a place but can be used incorrectly.
I think if you want to get close to "what really happened" it's best to have a discussion of an expert panel, instead of just one person sharing his opinion.
Simply because it's statistically unlikely that one single person makes no mistake in his/her analysis. Some errors may not be obvious to him/her, but to other people who focused on other sources.
This is a good video and I like his contribution, but I am not convinced.
Same
@ Guido - "it's best to have a discussion of an expert panel' - Given the poor quality of most conventional education systems in most countries, where the population is deliberately "dumbed down" to be more easily controlled, I have VERY little faith in 'experts" as most are little better than "superior idiots". By which I mean that while they may have 'higher" education, they have a poor grasp of reality !
Sounds like common sense to me. How many people do you need on a panel to tell it?
So 1 person being bias with no financial benefits dosnt convince you, but a group of oveusly bias people who are paid to vote based upon their success in the past would convince you. That's OK, but it dosnt me. This Ted talk isn't supposed to convince you. Most people fell asleep in the first 15 minutes. His goal is to first, open people's eyes to go research this idea. And second for those of whom will listen fully to him, he will have somone to talk to. The reason he wants to be heared, is because he loves to hear himself talk. I feel like we all can agree on that haha.
His point was made in one sentence near the end of the talk starting with “in my opinion”. This does not need an entire lecture.
There was a time when we " made it here", we had jobs for everyone and the products were of high quality, then the 1% wanted everything. Now Inflation drives prices up and if Inflation is high and jobs disappear by the millions we are in a recession and maybe headed for a Depression…So be careful with your money. It may take decades to get back on pay again. Luck to all.. I've seen folks make huge 7figure profit in a crashing market and pull it off much easily in a bull market Unequivocally the crash/recession is getting somebody somewhere rich...
On occasion you can beat the market with blind luck, but I wouldn't depend on it. Having a science background there is a saying, 'Luck favors the informed', I've found it to be true, allowed me in great part to retire early...
@@gracesdonny1532 Well politicians for certain are gaining off the crash, and true the average individual could profit off a crash but such high-grade investing come with equal risk which can only be managed by a proper pro or expert…
@@tradekings5433 Yes, the idea of a portfolio-coach used to sound generic, but new study by investopedia actually found that demand for portfolio-coaches sky-rocketed by over 41.8% since the pandemic and based on firsthand encounter, I can say for certain their skillets are topnotch…I’ve raised over $1.3m from an initially stagnant reserve of $180K in less than Two Years
@@emilybrown2719 I've actually been thinking of reaching a portfolio-adviser, my 401k and stocks been losing everything it's gained since 2019, mind if I looked-up this one coach you use?
@@FeliciaJudge Sure, the Invëstmënt-Advisër that guides me is "SUSAN AGNES HANCOCK" and she's renowned and has quite a following. So it shouldn't be a hassle finding her. Just look her up.
I worked for a company involved in the subprime mortgage business back in 2006, because I needed the money to pay my rent. What I saw when I did so were thousands of loans given out with no possibility of them being paid back. And at least some subprime companies were collapsing as early as then, because I was among those laid off in the wake of Ameriquest Mortgage going belly-up.
The only way those home loans made the slightest bit of sense is if the middlemen were lying to the people on both sides of the transaction. The available evidence is that borrowers and investors alike were both being defrauded by the only people who knew what was really going on, namely the middlemen. They should have gone to jail, but didn't because regulators in both the Bush and Obama administrations looked the other way.
It had approximately f-all to do with the Federal Reserve.
Soo nothing's really changed, we could see another 2008 crash in the future??
@@Capellofficial I'm guessing a big difference today is the financial markets no longer underestimate the risk associated with subprime mortgages, so they are no longer likely to overinvest even with fraud.
I heard a different not-so-nice story about the 2008-crisis: Banks , for instance Goldman-Sachs offered too-good-to-be-true loans to lower middle-class families who would like to live in a house with a garden for the children. If the house cost 100-thousand then the mortgage-secured loan this family was offered was 125-thousand i.e. 125 % so there was even money left for a new car. The installments on the loan were ridiculous easy. But only for the first two years. The fine "gotcha" print at the end of the loan-contract said that after two years, the installments would become REALISTIC. So Goldman-Sachs knew they had two years to get rid of these ticking-bomb subprime mortgages. Financial firms packaged these mortgages into bundles the so called CDO's ironically called Criminal-Debt-Obligation's. Somehow Goldman-Sachs managed to convince some back yard rating companies to give these bundles phony-baloney ratings AA or AAA , the same as for German or Norwegian state bonds. This fraudulent rating made it easy for Goldman-Sachs to sell these CDO's to unsuspecting pension plans and banks all over the world. German Hypo Real bank spent billions of euro on this and after two years these billion-euro bundles suddenly became worthless ( because millions of American houses were sold in execution for very low prices ) and the bank had to be rescued by German taxpayers. More than nine million American families lost their homes. No wonder that Donald Trump says that he wants to repeal banking regulation, he had top people from Goldman-Sachs in his government.
@@0118uhauha The point I want to emphasize is that *anybody* who actually saw the terms of the loans and understood anything about finance knew that they were absolute nonsense. So those who were trading these loans around to investors knew full well that they were polishing junk to try to sell it off before it collapsed, as you describe.
But that was the second part of the scam. The first part of the scam was to convince a borrower that these loans were sane. One of the common strategies for doing this was to say "Sure, the payments will go up in 2 years, but we can refinance again before then so you won't actually have to pay it". Also relevant here is that the loans were structured so that the originator collected a bunch of fees up front, the borrower paid interest only during most of those 2 years, so they weren't going to be paying down their actual principle at all.
As I said in my original comment, the middlemen were ripping people off in both directions.
The federal reserve is important in this. Where do you think the “middle men” aka the lenders get the money to lend on loans that go bad. From the secondary market they sell the loans into. The fed buys those bonds from the secondary market. Trillions of dollars worth. A bad loan doesn’t get funded without that.
The problem with blaming low interest rates as a major contributor to loan defaults is that the argument can easily be tested by comparing the US default rates to those of other Countries (eg Canada, UK, Australia) all of whom were operating under comparable interest rates at the time. Australia and Canada had essentially zero spike in defaults in the period leading up to the crisis in 2008 despite low interest rates.
Cause is not coincidence. Arbitrarily selected statistics are not science but the pre-scientific mentality of primitive man. Science is a theoretical organization of concrete knowledge, not concrete knowledge or theoretical knowledge alone. Statistics, to be scientific, rather than arbitrary or dishonest, must be selected by pre-statistical knowledge from common human experience. Economies are complex and, historically, combinations of freedom and govt control. A govt controls destructive effect may be contradicted by freedoms productive effect. Australia and Canada msy have had freedom in parts of the economy that the US controlleed. Further, "low" is contextual w/contextual effects. The same "low" rate may be caused by productive freedom in one economy and destructive govt controls in another economy.
In 2008, finance and nuclear power were the most govt-controlled industries. Some banks had hundreds of govt regulators working INSIDE the bank. Blaming the recession on capitalism is scientific fraud, not an honest error. Mans independent mind, protected by individual rights, is the basic method of production. Sticking a gun in the faces of productive people does not increase production. Govt looting from producers and then giving to non-producers or lesser producers does not increase production. Your hidden moral context is altruist sacrifice of some people to allegedly benefit others. Altruism rationalizes scientific fraud which rationalizes govt controls. Water falls. Fire burns. Altruists lie. The first altruist sacrifice is of mans independent mind. After that, all other sacrifices are easy. Altruism is the pseudo-morality of the enslaved mind ,of the moral coward afraid to focus his mind onto an indifferent reality that will not provide fishes and loaves or a Garden Of Eden. Look out at reality, not inward. Focus your mind.
Tea Party drank the kool-aid
@@JeremySteamsack Thanks for sharing your emotions.
@@JeremySteamsack Look out at reality, not inward. Focus your mind.
You’re forgetting that those countries didn’t not engage heavily in the derivatives pushed *by* gov’t to ensure home ownership continued to increase in the US. This is multivariate; rather than univariate.
Never attribute to malice what you can attribute to incompetence...
It really is hard to believe Alan Greenspan was so damn incompetent. He ignored all the red flags and standard reactions to those red flags. Negligence to that degree is malicious, even if it wasn't premeditated. But, I do believe the bubble and collapse was premeditated. It was the largest transfer of wealth (theft) ever, by far.
Watching this in 2023 with the new market/banking issues is interesting
In 2007-2008 I was laid off I could not find a job for the first time in my life even though I was employed steadily as a mechanical engineer since graduating in 1980 Finally in 2008 I finally got a job....selling vacuums at Sears for $11 hour.....part time. Long story short, 3 years after being laid off I lost my house to foreclosure and was technically homeless until I could secure an apartment. The bank physically put my belonging on the street and kicked me out of my house with a foreclosure that was eventually ruled as illegal. At Sears I was working with architects, mortgage brokers, and computer programmers. Now forward 10 years and since 2020 I have been working at Amazon as a repair contractor now at $32.50 hr. and the company I am working for can not find enough people to work and request I work overtime every week. Lesson learned....certainly don’t trust the government to care for working class except to take taxes every year.
You got your degree in mechanical engineering and only make $32.50?
The government does "take care" of the working class, but in another sense of the words... ;)
I didn't understand how your personal story lead up to not trusting the government. Can you please elaborate on the wisdom you obtained from such experiences
@@saeljhonnes7688 it's very simple - "goberment bad".
bank kick out, but blame govt...
Did low interest rates cause Goldman Sachs to hoodwink AIG into selling credit default swaps aka insurance policies that paid off if the bonds failed with no reserves to pay and then buy those credit default swaps themselves to bet against the very bonds they were marketing as triple A ?
It did they were using easy credit to speculative buy and sell housing bonds for enormous fees that fed the gluttony in the CDS market because remember the holders of CDS had to pay premiums. The FED is the catalyst for greed.
J Romeo - First of all, I'm no fan of Goldman Sacks, but no one hoodwinked AIG. If AIG (or anybody in such influential position in our financial system) is "hoodwinkable" they shouldn't survive one more day. On the subject of interest rates you're totally ignoring how the entire financial infrastructure works if you try to claim that keeping interest rates low for too long doesn't have and adverse effect on the economy. That is, in an of itself, probably a subject for a full hour video.
Jason Williams you are right AIG should not have survived one more day and they would not have without the massive government bailout. Banks underwrote these loans knowing there was no viability because they could instantly sell them as bond fodder because Goldman Sacs would buy them as backing for their bonds. Have you heard of NINJA loans? No income no assets.
@@jromeo6748 Government bailout? ...you mean the taxpayers bailout.
Jason Williams yes, taxpayer bailout.
I'm not sure why but every time i lean over this topic , i leave with more questions than i got answers :-l
It's actually really simple. FED prints money out of thin air and lends it to government. Then the taxpayer has to pay back the loan. Some people have literally umlimited funds while the poor get poorer. It's made to look very compliated, because it really is nothing but a scam, but in fact it's just that simple.
@@bigbud4sure Feels bad and the current corona quarantine is putting some governments in a huge debt spiral from what i can figure :-/
@@pierrevillemaire-brooks4247 Yeah, they all printing money and taking loans like crazy :D It's obviously time for change so that's what happening. Not the first time empires have fallen. Since this one is worldwide, it's fall is gonna be epic to witness :D
If you want to understand economics watch peter schiff on yt. Hes a very contraversial figure because he tells it how he sees it and is very intelligent.
Same
The real truth is 2008 never got solved we swept it under the rug and kept on going.
Blaming the consumers for the fraudulent acts committed by the banks and government officials is lunacy!
In his story about the house in front of the hurricane, what he fails to mention is that 20 years earlier the place was worth a LOT less, but with the loose lending rules and rampant speculation to catch the high returns the value went up to $500k.
Assets that are never written down can't be considered true assets which creates its own set of problems
While I find this perspective interesting, and I hate more government control, I am not convinced that free market capitalism can work without a little bit of control from a higher power.
Me too… sadly we do need *some* level of regulation.
I agree with you! But guess what? No one cares, so we play the game or hate the game.
First is step to start freeing the system more
So it's a process! Gradually free everything and it will be good
The insurance company is going to rebuild the house. So what’s the problem?
You've got that right, brother.
We read news in the media that doom and gloom is coming and we just accept it, doom and gloom doesn’t always have to be coming, I’ve read numerous success stories of people that are pulling off tremendous gains of up to $250K within weeks in this crazy market and I just want to learn how to achieve such figures.
Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.
There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
@Dan Brooks Impressive can you share more info?
@Dan Brooks She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; thank you for sharing.
This is a scam, dont bother looking into this person
Greed is what you describe. The practice of giving mortgages to people who clearly could not afford them is outside your 'a normal person would buy a bigger house with low interest rates' description. Also bundling these toxic loans and selling them as an asset is not what 'any person' would do. This was/is corporate greed. You are an apologist for these executives who get bailed out then pay themselves a bonus with the money.
He presents as if he is speaking to a group of high school dropouts. Wesbury is pulling a fast one here. He presents the stock market as a proxy for the health of the business community. The stock markets are a reflection of INVESTOR CONFIDENCE. Investor confidence often lags business health coming out of a significant downturn. His story about mark-to-market is accurate but drops short of the reality of all of the terrible loans that lax regulations allowed to be funded and were about to be defaulted on and the enormous number of derivatives that had been pushed throughout the world's financial systems using those loans as the revenue source.
Oh good… I’m glad others already called out this gas lighting shister. Lol.
W can thank President Clinton for this
@@Jacked2theTs: Of course. Because whining solves all problems. /s
@@Jacked2theTs First rule of "popular Economics": the stock market is not the economy.
Barney Frank's committee might have changed the mark-to-market accounting rule that helped ameliorate the financial crisis, but Barney Frank was instrumental in causing the financial crisis. He was the congressman who arrogantly said he was perfectly comfortable "rolling the dice" - i.e. maintaining relaxed lending standards and capital requirements in the early 2000s so high risk borrowers could purchase homes. Then, after the crisis hit, he did a 180 and began castigating banks for the "predatory lending" that he encouraged all along (and Fannie and Freddie implicitly mandated). He was never held to account for this (as politicians rarely are) and is now comfortably retired. Ironically, the man who was always talking about "fairness" helped create a plethora of financial injustice for the millions of innocent victims who lost their shirts in the 2008 financial crisis. Life certainly ain't fair.
It will _never_ be fair either. My dad always said, if you cant afford this with the next 6 paychecks, this is not for you. Americans are just weird, period. We dont buy a car unless we have 70% of the money for it and at least 50% of a house. I lived 3 years in usa, making 220k a year, and I was still poor compared to a 1/5 of that paycheck back home.
In all fairness I heard Bill Clinton say in an interview that the lowered standards for home loans only applied to community-based banks and those weren't the ones that sold the mortgages that got bundled up by Wall Street and passed along. I've heard commercial banks say they did the same thing in order to compete, but I'm not sure I believe their story (they have many other major sources of revenue and wouldn't have necessarily gone out of business).
Barney Franks also stood in front of the American people before the collapse and said the home loan market was strong, and that there was nothing to worry about. This was after Bush warned us that banks were engaged in too risky loans.
Then Obama blamed Bush for 8 years
It was government that fixed the rule (Mark-to-Market) through elimination of it. Why was a rule that had been abandoned in 1938 because it was seen to be bad brought back anyway? I suspect the elimination of Glass-Steagall in 1999 was in some way a contributing factor. Banks should go back to being boring like they were from 1932 to 1999.
2008 crash started well before canning Glass-Steagall.
You could argue it was started with the carter and REAGAN RMBS reforms, carter admin the one that started the new foundation, Reagan admin coming in and "no, no no, like this. This is how you build a new foundation to Capitalism". Carter mixed up a bag of concrete, threw a little around. Reagan came in with 10,000 dump trucks and turning it into the bedrock of the American Finical System. Which all Dodd-Frank was re-establishing the carter/REAGAN system, and a few other things. Like the Julian 365.25 Calander, and the Gregorian 365.2425 Calander
The main culprit of the 2008 collapse was the reforms of the Clinton era and the refusal of ALL sides to act to stop the clearly unfolding train crash that caught everyone's attention in 2002. The collapsing Housing Market was a core George Bush 2004 issue, and nobody, left or right would budge, until it was inevitable.
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i find it fascinating that the leveraging of mortgage lending was not discussed. all he talked about was the mortgage loans, but the crash was not due to the default of the loans, it was due to the cascading, collateralized securities based on those loans that like dominoes fell.
if the interest rates had been high as he claimed at 5:10 indeed lending would have been lower, and likely secured only by those absolutely capable of affording such high interest rates. but as a consequence, home ownership would be lower, and yes mortgage lending would not have been as risky, and thus likely not attractive for collateralized securities, but the market would have found a way! just as he is willing to apply 'free market' principles to mortgage lending and how it would have not been attractive for secularization due to its very low risk (because affordability would have been tested more robustly), and thus most of the loans made would be very stable, because we have evidence that affordability tests were compromised, there is no reason to believe that they would not have been compromised had the lending not been as robust.
yes, instead of 50 million new home purchases, there would have been 10-15 million home purchases, but there is no reason to believe that suddenly the lending officers would be practicing more vigilance, especially if they had an incentive to approve loans.
the market collapsed due to a cascade of errors, which included cascading securities. it was not just one weak link, it was multiple levels of incompetence or convenience.
people should not be too attached to finding simple solutions. that is a fallacy in itself.
aliesneo lower home ownership would have been a good thing. If interest rates were not kept artificially low the way they were, the housing market would have corrected earlier and banks would not have had the opportunity to abuse the fed' s "free money".
The incentive to provide sub-prime loans was a combination of the low interest rates themselves and CRA threatening banks if they didnt lend to low income or minority groups.
"It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble." - brian s. westbury, 2008
Pretty insane argument alright. His argument is that the truth killed the stock market and lies brought it back. Maybe, but if so, it was obviously a market (or system) that needed to die.
@@Make_Ukraine_Russia_Again uhh what exactly do you think happened? Also what you said is pretty antisemitic, chill out with that.
@@charleshuddle8225 Wouldn't you like to know. Probably your mama.
Where is that quote from? Thanks
@@charleshuddle8225 Wtf? Where's the anti-Semitism? 🤔
Real Estate interest rates are tied to the bond market not the discount rate.
Times change. In the early 70's my father bought a house, which included a huge lot size, for $10,000.
Today, it is replaced with two houses that each are of a value that is above 2 million dollars. So that's over a 4 million dollar total value.
So after 47 years it went from a one house lot which has a $10,000 value, to two one house lots which have a total of over a 4 million dollar value. WOW !
This is called inflation
Interest rates and loose approval rules brought huge numbers of buyers into the market who should not have been purchasing homes. The banks, the government and the Federal Reserve all had a hand in this catastrophe.
I think he missed a key factor. Frank a few years before pushed through a federal program to encourage home loans to people regardless of ability to pay. That's what loaded up the sub prime market for problems.
Yes but supposedly that only applied to community-based banks which weren't the ones that created the bad mortgages that got turned into toxic assets by Wall Street (commercial banks claim that they had to lower their standards in order to compete with the community-based banks, although I'm not sure I believe that).
@@watching99134 oh no. The community banks were selling the loans as soon as they closed the deals. Outfits like American equity mortgage did too if I recall.
If there is no job security, there is no way to afford a mortgage. No matter how long you pay a mortgage, if you lose your job and can't pay it off, and the equity is not enough to buy another house, you lose everything. Been there, and so have many others in 2008.
Notice he never mentions the levels of private debt which is the real reason why the economy collapsed, private debt had reached 170% of gdp where as in the 1980's it was much lower.
How do you get to private debt? You give people the means to lend money without thinking about it
Dave: Consumer personal debt is now $16 trillion. USA national debt is $1 trillion.
Great, now ask yourself why was debt in high? Maby because of 1 percent interest rates?
@@cointomato9768 interest rates were not low before the 2008 crisis, I know because I took on a mortgage in 2008 just before they cut interest rates right down.
11:00- extremely suspect correlative argument-and it’s really his first big one that TARP made things worse. He’s 11 minutes in and just starting....and it’s a super rocky, unconvincing start.
Exactly where I paused it - he doesn't even acknowledge, let alone address, the obvious question of what would have happened without TARP - and as for "the free market doesn't have a press spokesman" - erm, it's called Fox News among other things
@@nigellarge8924 Second that! And then goes on to blame M2M accounting....I mean how are you supposed to account for derivatives..??!
I would recommend Matt Taibi's work on this subject. I believe he was with Rolling Stone at the time.
Matt is a straight up, honest journalist. I cant say that his is the definitive word because I am painfully uninformed on the subject.
He does illuminate some activities by the institutions that this speaker seems to omit. Regardless, much appreciation for all involved in allowing me to listen and learn.
God Bless❤
appreciate your insight and humility.
there are plenty of indicator believed to explain how the economy will pan out, yet only the most certain indicator is long-short yield spread. either 10yr-2yr or 10yr-3m predicted it bubble, financial crisis and even the pandemic. the fact that the yield curve has been inverted and stayed that way gives a glimpse of where the economy's heading once the curve circles back to the normal stage. brace for the impact, cause it creeps in bit by bit and the fallout eventually will burst out crippling the mkt. a crisis repeats, but in a different form.
This is only a part of the story. One tiny aspect of the event. Told from a traditional economist point of view. The low interest rate was just part of the cause. Most people in this comments section seem to know more about happened. Maybe they should be on Ted Talks.
Everyone thinks they know the best. Even if they're disqualified :P
There are a couple of mis-leading oversimplifications in this talk. As a CPA myself, and at least a reasonable stickler for accounting rule changes, I'd question whether pointing the blame at the change to re-implement Mark-to-Market, which he cites in 2007, is completely correct.
For one thing, Mark-to-Market was used at least since de-regulation in the 1990's, and of course, perhaps figured most prominently with Enron, which went belly-up in 2001. So, there's that.
But also, trying to blame either just Barney Frank or Tim Geithner, is a misdirection. Putting aside disputes between Mr. Frank and other regulators on the right & left, the rule was changed on 04/02/2009 by the FASB (Financial Accounting Standards Board).
...One could argue that the House Subcommittee headed by Mr. Frank held lots of hearings to try and persuade the FASB, but that's about as much as you could say. ...We could also perhaps argue about Geithner, or Hank Paulson, or whomever, but there's only so much you can blame the bureaucrats for, especially after the fact.
There's plenty of blame to share for the 2008 crisis, but after all these years of discussion & analysis, to try and pin the whole "real truth" on accounting rule changes is uninformed & disingenuous at best. ----> en.wikipedia.org/wiki/Mark-to-market_accounting
Agree. Several factors here, and boiling it down to an accounting change is misleading at best.
It is worth observing that a reduction in the rate of interest on a mortgage loan will not necessarily lead to the ability to purchase a larger, more amenity rich residential property. The reason for this is simple. The initial increase in borrowing capacity will be capitalized into higher land prices and, therefore, higher prices for all residential properties.
Ronald Reagan said “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’” It's as old as the hills and as true as the day is long.
The government is all that stands between you and your boss who stands to gain unimaginable wealth by physically chaining you to your post for a 12-hour 7day shift paying just enough to keep you from starving faster than he can replace you. The reason we know that is because that is what happened to people for quite a long time as a rule before they fought for a better lot which only democratic government could secure into law and enact.
very good lecture till at the end, Sir the economy for the bottom 99% has not recovered, it has worsened......
That's completely false of course
You mean the “real truth” doesn’t include the derivative market. I’d say the this real truth is a limited hangout.
This guy is a spin artist and a shill for the banksters. If anyone even remotely understood math and how the 14% increase in value has no relation to the 1% COMPOUND INTEREST that these fancy math tricksters use to keep their game going
He's basicly turned a half truth into a lie and missed out a thousand other details
Major insurance companies use Mark to market when it comes to tracking the book value of their derivative transactions through hedging, and they've introduced regulations to lessen the impact on capital from the fluctuation in markets.
@@danhall6922 16 trillion to Banks and QE for years
TED Talks, you should be held accountable for spreading this bs.
robbedontuesday - so you're one of those who wants the government to "hold accountable" anyone who says something that disagrees with your view of the world... Wake up and smell the coffee hominid, you're living in an alternate universe.
@@jasonwilliams9485 wise up. I want everyone to be accountable for their actions, specially bshitters like the lecturer. Who said anything about government?
@@robbedontuesday Why is this bs?
@@waicollins3594 because it's a lame try to brainwash ppl, even after 11 years of bailing out the corrupt banking system.
@@robbedontuesday Can you be more specific? Which part are you talking about? As of right now I'm not even sure we're watching the same clip.
How can this completely ignore the speculation of mortgage backed securities this is ridiculous
You decide. Brian Westbury wrote an editorial for The Wall Street Journal on January 28, 2008 titled “The Economy Is Fine (Really)”.
You can see things from a different perspective over time. It is years later, we all change our minds every couple of years right?
The Economy is fine because it is ALWAYS over-leveraged and f&cked up. Over time if the Government (FED) doesn't screw it up based on other agenda from Gov, the markets regulate themselves. Bankruptcies are normal. People who can't pay their bills and have their chit repossessed are normal. NONE of the factors the Media cites has anything to do with anything really.
I think that our problem began when Congress repealed Glass-Steagall signed into law by BillClinton and allowed the banks to gamble with their funds. That there was both carelessness and malfeasance in the financial industry because of it and we were ruined because of it. No, I wouldn't place all the blame on the Board of Governors, but I would place a great deal of blame on Congress and our President for not realizing the effects of their actions.
Glass-Steagall was the repeal of a law that kept the investment side of a bank separate from the commercial side. In the long run it had very very little to do with the crash of 2008.
I was looking for this comment!
Sir, you're correct, but allow me to add another point.
Glass Steagall did separate commercial banking from investment banking, and it is the fact that commercial banks create money out of thin air by means of the ledger method.
What is that?
When you go to a commercial bank to get a loan, you sign a debt contract.
You have created a security, a debt instrument.
By law, banks do not make loans and do not take deposits.
Banks are in the business of buying securities.
That loan contract goes on the bank's ledger as an asset and a liability appears on the bank's ledger which is the amount owed to you.
The bank then tells you that there is money in your account.
They cannot tell you that they deposited it there because they would be lying 🤥.
All the banks recognized this and straighten things out by clearing.
This making up money creation is what causes bubbles.
Unlimited money chasing limited supply, assets, whether it's stocks or real estate.
Glass Steagall did not allow speculators access to this money.
The stock market was relitively stable until Glass Steagall was chipped away at in the Eighties until it was totally repealed in 1999.
all I know is that bankers were betting with each other and the ones that lost got bailed out by the middle class taxpayers.
Diligent investors continue paying for it from the unlawful upward manipulation of the stock market - those who got hit the worst.
Wrong! Everybody payed.
+goodcat1982
That's what insider trading looks like.
Correct. Most everybody missed the point of why banks and mortgage lenders took these unparalleled risks- they thought that the government would bail out the next guys upline, that the government would bail out FANNIE MAY and FREDDIE MAC.
In other words, the government ensured the moral hazard.
"all i know is that god talked to me"
MTM GAAP accounting is a result, not the driver. It doesn't explain:
High concentration in credit risks (subprime)
High amount of leverage (100% LTV loans).
High amounts of fraud.
High amounts of speculation, also leveraged.
Prices accelerating well past any kind of intrinsic value (land value + rent payments).
Derivatives, CDOs or other off-balance sheet liabilities.
Folks that HAD good credit but lost employment (propensity - credit score is not capacity - debt ratio).
He's right about one thing: the government system needs to be fixed.... but he's wrong about why. The government system needs to be fixed to increase oversight on banking practices to prevent banks from practicing the predatory loan schemes and allowing investment on loans that brought about the 2008 crash in the first place. Capitalists are gonna capitalist unless there are regulations, and ethics and standards in place to control their worst impulses and protect the people most affected by an economic crash - which are the banking consumers - not the banks themselves.
And it is necessary to bring back Glass-Steagal
it was the gov banks freddie mac and annie mae that started this whole mess. Barney Frank wanted low income families to be able to get loans.
We saw this in the Hoover administration as well and at that time everyone was looking at the "Own You Own Home" program, a government program similar to what Clinton pushed for, deregulating lending for mortgages. It wasn't the actually cause as Wesbury explains, but it compounds when integrated into an existing accounting practice. He should have explained that QE isn't simply increasing the supply of money as many think that's where inflation starts, it's scaling the balance sheet to increase assets as well as liabilities, so yes it increases the "supply" of money, but it does it through debt. And it gets worse, the root cause of inflation is inefficiency on the supply side to meet demand. This inefficiency is bad enough on its own, but when its financed through debt it brings along an interest rate. Since ultimately this debt is our national debt there is most certainly an interest rate on that, otherwise nobody would consider buying it. This is why the federal reserve really doesn't want raise the interest rate, it would consume even more of our deficit each year. Congress has indeed raised the ceiling on spending, but they know they're running out of time.
The only way to reverse this is to lower taxes, rely on the velocity of money to scale tax revenue up which it always has, use that to pay down the national debt as quickly as possible so that eventually someday we can raise interest rates again and everyone can grow wealth in saving not just investing. Given how long it will take to do this, and that a term for a president is only 4 years, 8 at most but not reliably we can safely assume this will never happen. We were doomed as a nation in the 1970's and didn't even know it. It would take an incredible effort on the part of our leaders to set aside their political ambitions and unite on an economic understanding we once had to solve this. I don't think it's possible. But creating money, i.e. growing the economy purely off debt that exposes every single citizen to such a liability is the antithesis of how this nation was intended to function, the idea was to minimize the effect of government decisions on the people. Should we be surprised that centralizing decision making does this? That is what the Federal Reserve is.
It's ,Brandon's world.. You're just funding it.
There are people in this world who have no qualms about killing civilization,but for as long as civilization continues these people want to be on top.Thats it,thats all you need to know.
Regardless of how much you agree/disagree it as to be said we (the public) were at least complicit. The bankers may (were) have been greedy and pushed too far, the government could have done more to hold them back and regulate but we aren't just innocent bystanders. Over-reliance on debt for unaffordable purchases, living beyond our means and short term thinking were rampant prior to the collapse and we certainly played our part.
I always thought that it was when the banks were de-regulated in the 1970's that the troubles started along with the selling and trading of worthless credit swaps and the big finance companies knowing that they were selling worthless stock.
Films like 'The Big Short' and 'The Wolf of Wall Street' taught people like myself what really happened and what is even more
shocking is that very few people have even been jailed for what they did.
Learning economics from Hollywood isn't a good idea.
@@tomaricotube, that's true Tom but Hollywood didn't finance the Big Short (did it?) which is where I got most of my info.
You could read the book "A Fighting Chance" from 2014 where senator Elizabeth Warren tells about her life and corruption in banks and politics. About the financial crisis in 2007 there is a chapter page 120 titled "Who Goes to Jail" I quote: ". . . Where were the full-scale public investigations ? Where were the armies of auditors seizing hard drives and poring over the financial statements ?"
@@tomaricotube Are you saying that CDO's didn't exist in the mid 2000's? Or that they were such a small part of the whole real estate market that their collapse didn't exacerbate the problems of the housing crisis because people were betting on the housing market with significantly larger amounts of money than the actual value of all of the home loans?
The title of this presentation should be : How far from the real truth...
In my opinion it is the Greed what causes it and it will again at some point. There is no government or any good will that can control it. There is no broker no bank no feds and no insurance to regulate Greed. And all of them share the same denominator. It is a simple overvaluation and high payments for the consumers to pay and afcource took the toll. The market always will find the right price. In this situation the right price was highly multiplied by the Greed factor and uncontrolled played by the banks.
Just think about it: How does a bank survives at least medium term by giving credit to people that cannot pay it? It doesnt, it ONLY survives if the government says it is going to pay when the credits are not paid, and thats WHAT HAPPENED
So, bear with me: Without manipulated interests rates and this free bail out by the government, the banks that would survive long term would not be able to do such irresponsible credit lending
Hi! The people that allowed this mess to happen didn't go to jail, now they're at it again.
finally this ted talk is getting some traction. would love to do a call with Brian S. Wesbury
This man likes the free market: The result of a "compleet free market" is a drama for the common man and a blessing for the super rich. In particular, what each one depends on should not be in the hands of a company. (hospitals, electricity supply, schools, etc.)
For real, anyone that has read Sinclair's The Jungle knows that.
This guy IS *PROOF THAT BANKS CAN AFFORD A LOT OF MINIONS,* but they sell out for crumbs of the WINDFALL! !
On the bright side, this talk was better organized than most TEDx talks, in that within the first couple of minutes you actually have some hint about what it is he's going to be arguing. But beyond that it's not *much* better than most TEDx talks in that he tackles a deep subject at a level you could get by talking to a random person at a cocktail party.
If you want to hear an insightful take on the financial crisis, look for just about any talk by Mark Blyth. There are many of them and they are all more knowledgeable and more engaging than this.
@Dave Park TEDx talk, not TED talk. The two are very different. And this is more of a statement about how bad TEDx talks are in general.
@Dave Park Why yes. Because I don't think we're having the same conversation at all. I thought all this was obvious but let me spell it out: the quality of TEDx talks is typically abysmal. People get tricked into thinking they will be good because TED is in the name. My original comment suggested that as bad as this is, it is probably still better than the average TEDx talk because you can at least tell what it's about. Then I went on to say some negative things about this talk.
You seem to have interpreted that as me meaning that this talk was good.
All of the important points covered in the first 57 seconds
AGREED his whole talk is just a load of bull and he seems to forget his point at the middle end.
As a bankruptcy lawyer: his story about the Texas house is false, the mortgage is a contract and cannot be changed unless either party agrees. So his analogy is FALSE.
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So a banker says that banks are not to blame. Go figure.
Chad Bentoski hey Chad, I know him personally and he is not a banker. He’s an economist. He deals in facts and reality. I was there on 3/09/09. The announcement of the accounting change and just watching the market take off like a rocket. I received two messages from independent $$ managers, “throw everything you have in now!” On that day. Look it up yourself!
Economics is a dysfunction.
@@ogukuo97 Here's a lesson. A truly intelligent person would never call someone else a moron. They would educate them or keep their mouth shut.
@Burt Gummer yes, because banks are the ones lending and should know better.
@Burt Gummer Bankers have what they call lending standards and they're supposed to be well regulated. So clearly they were engaging in criminal activity.
This issue with the 2008 financial crisis wasn't Marktomarket accounting but an incorrect risk assessment of the bond market. Banks and financial institutions use AAA bonds as "cash equivalents", which means an asset that is so liquid and stable in value that it can be turned into a predictable cash amount.
As we all know today, MBS products were actually much riskier than models predicted. This is because the loans that composed them were not rated accurately.
When default rates began to rise, the MBS products began to fail and subsequently drop in value. Since these assets made up a sizeable portion of the banks' and financial institutions' "cash reserves" they suddenly found that they had much less money than they thought. So when people went to withdraw their money, or when institutions faced margin calls, banks and financial institutions found they didn't have enough liquidity to pay up.
But the key thing to note is that this was a liquidity crisis and not a solvency crisis. In other words, the banks had enough assets to cover their debts, but not the cash on hand to pay everyone at once. This is why Lehman was eventually able to pay back all its creditors given enough time.
An argument can be made that the government's desire to increase homeownership rates by facilitating mortgage lending was ultimately to blame, or that it was the fault of people who took out loans that they knew they wouldn't be able to pay back, or the rating agencies that incorrectly rated the loans.
Ultimately though it was giving the banks the liquidity needed to keep up with expenses, and most importantly to reassure creditors, which undeniably prevented a complete collapse of the banking sector. Which would have cascaded into an economic collapse. The minimum reserve requirements put in place by governments since then is also what prevents such a situation from occurring again.
"..then the government had to come in an save us ". There was me thinking everyone saved the banks with their savings.
I know right? You could tell buy the guy's tone when he first started talking that he was selling us BS.
corelation does not equal causation
his point is valid only so far
the market crashed every 15 year until the regulation after the depression
for 70 years we were ok
then when regulations were weakened we started having problems.
+Tom Robertson We have had 23 recessions since major banking regulation. We even had Black Monday.
Weve had minor ones.
The great depression was just the last one in a series.
With regulation, the wild swing s stoped.
With deregulation, the wild swings are back.
Wall street and banksters have fought reregulation.
We have no safeguards to stop another recession or even a depression.
I am a pessimist .
I have become dept free and started a garden.
I give our economy only a ten percent chance of not having a great swing in the next decade
Tom Robertson The Dot Com Bubble, Black Monday, the 1970's Misery Index with stagflation were far from minor economic downturns.
We have a recession every 8-10 years. We are excepted to have another recession in the next year or two.
This goes back to the saying "who watchers the watcher?" Are government officials somehow more intelligent and deity like than any other person? What is government? Government is just society, you and me.
Dot Com was after deregulation
Same with black Friday
Same with s and l.
Any thing since Regan is because of deregulation
Banks were never allowed to do naked derivitivex.
Banking was a very boring occupation.
It was safe.
No more
The firewall between services is no longer in place.
Dems tried to make financial counselor tell customer who they represented.
Rebs struck that down.
With libertarian in your handle, I know your basic belief system.
I'm 60.
I have watch all this unfold with intrest
Regan stopped enforcing the Sherman anti trust act.
No other president has either since then.
In my youth, I could be kidnapped and dropped anywhere in the USA
And I would know exactly where I was.
No more.
The same corporate names are everywhere.
All the regional chains are gone.
I am pessimistic because citizens united states the corperations are real people and money equals free speech
We have the koch brothers spending a billion dollars on this election.
How much are the other billionaires spending?
How much are corperations spending.
Citizens united said congress had the right to for e transparency
Dems put a bill up
Rebs blocked it.
I see bernie having a chance to stop the slide.
I see clinton as a place holder, neither good our bad.
I see disaster under any other republican
Trump is even worse.
Tom Robertson President Bill Clinton is the one who deregulated the banks. President Ronald Reagan had nothing to do with that at all.
Do you know unions have donated more money to politicians and super pacs than 1% or corporations?
The Sherman Anti-Trust Act has done very little for anyone in the long run.President Regan actually used anti-trust on AT&T. Then in 2001 Microsoft had antitrust put up against it. Did you know the anti-trust act against Standard Oil that oil prices had dropped and the supply filled the markets, Microsoft had it used on it as well. Microsoft had lowered PC prices and had made it available to everyone.
The cause:
Every person and institution in this sequence was complicit:
Borrowers who lied or knew better but let greed win, mortgage brokers who lied and encouraged lying while they profited, lenders who knew there were lies in the system yet profited, institutional lenders who knew there were lies yet passed the buck while profiting, the final investors who knew there were lies yet profited but only for a time. Every person/institution involved could have told the truth and stopped it.
Exactly!
It is true till the point: "the final investors who knes there were lies..." No i don't think so. They believed the lies. They paid a hefty price for this.
@@peterlustig8778 I agree, mostly, since some investors DID know. I guess I was too focused on the investors that did know, or should have known, but in truth probably only 20% knew. In my zeal, after noticing the overarching worldwide blind spot of greed, I neglected to focus on massive losses experienced by super responsible investors like a German retirement fund I read about.
Frontline interviewed Fidelity. While Fidelity promotes their funds as good investments, Fidelity employees typically avoid those funds and choose spiders and other low/no-fee, broad-market funds.
Greed.
It’s timeless.
So always watch for it before it blinds you too.
simplistic view. glib, vapid. sophomoric. this is like saying "war is caused by the pride of all those involved in starting and fighting it! if all men were fair and just, there would be no war" and leaving it at that
@@RobertMJohnson Dems fightin’ words but, putting aside your style of communication, what is your opinion?
Bull, the banks allowed people they knew could not afford to borrow money to borrow money, interest rates were irrelevant, they are called liar loans for a reason.
He totally forgot everything else, like how Banks traded their debts, and made Bets on People Defaulting on their loans, and on the economy failing.
"Alan Greenspan the smartest mind in the world" hearing that is enough to make one puke
Yep. I think that was the point. Sarcasm often gets lots on the interwebs.
I don’t doubt a little bit about his smarts. Human decency has nothing to do with that.
Irrational exuberants
He was saying this in the character of a fictional banker.
Greenspan testified before Congress that he should have factored in greed. That's how smart he is.
Thanks friendly one. I got three and a half minutes before I discovered that what this guy was selling is fit only for fertilizing the garden. The comments were awesome.
Took me 5:30 but I’m a slow learner 😂
Why the comments are so negative! He identified the true architects of Finacial collapse and that is The Federal Reserve Bank which is in most part a Private entity that controls the money supply and the interest rated. since the 1913 Federal Reserve act and not long after the stock market crashed and of course the depression, the main cause of the crash was the policies of The Federal Reserve Bank, as he mentioned the same pattern reappears between 2002 to 2005, lowering interest rate below inflation which means cheap money for banks to borrow and lend out at very low-interest rate then the interest rate shoots up very quickly, and on top of that there's the reintroduction of MARK TO MARKET ACCOUNTING and why? this an accounting tool that was pretty much abolished in the 1930s, and the reintroduction of it can only devaluate hard assets like housing against an uncertain economical and political background, like the Iraq war or the aftermath of the first world war in Europe ....Now a banking crisis turns into a economical crisis. If the pattern repeats itself with the same result, then it is the causation. In the case of banks and financial institutions, they knew no one is going to go to prison. The whole this a Ponzi scheme.
All things being equal, a drop in mortgage interest rates will be capitalized into higher property (i.e., land) prices. The economics are simple: every parcel of land yields some potential (i.e. imputed) rental value, capitalized by market forces into a selling price for land. The lower the effective rate of taxation imposed on this rental value, the higher is the net imputed rent to be capitalized. Thus, capitalized land rents represent a primary, inflationary driver in any economy. What happened to make the 2008 land market crash worse than in previous recessions was the high level of fraud associated with the private label mortgage-backed securities issued by the banks and sold to investors by Wall Street.
Edward Dodson what fraud? Securities are rated. Also why just “private label” cmbs and rmbs?
add to that interest only loans and you have an inflation bubble in R/E
@@Zone47. Just noticed your comment. There is well-documented evidence that the residential mortgage loans pooled as collateral for private-label MBS were characterized by a high degree of fraud and misrepresentation of borrower income, credit and the assigned value of the subject properties. There may have been similar problems with the underwriting associated with commercial properties. I simply have not researched the issue.
@@davrsch Yes, of course. Interest only loans are for the most part an effect of a property inflation that has reached a high level of stress on borrower ability to qualify for a full amortizing loan. But, then, higher asking prices for property becomes a market reaction to this and all measures that maintain demand at a high level.
@@nthperson over about five years the price of 'a house' increased until they fell off the cliff. Because the higher prices meant higher tax revenues, higher mortgage portfolio valuations etc everyone was onboard- Government national and local, the industry of builders and the banks including the FOMC and FDIC. This is/was a classic bubble and burst scenario.
When the entire world gets to watch the WAR CASTLE series, you will ALL understand completely what's been going on, not only behind your backs, but right in front of your very eyes!!
It is on UA-cam or anything else
The comments saved me 20 mins. THANK YOU guys
Great presentation. Governments is the problem. Government failure!
The economy failed because the financial industry, thanks to deregulation, was able to commoditize bad mortgage debts that they knew would never be repaid.
EXACTLY this guy is f#$cking blind.
Although that is true, you have to ask yourself why were the banks inclined to make these deals mortgages in the first place. Goes back a lot farther than you might think.
@@thienhoang1001 Because the private Bank the FED which is controlled by bankers and not the government sets the rates that they play the game with. those rate only aplly to them and they know it. They crash the economy all the time and then whine that they are over regulated every time. Notice that in the 80's the whole economy did not crash. Why? Because they had not been deregulated yet and had to use their own money to gamble with. Only the savings and loans crumbled because they were covered by different rules. then Clinton repealed glass steagall and the glut was on/ lets make as much as we can as fast as we can. and when it all fell apart they came crying to the taxpayer to bail them out.
Not taking sides here, but the data presented seems insufficient for making sound conclusions. Did the increase in FR meetings make matters worse or did the developing crisis require more meetings ? I also find it difficult to conclude efforts by FR and GVT did not help given the data. For example how long does an economic decision take to have an impact. More questions- isn't the financial sector a bigger % of economy than in the 80's? Still have lots of questions
My frustration with people like this guy is they always cover just a small portion of the causes of the event and lead you to believe there's no more investigating to be done. The 2008 crisis was a perfect storm with many key contributing factors. Covering just a few is insufficient and leads people to have a false sense of understanding and confidence. This is worse than if someone knew nothing. It's like having a faulty speedometer in your car.
This talk is misleading to say the least. Myopic more like.
It's weird that he mentions the FR meetings at all, I think. I came to the conclusion that he only mentions it so that he can argue he did us a favor by reading them all.
To put it as Sherlock Holmes would you need motivation and opportunity.
Motivation = Greed of Banks, Rating agencies, common man’s greed to make a quick buck on real estate
Opportunity = Low interest rates, banks lending with less due diligence, you can walk away from your debt with no recourse
Live within personal means and build in adequate financial buffers to weather economic storms. Likely storms about to hit once again late 2022 and early 2023.
Autoplayed after "how incompetent men get in charge." Is UA-cam trying to tell me something?
its not incompetence, its just kapitalism, personal gain,greed, and corruption in one nutshell.
He is technically right that mark-market caused the mess, but he is utterly disingenuous about it. By providing home values as the example, he is trying to set it up that this was going on in the sub prime mortgage market that was the catalyst for it. Rather, it was mark-to-market of the Derivatives market that was going on. He also seems to think that the rules suddenly allowed them to in banks to take advantage of hapless homeowners that led to it; not only does this not make any sense at all in the mortgage industry (a bank literally can't call in all of its debt), but nobody forced anyone to employ these shady accounting standards in the derivatives market in the first place and the law enacted following Enron actually was supposed to curtail this behavior by enforcing stricter accounting standards on assets. The problem was the derivatives market was a nebulous space that often didn't have direct market value, so they had to figure out "fair" market value. Amd more often than not, the "fair" market value was propped up with fraud and lies, and the bag was passed onto hapless investors through fraudulent credit ratings.
So, he is technically correct, but presents it in a massively misleading manner that obfuscates the problem.
Not incompetent - criminal.
The Wall Street Journal, Jan 28 2008, "The Economy is Fine (really)" by Brian Wesbury: "It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble."
This should be at the top of the likes.
He also never mentions that Mark to Market started much earlier than 2008. Anyone remember a little called Enron that caused a lot of problems. They were the kings of Mark to Market.
I clearly remember the stock market taking a steep correction in November of 2007.
The Financial Accounting Standards Board (FASB) released its Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157) in September 2006. FAS 157 became effective for fiscal years beginning November 15, 2007 and thereafter.
His Ted talk is correct with the effective date
He's leaving out the biggest problem.
banks were bundling loans and passing them off to investors.
Banks were encouraged to just sell more properties regardless of weather or not the loan was a good bet.
Loans were just traded as a stock option.
It wasn't the average person buying more then they could afford.
It was banks encouraging people to buy outside their means.
Only in the crash did the buyer find out.
Their house loan was not really theirs.
It was bundled.
So who gets stuck with the bill for all the cooked books.
The American taxpayer.
Because the banks are to big to fail.
It happened in 29.
Again in 08.
Banks / wall street need strong regulations.
Happening again today
Reminds me of the South Park episode where everyone is blaming everyone.
It was greed among US Consumers, it was greed among investment bankers, it was ineptitude by the government and it was robbery by the Fed.
Blaming one institution for the problems of 2008 is wrong on so many levels.
Wesbury’s spiel completely avoids the bailouts and how they devalued the dollar.
Theseus Titan - Not really... He clearly indicated that the worst part of the collapse came right after TARP. Remember what TARP was? I'm not sure I agree with his view of mark-to-market though. It's true that it collapsed the stock prices of most financial institutions with large holdings of mortgage-based assets, but removing it made the balance sheets of those institutions totally fictitious, as they continued to claim those Real Estate assets in their balance sheets at prices that were sometimes twice as much as their actual market value,
Watch The Big Short and then watch this again.
"The Big Short" is full of manipulation, misdirection and outright lies. The former: practically no mention is made of Fannie Mae and Freddie Mac, which made the lending out of huge sumes for bad mortgages possible. The latter: only one banker was jailed, in fact, dozens were.
Read “Hidden in Plain Sight” by Peter Wallison and watch this again. And remember that Big Short was written by a guy that had a couple years as a trader on Wall Street and then wrote books on a bunch of other things like baseball and compare that to Wallison, who was a fellow in Financial Policy Studies and was a White House Counsel and then Wesbury, and who is on the advisory council on the Fed Bank of Chicago and determine who you should believe...
@@sctrojan84 "The BIg Short" is typical liberal elite Hollywood whitewash. In the film, practically no mention is made of Fannie Mae and Freddie Mac, which made the lending out of huge sums for bad mortgages possible and these were institutions created by the federal government.
The brainwashing of the American public continues unabated.
No don't. That film is worse than this presentation I think.
@@ivanlozowy Nice Charlie Kirk rebuttal. What do you say to the three big rating agencies that slapped the AAA rating on subprime mortgage bonds? What about the banks that gave away mortgages like they were free candy to people they KNEW couldn’t pay them back? Would love to hear your defense to why repealing Glass-Steagall didn’t inadvertently turn our banking industry into several giants that literally became “too big to fail”.
Greed is what caused the 2008 financial crisis, living on more and more borrowed money to get higher and higher profits until the entire house of cards comes crashing down because it cannot be sustained. If you borrow more and more money, there will come a time when the debt collector comes knocking on your door ..