Good Recap of Financial Crisis

[admin]

Good article by Ezra Klein on the financial crisis.

IMO, the $8 trillion in lost wealth is the main factor holding back the economy.

ANALYSIS | The biggest stimulus in U.S. history was too small to get the economy moving. But it’s no accident that crises so often turn out the same.

In our crisis, the “debt” in question is housing debt. Home prices have fallen almost 33 percent since the beginning of the crisis. All together, the nation’s housing stock is worth $8 trillion less than it was in 2006. And we’re not done. Morgan Stanley estimates there are more than 2.2 million homes sitting vacant, and 7.5 million more facing foreclosure. It is housing debt that has weakened the banks, and mortgage debt that is keeping consumers from spending.

http://www.washingtonpost.com/business/financial-crisis-and-stimulus-could-this-time-be-different/2011/10/04/gIQALuwdVL_story.html

[LuckyInOC]

IMO, it is not lost wealth. It is lost debt-inflated dollars. The economy was built on a house of cards.

Lucky In OC

[patientrenter]

[quote=LuckyInOC]IMO, it is not lost wealth. It is lost debt-inflated dollars. The economy was built on a house of cards….[/quote]

I tend to agree.

Blaming our economic ills on the crash of 2008 ignores the underlying cause of that crash – the runaway asset inflation of prior years. That was allowed to happen because it allowed us to dream that we were doing well, even as spendable incomes, net of health care costs, were declining for many Americans. Now the tide has gone out some, and the promise of affluence without fundamental, painful, reform is the naked man on the beach.

[CA renter]

[quote=patientrenter][quote=LuckyInOC]IMO, it is not lost wealth. It is lost debt-inflated dollars. The economy was built on a house of cards….[/quote]

I tend to agree.

Blaming our economic ills on the crash of 2008 ignores the underlying cause of that crash – the runaway asset inflation of prior years. That was allowed to happen because it allowed us to dream that we were doing well, even as spendable incomes, net of health care costs, were declining for many Americans. Now the tide has gone out some, and the promise of affluence without fundamental, painful, reform is the naked man on the beach.[/quote]

Exactly.

[scaredyclassic]

Actually the naked guy on the beach is me. Sorry. I thought no one was out this early.

[Aecetia]

“The problem is not in Britain – which, despite the appalling legacy of debt left by the last government, is doing most of the right things – but in mainland Europe, where lack of foresight, unwillingness to act, confusion of counsel and lack of clear thinking are indeed everywhere to behold. We can but hope that self-preservation will eventually force governments into corrective action, but they are leaving it perilously late.”

http://www.telegraph.co.uk/comment/telegraph-view/8813441/An-entire-system-of-global-trade-is-at-risk.html

[Aecetia]

“So maybe law enforcement needs to drop into those corporate board rooms and treat them like Seal Team 6 treated Osama Bin Laden.”

http://www.businessinsider.com/bny-mellon-fraud-2011-10

[evolusd]

One benefit of the meltdown- less Hummer H2s on the road. Those things were the epitome of excess.

[Aecetia]

Actually, since Government Motors is not making them any more, the prices have come down and the kids are buying them.

[Author]

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