What caused the 2008 Global Economic Collapse?

[Ivan Seeking]

One year ago this week, the failure of the banking and investment systems turned the global economy upside down.

Apparently we define the beginning of the collapse to be the failure of Lehman Brothers. IIRC, by this time, Fannie and Freddie had already been bailed out.

Late edit: Okay, Freddie and Fannie were nationalized on Sept 7th, 2008.

 

[Ivan Seeking]

Here is a great video that documents the failure of the system.

On Thursday, Sept. 18, 2008, the astonished leadership of the U.S. Congress was told in a private session by the chairman of the Federal Reserve that the American economy was in grave danger of a complete meltdown within a matter of days. "There was literally a pause in that room where the oxygen left," says Sen. Christopher Dodd (D-Conn.). (more »)

http://www.pbs.org/wgbh/pages/frontline/meltdown/view/

 

[xxChrisxx]

1st birthday?

I'll get the jelly and icecream.

 

[byronm]

Hopefully the job market picks up.. My employer is in the black and making a profit but from my perspective its only because they've reduced employee benefits & raises to nothing this year..

Work harder for less money when you factor in inflation and cost of living. iiiit burrrns

 

[waht]

Hopefully Obama will set things straight.

 

[BobG]

Hopefully the job market picks up.. My employer is in the black and making a profit but from my perspective its only because they've reduced employee benefits & raises to nothing this year..

Work harder for less money when you factor in inflation and cost of living. iiiit burrrns

Are you sure about that? Factoring in inflation and cost of living, maintaining the same salary gives you more purchasing power than you had a year ago. Or pretty close to it.

The Consumer Price Index peaked at about 220 in July 2008. As of July 2009, the CPI was still in the 215's, although increasing again, as it historically has. So, technically, there's a good chance the CPI is equal to last year's or even slightly higher than last year. Or, at least about to be higher. The CPI was around 219 in Sep 2008, but had fallen to 210 by Dec 2008.

Your pay is still in about the same place it was relative to prices as it was last year, though. In fact, inflation from Jul 2007 to Jul 2008 was kind of high. It wouldn't be a shock if it took until Jul 2010 to reach 220 again (although I would at least be surprised).

 

[Artman]

Hopefully Obama will set things straight.

Hopefully, but you can't lift a bucket you're standing in, you can just make it pop up and down.

I didn't realize it had been a year.

My father-in-law, a retired banker, predicted this economic disaster pointing to the shoddy mortgage practices going on in the lending market. He said months before it happened, that the crash was coming and it will be big.

Currently, we are working 32 hour weeks with a reduction in benefits (employee pays for spouse coverage), and I haven't seen a raise in several years. I'm making less than I did 20 years ago.

 

[Ivan Seeking]

Hopefully, but you can't lift a bucket you're standing in, you can just make it pop up and down.

You are forgetting about his extraordinarily large ears.

The last year was pretty rough, but last month was I think the second best I've ever had in eleven years. This may be unique to a recent set of deals made rather than the general state of the economy, but in the end I see people spending money.

 

[BobG]

Hopefully, but you can't lift a bucket you're standing in, you can just make it pop up and down.

People lift a bucket they're standing in with hot air all the time. In some parts, they even proclaim you a wizard for that sort of thing.

 

[Artman]

You are forgetting about his extraordinarily large ears.

I agree with some of his programs, especially the energy efficient design incentives. These are very smart use of public money. I'm taking advantage of some of these by putting in a solar electric system at my house (state tax rebate backed by federal funds and uncapped 30% tax credit on the full amount after the state rebate). These types of improvements bring work to designers, installers, manufacturers; give money to financial institutions who fund the projects; reduce our energy footprint; saves money for the owners, which can get invested or spent to further aid the economy; reduces the burden on public utilities to build more generating facilities; reduces greenhouse gases; and returns some money to the government in the form of income taxes and sales taxes.

 

[Ivan Seeking]

People lift a bucket they're standing in with hot air all the time. In some parts, they even proclaim you a wizard for that sort of thing.

According to many experts, we well might have been in the midst of a great depression by now. According to some of the most knowledgeable folks, we were on a near certain path to an inescapable deflationary spiral.

Other folks would rather discuss it by the bucketful.

 

[byronm]

Are you sure about that? Factoring in inflation and cost of living, maintaining the same salary gives you more purchasing power than you had a year ago. Or pretty close to it.

Cash in Cash out, I'm much worse off this year than i was last year even after reducing my voluntary expenses (canceled cable tv, canceled pest control, canceled all magazine subscriptions, canceled club memberships, canceled aopa membership, canceled our family vacation..)

PP&L alone is going to break a lot of people with their 40% rate increase come January 1st.. I'm already balanced billed at 240.. Thats adding 1200/year in expenses for the same service :(

Sure, if you scale in the fact its cheaper to eat at mc donalds than to cook a family of 4 a healthy meal prices may seem to be stable but I'm not sure that reflects reality.

All the meanwhile i try not to remind myself that my mortgage is paying for a net loss 105k value in the house.. sure that equity/value may be made up over the years but it doesn't add anything to the piece of mind of having an option to move for a better job or more affordable living. I'd have to claim bankruptcy today to do what i could have done a year and a half ago at least by breaking even. No way you can sustain 105-110k loss on a house and make it somewhere else.

edit:

I actually feel like a lucky one though.. at least i purchased a house with physical property (2 acres) and a great view of farms and hillside that is preserved.. those poor saps that bought big box houses that look a purdy inside for 399k that don't even own the lot it sits upon got BURNED with - 200k valuations.. so i do so more benefit in just the value of my lot. .all is not lost if i stay firm.. its just the burden of it all that is hard to live through when the improvements tot he economy are few and far between and the options/alternatives are out of reach without going through a cataclysmic event of bankruptcy or sheer luck

 

[russ_watters]

Shouldn't we call it "Almost Economic Collapse Day" since according to the PBS quote, it didn't collapse but only almsot collapsed?

 

[Kenneth Mann]

Late edit: Okay, Freddie and Fannie were nationalized on Sept 7th, 2008.

Freddie and Fannie have always been nationalized. They were created by Congress, and have never been allowed full autonomy. That would have made it difficult to run back to Congress every time they needed or wanted a favor.

KM

 

[WhoWee]

People lift a bucket they're standing in with hot air all the time. In some parts, they even proclaim you a wizard for that sort of thing.

 

[WhoWee]

According to some of the most knowledgeable folks, we were on a near certain path to an inescapable deflationary spiral.

Don't worry, the printing presses will guarantee inflation.

 

[edward]

House of Cards from CBS is a good documentary also.

http://www.cbsnews.com/video/watch/?id=3756665n

 

[edward]

The investment bankers already have a new product to replace sub prime mortgages.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

http://www.nytimes.com/2009/09/06/business/06insurance.html

There is a bit of irony here. The investment banks were the reason that many older people lost retirement funds. IMHO it seems that people who have lost their retirement funds would be the people who would be most likely to need to sell their life insurance policies.

Talk about a pull the plug on grandma situation. There are now entities who will have a motive. As far as being ghoulish this ranks right up there with the dead peasant insurance policies.

 

[byronm]

Freddie and Fannie have always been nationalized. They were created by Congress, and have never been allowed full autonomy. That would have made it difficult to run back to Congress every time they needed or wanted a favor.

KM

If you compare the cash infusion into Freddie and Fannie, isn't that much much smaller than than the cash infusion into the private sector?

Oddly enough its still the private sector running to congress today ;)

 

[WhoWee]

If you compare the cash infusion into Freddie and Fannie, isn't that much much smaller than than the cash infusion into the private sector?

Oddly enough its still the private sector running to congress today ;)

Unlike food, water, shelter, and medical care - it's said you can never have enough money. As long as they're offering to hand it out, someone will take it.

There is one thing about the events of the past year that absolutely infuriates me. I think the person responsible for spending tax payer funds on road side signage telling us tax payer funds are being spent should be suspended for a period of 8 hours (1 day shift) from each of those hundreds of signs - or allowed to pay the funds back from his own pocket.

 

[byronm]

Unlike food, water, shelter, and medical care - it's said you can never have enough money. As long as they're offering to hand it out, someone will take it.

What kind of statement is that?

There is one thing about the events of the past year that absolutely infuriates me. I think the person responsible for spending tax payer funds on road side signage telling us tax payer funds are being spent should be suspended for a period of 8 hours (1 day shift) from each of those hundreds of signs - or allowed to pay the funds back from his own pocket.

I've thought the same, but reality is, commercial interests are no different. Why should i pay tolls on a toll road only to see the toll road company advertisng I'm on its very toll road? Wouldn't the toll road be cheaper if they weren't making fancy signage to say I'm on the very road i already know I'm on?

Its always a two sided argument.. that's sort of my point. I know *MORE* people who work who want the public option than people who don't work and even care what the public option is yet your statement above would lump me into your "hand out category" because of your very broad assumptions.

BTW, if you look for the simplest explanation for your pet peeve it doesn't take much to understand the reason why you see those signs. WHen people want proof of the billions of dollars being spent, a sign is a simple way to present that proof. Otherwise if there was no sign your pet peeve would be driving by that construction mumbling "i hope they're using some of our taxpayer money to do this and not blowing it on toilets seats" and wondering how you would find out where your money is being spent :)

ironically it did create jobs to create those signs ... hehehe

 

[WhoWee]

What kind of statement is that?

I've thought the same, but reality is, commercial interests are no different. Why should i pay tolls on a toll road only to see the toll road company advertisng I'm on its very toll road? Wouldn't the toll road be cheaper if they weren't making fancy signage to say I'm on the very road i already know I'm on?

Its always a two sided argument.. that's sort of my point. I know *MORE* people who work who want the public option than people who don't work and even care what the public option is yet your statement above would lump me into your "hand out category" because of your very broad assumptions.

BTW, if you look for the simplest explanation for your pet peeve it doesn't take much to understand the reason why you see those signs. WHen people want proof of the billions of dollars being spent, a sign is a simple way to present that proof. Otherwise if there was no sign your pet peeve would be driving by that construction mumbling "i hope they're using some of our taxpayer money to do this and not blowing it on toilets seats" and wondering how you would find out where your money is being spent :)

ironically it did create jobs to create those signs ... hehehe

I'll attempt a more specific explanation. For the record, I don't have a problem feeding, clothing, sheltering, educating, and providing health care to people who need it - as long as they are not dependent on my support for the rest of their lives. If someone needs temporary housing (think Katrina) that's fine.

On a side note regarding Katrina, some people are still living in FEMA trailers and a lawsuit is moving forward this week against the Government because they were exposed to formaldehyde for too long (the trailers were rushed into production - other variables). Ask yourself, who continues to live in a construction trailer for over a year - then sues the Government because of the poor quality of the temporary shelter?

If you can't find a job to rent an apartment, then use the debit card to buy a bus ticket to somewhere else!

There is no end to the "you owe me" mentality.

On the other hand, I don't see the public option in the same way. People who can't, won't, or don't work are already covered. The public option is SUPPOSED to cover the working poor who can't afford coverage. However (watch who Obama is speaking to this week - UNIONS), if the Government option costs less than private insurance (because of Obama's mandates) large and small employers will drop coverage and move to the Government plan. We'll have 95% ON the public plan - not the 5% Obama estimates.

 

[byronm]

I'll attempt a more specific explanation. For the record, I don't have a problem feeding, clothing, sheltering, educating, and providing health care to people who need it - as long as they are not dependent on my support for the rest of their lives. If someone needs temporary housing (think Katrina) that's fine.

On a side note regarding Katrina, some people are still living in FEMA trailers and a lawsuit is moving forward this week against the Government because they were exposed to formaldehyde for too long (the trailers were rushed into production - other variables). Ask yourself, who continues to live in a construction trailer for over a year - then sues the Government because of the poor quality of the temporary shelter?

Consumer protection laws exist whether or not the item is purchased, given by charity or an act of government. While it does seem awkward to sue your own government, suing anyone or anything ultimately drives up everyones cost regardless of it being government or private sector, it is still a protection awarded to everyone.

What would you do if everything you owned was washed away and your job was out of business and you had no family to pull you out and the government gave you a house that was incorrectly built and failed a code? Would you sit idly by and take that without taking action?

The government failed with katrina in so many regards but i don't blame the people that did their part to help, i blame the administration that failed to recognize the problem that resulted in lawsuits to rectify it.

If you can't find a job to rent an apartment, then use the debit card to buy a bus ticket to somewhere else!

Sure, easy for you to say. When hundreds of thousands of poverty stricken people are displaced it sure is easy to just packup and leave isn't it? Heck, i live 1500 miles away from my family and 99.9% of people i speak to ask "how did you do it", its simply not as easy as you make it sound and the majority of people can't do it. For many people, where they live is home

There is no end to the "you owe me" mentality.

Thats just a downright poor attitude to have towards fellow humans.

On the other hand, I don't see the public option in the same way. People who can't, won't, or don't work are already covered. The public option is SUPPOSED to cover the working poor who can't afford coverage. However (watch who Obama is speaking to this week - UNIONS), if the Government option costs less than private insurance (because of Obama's mandates) large and small employers will drop coverage and move to the Government plan. We'll have 95% ON the public plan - not the 5% Obama estimates.

There is nothing wrong with that. The government is still going to operate through the capitalistic system that FOR profit companies do. If for profit companies can't make money without denying coverages then the people have spoke to deny for profit carriers the ability to do business.

I would tend to agree with you in some respects if my employer gave me the option to chose their coverage or to get the cash myself.. In other words, if i chose their single insurance plan they offer i'll take the salary + my payouts but if they want me to have a choice for my carrier then i want that extra 15,000 year salary so i can go out and buy my own insurance without further reducing my out of pocket expenses. In other words today I am presented with the false choice of having a job and finding a new job just to chose my health care provider. The public option would not only force companies to offer up competition but once that competition is open more providers can compete for that business.

Right now there is no such thing as even a free market system and i believe the public option can kick that in and either prove if it works or it doesn't or roll into a social system in which case either scenario is a win win.

Either way i hope people continue to be critical of our policies but do so in such a way they can accept them with humility (its not whether or not we're right or wrong but whether or not we're solving our problems). We're too polarized that we end up in conversations like this were we speak of completely baseless non issues and ignore the reality of our problems. Pointing out a very very small population that is lazy as an excuse to ignore the epidemic problem of little or no health care and explosive costs and reduced benefits is just wrong.

 

[WhoWee]

Consumer protection laws exist whether or not the item is purchased, given by charity or an act of government. While it does seem awkward to sue your own government, suing anyone or anything ultimately drives up everyones cost regardless of it being government or private sector, it is still a protection awarded to everyone.

What would you do if everything you owned was washed away and your job was out of business and you had no family to pull you out and the government gave you a house that was incorrectly built and failed a code? Would you sit idly by and take that without taking action?

The government failed with katrina in so many regards but i don't blame the people that did their part to help, i blame the administration that failed to recognize the problem that resulted in lawsuits to rectify it.




Sure, easy for you to say. When hundreds of thousands of poverty stricken people are displaced it sure is easy to just packup and leave isn't it? Heck, i live 1500 miles away from my family and 99.9% of people i speak to ask "how did you do it", its simply not as easy as you make it sound and the majority of people can't do it. For many people, where they live is home



Thats just a downright poor attitude to have towards fellow humans.



There is nothing wrong with that. The government is still going to operate through the capitalistic system that FOR profit companies do. If for profit companies can't make money without denying coverages then the people have spoke to deny for profit carriers the ability to do business.

I would tend to agree with you in some respects if my employer gave me the option to chose their coverage or to get the cash myself.. In other words, if i chose their single insurance plan they offer i'll take the salary + my payouts but if they want me to have a choice for my carrier then i want that extra 15,000 year salary so i can go out and buy my own insurance without further reducing my out of pocket expenses. In other words today I am presented with the false choice of having a job and finding a new job just to chose my health care provider. The public option would not only force companies to offer up competition but once that competition is open more providers can compete for that business.

Right now there is no such thing as even a free market system and i believe the public option can kick that in and either prove if it works or it doesn't or roll into a social system in which case either scenario is a win win.

Either way i hope people continue to be critical of our policies but do so in such a way they can accept them with humility (its not whether or not we're right or wrong but whether or not we're solving our problems). We're too polarized that we end up in conversations like this were we speak of completely baseless non issues and ignore the reality of our problems. Pointing out a very very small population that is lazy as an excuse to ignore the epidemic problem of little or no health care and explosive costs and reduced benefits is just wrong.

The Government gave the victims temporary trailers to live in for a few weeks under emergency conditions. Then the Government gave victims debit cards with a few $thousand each to help cover expenses. People that didn't receive trailers were provided hotel rooms.

Some people remained in the temporary trailers (for over a year) and are now suing the Government.

Many people used the debit cards to leave the area and rebuild their lives.

Katrina is not the only natural disaster this country has ever faced. We've had floods and tornados and fires and earthquakes, and even other hurricanes since Katrina - New Orleans isn't the only place that needs assistance.

I remember watching interviews on TV of people in New Orleans asking "when is someone going to clean my house - look at all of the mess in my house". At the time I thought, who would clean my house after a flood - most likely I would clean my house.

 

[Ivan Seeking]

One day after Economic Collapse Day, one year after the collapse, and nine months after Obama took office...

...Federal Reserve chief Ben Bernanke pronounced that the recession “is very likely over.”...

http://features.csmonitor.com/econo...ession-over-five-signs-bernanke-may-be-right/

The link for the story was arbitrary.

 

[BobG]

I think it's time to admit the economy has collapsed beyond any chance of recovery:

 

[Borg]

One year ago this week, the failure of the banking and investment systems turned the global economy upside down.

Apparently we define the beginning of the collapse to be the failure of Lehman Brothers. IIRC, by this time, Fannie and Freddie had already been bailed out.

Late edit: Okay, Freddie and Fannie were nationalized on Sept 7th, 2008.

The market always goes down when my wife and I go on vacation. Last year, we were in the middle of an Italian cruise at this time. We don't have any upcoming vacations planned so the market should be fine.

 

[OmCheeto]

This song always makes me cry.....

http://www.lyricsdomain.com/2/bette_midler/mr_rockefeller.html"
May I help you?
Yeah, it's me again. Did you get him on the line yet? . . .
Oh, this is awful. I've been trying to get him all day. . . .
No, it's okay. I'll wait.

Album: Songs For The New Depression
Released January 8, 1976

holy moses! (https://www.amazon.com/dp/B000002J5G/?tag=pfamazon01-20):

Someone thinks someone has money to burn...