Paying the Piper

It has been a decade since the financial crisis of 2008.  I have posted a few things here and have read perhaps hunderds of articles and a handful of books on the subject.  A few things still puzzle me and a few more things seem to go unsaid.

Today everybody knows that a massive real estate bubble was blown in the US that lead to the crisis.  I have since met people who worked in finance and knew absolutely we were headed for trouble as much as two years before the event.  This brings up the always difficult, but basic question:  Why?

While the banks aren’t blameless and have quietly taken the blame for the crisis, I can’t help but think there is at least another layer to this onion. Why did every bank and financial instution participate in an obvious bubble?  Where was all the banking regulation (I know some of these institutions were lightly or unregulated, but still).

I think the underlying questions is:  why were interest rates kept so low during this period?  Alan Greenspan, the long time chairman of the Federal Reserve, claims he didn’t realize a bubble was being blown.  Being a good Libertarian, he believes all prices are set by an efficient market and that bubbles are impossible.

So then, what did he make of the role of the Fed in setting interest rates.  Did it not matter?  Certainly he believed the Fed and the setting of interest rates was a serious business.  So what was happening here?

I haven’t heard this anywhere else, but this was during a time when the country was piling up unprecedented debt from tax cuts and two unfunded wars.  I have to believe the low interest rates and housing bubble were the mechanism that papered over this debt.  It was a time of patriotism and all of this was cast as part of the war on terror, but how many times in history has an otherwise great country or even Empire been brought low by long and costly foreign wars?

So that is what I am going with.  The Bush War on Terror was ultimately paid for by the real estate bubble.  And many Americans are still paying the price.

Facebook Censorship Fail

Was going back through old postings and ran across this old posting that had been censored.  It says it looked like Spam (it doesn’t) and that it may violate community standards.  It is an article from a reputable source about the support for Nazism in pre-WW II America.  A cautionary tale, one would think.  At the very least, factual.  I suppose it could be read as a recruitment for neo-Nazis, but given the other stuff I have seen (and heard about) on Facebook I found this one a bit odd.  For my old friends who missed this due to censorship (and yes, this is censorship, even though Facebook isn’t a government body) a good read about an embarassing part of American history you may not hear much about.

6 Things You May Not Have Known About Nazis in America

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Rainy Day Friends

The rain has been coming down here.  Dark skies and then a thick downpour that passes in a few minutes.  Last night I was already awake from the rain when a thunder shook the house. I was surprised the lights stayed on.  It was coming down so hard enough that I went downstairs in the dark and pointed a flashlight out of the window to see if it was flooding.

This morning I went out to check the yard.  I hadn’t emptied the rain gauge in a while, but this morning it was overflowing at five inches.  The shed had flooded again.

Last night I backslid. I went back on Facebook and got into a political argument with an old colleague.  Made me dislike Facebook all the more.  I was going to remove the app from my pad (I have already taken it off my phone) when I decided to give it one last look.  I realized there are a few people I keep in touch with this way that I don’t want to lose touch with.  Up until now I had been just blocking people,  but I decided, for the first time, to do a big cull and unfriend some people.

The sobering part was I found five (or was it six?) People who had died.  One or two were old friends I hadn’t seen in a long time, but one was a very close friend.  It hurt a bit to remove him from my feed, but I didn’t see the point in keeping him on my list.  He won’t be posting and it isn’t like I will forget him any time soon.  I was also going to cull a couple of old classmates who seem to have drifted to the far right and are fond of posting some of the most purile content from that end of the political spectrum.  Who needs that sort of nonsense in their life? Not me.  At the last minute I went back on that too.  I told myself it is interesting to see what the enemy is up to, but it still felt wrong.  Ah, the pull of social media.

How Many Trillions?

I thought I had read enough about the 2008 financial crisis to have at least all the basic facts.   Turns out some of it was kept very, very quiet.  Andrew Ross Sorkin in the New York Times Dealbook mailing sent ought the following last week:

DealBook Briefing: Reliving Wall Street’s Near-Death Experience

There was a total cost tally that I thought was in this article, but it must have been somewhere else that I can’t seem to find now.  A quick Google turns up a tally from The Huffington Post (I will cite HuffPo here because it is just a list of numbers that are hard to argue with).

TARP Uncovered — the Real Cost of the Government Bailout

  • Total estimated cost of government bailout = $14.85 trillion.

Wow.  A whole year of GDP.  Put another way, the Finincial crisis cost every American a year of work, at least in the short term.  The sad part is that it could have been much worse.