2008 financial meltdown

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The 2008 financial meltdown either began late in 2007 or in January 2008, depending on which metrics you look at. It led to a long-lasting worldwide recession whose effects are still being felt.

Major contributors include several actions of the US government whose consequences should have been foreseen by those who made them (and which probably would have caused public outrage for that reason, had current mechanisms of online activism existed at the time they were enacted). These include:

Conclusions

The proximate cause for the meltdown – "the straw that broke the camel's back" – was the bursting of the housing bubble in late 2007, causing extensive damage to the financial industry. Had the investment firms which had become too involved with the new financial instruments permitted by the Glass-Steagall repeal simply been allowed to fail (with any government money being used to compensate individual investors instead of the failed investment firms), the economy might have recovered much more quickly – since the "damage" was entirely a paper construct having to do with allocation of funds; there was no damage to actual essential services or infrastructure.

Unfortunately, first Bush and then Obama approved a series of government bailouts which were given directly to many of the institutions which had behaved irresponsibly – essentially "socializing" the risk those institutions had taken while allowing them to keep their private profits. (Articles needed: socialized risk, privatized profit, corporate welfare)

This in turn deepened the already-severe US budget deficit and heightened the public perception of a disaster in need of drastic measures.

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  • 2010-10-02 [Talk|Index] Donald Duck Meets Glenn Beck in Right Wing Radio Duck § “This is a re-imagined Donald Duck cartoon remix constructed using dozens of classic Walt Disney cartoons from the 1930s to 1960s. Donald's life is turned upside-down by the current economic crisis and he finds himself unemployed and falling behind on his house payments. As his frustration turns into despair Donald discovers a seemingly sympathetic voice coming from his radio named Glenn Beck.”
  • 2010-04-09 [Talk|Index] The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going § “When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers. .. Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began.”
  • 2009-10-17 [Talk|Index] Goldman Can Spare You a Dime § “...most Americans know all too well that only the intervention of billions of dollars in taxpayer bailout money saved Goldman from the dire fate of its less well-connected competitors. The growing ranks of under-and-unemployed Americans, meanwhile, are waiting with increasing desperation for a recovery of their own.”
  • 2009-07-19 [Talk|Index] Too Big To Think About § “I don't think I was alone in finding it shockingly arrogant for Goldman Sachs to announce their insane bonuses last week. Trumpeting such a thing in the midst of this horrific economy is beyond poor taste.”
  • 2009-03-05 [Talk|Index] Wall Street's Best Investment § “Financial deregulatory mania over the last three decades led directly to the current financial meltdown. Were the deregulators acting out of principle? Perhaps. ut it couldn't have hurt that the financial sector invested a staggering $5.1 billion in political influence purchasing in the United States over the last decade.”
  • 2009-02-25 [Talk|Index] Japan exports drop 46% in January § “Japan's exports plunged 45.7% in January compared with a year ago to hit the lowest figure in 10 years, official figures have shown.”
  • 2009-02-21 [Talk|Index] Soros sees no bottom for world financial "collapse" § “Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.”
  • 2009-02-15 [Talk|Index] "We're All Swedes Now" § “How can an economy cast off its ability to make things, and instead live on ever-cleverer "financial instruments" and "intellectual property" to sustain itself? ... The answer is now clear: It can't.”
  • 2009-02-12 [Talk|Index] For Insight on Stimulus Battle, Look to the '30s § The New Deal absolutely helped the economy, and its only shortcomings were due to insufficient spending – Republican revisionist history notwithstanding.
  • 2009-01-07 [Talk|Index] President Bush Tried to Rein In Fan and Fred § Karl Rove writes: “Fannie Mae and Freddie Mac were among the principal culprits of the housing crisis, and Mr. Bush wanted to rein them in before things got out of hand.”
  • 2008-12-22 [Talk|Index] Madoff as Metaphor § “The puzzle is to explain the "cluster of errors" that appears at the beginning of a recession. How could so many have been so wrong about so much at the same time? The business cycle is a system-wide failure, not merely the mistaken judgment of a few.”
  • 2008-12-04 [Talk|Index] Conservative myths about the financial crisis § “Contrary to conservative mythmakers, the subprime credit is not the cause of the current crisis and the Community Reinvestment Act is not its trigger.”
  • 2008-10-03 [Talk|Index] How Government Stoked the Mania § “Housing prices would never have risen so high without multiple Washington mistakes.”
  • 2008-03-17 [Talk|Index] Leading Economic Writer: Financial Meltdown A "Gigantic Fraud" § [2]“A leading economic journalist has described the current financial crisis as a "gigantic fraud", the fallout of a deliberate and preconceived profit agenda to enslave the middle classes in a debt bubble. .. The economics editor of the London Guardian, Larry Elliott, has hit out at the global financial elite in a refreshing piece that marks a rare shift away from the establishment hackery we are used to from the corporate media.”
  • 2008-01-22 [Talk|Index] Fed Makes Emergency 0.75% Rate Cut § [2]“The Federal Reserve, responding to an international stock sell-off and the likelihood of a sharp drop in America on Tuesday morning, cut its benchmark interest rate by three-quarters of a percentage point. ... The Japanese stock market dropped 5.7 percent, for the worst two-day loss in 17 years, while the Australian stock market tumbled 7.1 percent, its worst single-day loss in nearly two decades. The Shanghai market lost 7.2 percent while the Hang Seng index in Hong Kong plummeted 8.7 percent. .. "At this stage, you can say there is panic selling in the market," said Kwong Man Bun, the chief operating officer of KGI Asia Ltd., a large Asian futures broker. "We don't think the Hang Seng index has found its bottom yet; the index will continue to go down and will only find its bottom when external markets – namely, the U.S. market – stabilize."”
  • 2008-01-22 [Talk|Index] Asian markets plunge for second day § [2]by Lindsay Whipp in Tokyo and Andrew Wood in Hong Kong: “Stocks plummeted across Asia for a second day on Tuesday on unrelenting fears that the US, Asia's most important trading partner, is heading into recession.”
  • 2007-12-23 [Talk|Index] Crisis may make 1929 look a 'walk in the park' § “As central banks continue to splash their cash over the system, so far to little effect, Ambrose Evans-Pritchard argues things are rapidly spiralling out of their control”
  • 1999-09-30 [Talk|Index] Fannie Mae Eases Credit To Aid Mortgage Lending § “Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”

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