If 9/11 had never happened would we have had the housing bubble, the spike in gas and all the other financial mishaps that have brought is to where we are today?
Just curious.
Just curious.
In 9/11 had never happened would we be in the finacial mess we are now?
- Thread starter Wheezer
- Start date
dullard
Elite Member
- May 21, 2001
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I'm curious as to why you think a few thousand lives lost would cause banks to loan money to people who had no chance to repay them (or cause gas prices to quadruple, or any other mishap).
Japan's recent quake killed 5 times as many people, does that mean that private schools will have a scandal or that the price of bubble gum will be $1000/stick in 9 years?
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Capt Caveman
Lifer
- Jan 30, 2005
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9/11 has had a major impact on our society, culture and certainly economy, but I don't see how it happening or not happening would have changed the unsustainable bubble and subsequent economic meltdown. It might have changed the timing though.
Without 9/11, Americans would still have jobs that the Chinese are currently having, right? Maybe I'm crazy, but I think the current down-turn in U.S economy is the result of years of exporting jobs to other countries. We are buying stuffs which we no longer make, exporting wealth to countries which are making stuffs. We are sending every dollar we "save" at Wall-mart to China.
The connection isn't obvious - I didn't think there was one until recently.
But about a week ago, I saw a commentator make a case that there is: 9/11 brought the economy to a 'standstill' for a couple days and slowed it longer.
The Fed in response, to get it going again, lowered interest rates tohistoric lows - but left them there longer than needed for that stimulus.
Those cheap interest rates were key to fueling the housing surge.
And that housing surge was what created the opportunity for Wall Street to take the surge in new mortgage debt, and accelerate it even further to create product for a new market it had invented for this - and another factor was that the federal government (at the behest of Wall Street) had removed rules restricting what huge 'conservative' investments could be put in, instead of banning them from things like housing they were required to buy new classes.
It created a massive market for Wall Street to profit from, with their new product, IF they could get enough product to sell - which they could by incenting new loans.
A lot of people made a lot of short-term money by 'making the deals' and left the losses to the unsuspecting buyers of AAA-rated product.
I don't have the knowledge to say just how much the 9/11 lower interest rates were essential to all this, but it seems plausible they played an important role.
But about a week ago, I saw a commentator make a case that there is: 9/11 brought the economy to a 'standstill' for a couple days and slowed it longer.
The Fed in response, to get it going again, lowered interest rates tohistoric lows - but left them there longer than needed for that stimulus.
Those cheap interest rates were key to fueling the housing surge.
And that housing surge was what created the opportunity for Wall Street to take the surge in new mortgage debt, and accelerate it even further to create product for a new market it had invented for this - and another factor was that the federal government (at the behest of Wall Street) had removed rules restricting what huge 'conservative' investments could be put in, instead of banning them from things like housing they were required to buy new classes.
It created a massive market for Wall Street to profit from, with their new product, IF they could get enough product to sell - which they could by incenting new loans.
A lot of people made a lot of short-term money by 'making the deals' and left the losses to the unsuspecting buyers of AAA-rated product.
I don't have the knowledge to say just how much the 9/11 lower interest rates were essential to all this, but it seems plausible they played an important role.
The causes of the financial crisis started well before 9/11. The difference is, the US would have been in far better financial shape going into and coming out of the crisis had it not been for the very expensive wars.
If Bush had stopped with Afghanistan instead of playing at nation building we'd be in better shape financially.
The housing bubble would still have popped, and government entitlement and defense programs would still not be sustainable as they are.
The housing bubble would still have popped, and government entitlement and defense programs would still not be sustainable as they are.
ericlp
Diamond Member
- Dec 24, 2000
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Hell yes, Bush fucked up this nation and the next of the next generation will be paying for it for some time. Look, how much we spent on killing Bin Laden? No one knows because it's in the 100's of billions maybe even a trillion.
I wonder how many sick Americans could have been saved you know the uninsured... if we pumped just HALF the money of the WAR machine into healthcare. Oh well... Let the madness continue.
Meanwhile we are falling hard in technology and China is stomping on us. We don't spend much dollars on tech 75% goes into killing people.
I wonder how many sick Americans could have been saved you know the uninsured... if we pumped just HALF the money of the WAR machine into healthcare. Oh well... Let the madness continue.
Meanwhile we are falling hard in technology and China is stomping on us. We don't spend much dollars on tech 75% goes into killing people.
It definately contributed to the mess by pushing this country further into recession than it already was. Then the war costs. But the cheap money definately inflated that bubble. And it is possible that cheap money was kept cheap due to 9-11 slowing our recovery.
Schadenfroh
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- Mar 8, 2003
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I was not aware that China has greatly surpassed us in innovation and technology. Last I heard, they were busy trying to reverse engineer older Western and Russian technology.
They must have made 20 years of progress since March.
http://www.tomshardware.com/news/china-supercomputer-cpu-loongson,12387.html
Actually, a large chunk of that cash gets pumped into technology that improves our ability to kill people or mitigating others' ability to do so, not just on existing technology. You are currently using a communication system whose roots can be traced back to defense spending.
Obama hears you, he is expanding the defense budget beyond (inflation adjusted) Cold War levels and those of Reagan and both Bushes
http://forums.anandtech.com/showthread.php?t=2143525
What were the worst types of loans that have defaulted the most and drove prices up the quickest? Option arms with teaser rates and no documentation. What are option arms with teaser rates and no documentation? You get off with paying a minimal payment, sometimes $0, and let the mortgage negative amortize.
When were these used the most? When rates were going up.
Now, tell me, how much did rates matter if the key causes of the boom were directly meant to delink income from interest/principal expense?
The mortgage market wasn't "new", synthetic CDOs weren't "new". Please link to this supposed regulation for "new classes"?
Who were these unsuspecting people? Were they Qualified Institutional Buyers or were they Accredited Investors? Did they do their due-diligence?
And Al Gore, who won the presidency in 2000, and would have spent far less than Bush on things, not invading Iraq, not as much on 'homeland security'.
Give me a progressive candidate who will cut defense spending. I don't expect to have the Republican to be that progressive.
Well, things are related - the demand for mortgage-based products skyrocketed, creating the demand for more mortgages to be issued.
The low interest rates could have played a role in the increase in Wall Street pushing those products, creating that demand, in conjunction with new rules as I mentioned.
Things don't have to be 'new' for their to be 'new' changes with them - new rules, greatly increased marketing, new flavors, any number of things.
The fact the investment classes aren't 'new' doesn't mean the rules aren't 'new' about how institutional investors are allowed to take more risk by investing in them.
Read Matt Taibbi's "Griftopia" for a lot of good info on how that worked.
Who were these unsuspecting buyers? It appears they were mostly institutional buyers, restricted to highly-rated investments (AAA), which the top 'trench' of these mortgage derivatives were rated, wrongly, and this in conjunction with, at Wall Street's lobbying, decades of restrictions against their being able to buy things like that changed to new requirements for them to diversify to things like that.
Of course you also had things like Goldman pushing them hard - while shorting them with their own money, making a lot from that shorting as they lost money.
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Lemon law
Lifer
- Nov 6, 2005
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In my mind its only a side question, if 911 never happened, we might have had all the undesired economic upsets we have to day, but the USA would have the financial reserves to better cope with the problems. As our over reaction to 911 makes the consequences much worse and have delimited the USA's ability to rebound.
ericlp
Diamond Member
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Schadenfroh
Elite Member
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I agree, recessions have the habit of brining clandestine underlying problems into the light. For example, the WorldCom and Enron accounting scandals happened when the economy was starting to experience a hiccup and the companies that were cheating with their books could not handle / hide it anymore. In a similar manner, Madoff's ponzi scheme came to light sooner rather than later in part because of the recession.
The revelation of the accounting scandals caused more direct economic damage than 9/11 because people did not trust the bookkeeping of corporations any more, although getting bogged down in Afghanistan have long-term consequences as well.
But, it was built using American designed GPUs and CPUs. America is home to 274 of the fastest 500 computers on the planet, China has 41. America has 5 supercomputers in the top 10, China has 2.
Not to mention, there are 5 supercomputers debuting soon, each 4 times more powerful than the Chinese supercomputer you mentioned. Three of those will be in America, the rest in Japan.
Behold, IBM's Mira, soon to be the world's most powerful supercomputer.
References:
http://www.npr.org/templates/story/story.php?storyId=130895386
http://en.wikipedia.org/wiki/TOP500
http://articles.economictimes.india...319_1_fastest-supercomputer-mira-calculations
Completely made with US researched, patented, mostly manufactured, Intel and Nvidia chips.
Only country can bolt a ton of Pentium core chips and Nvidia GPUs together to make a supercomputer. They didn't do anything organic or awe inspiring.
Jaskalas
Lifer
- Jun 23, 2004
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Yes, government stimulus played a crucial role, which is why we're up in arms over continuing that policy.
We have spent ~ $1.1 trillion or so over 10 years on both wars, correct?
Meanwhile, the budget deficit combined for the past 2 years is over $3 trillion.
No... the financial disaster would have happened regardless, and we have cheap money, aka too low interest rates for too long, to thank for it.
The Fed decided it was not going to be in the business of popping asset bubbles even though everyone with a brain knew we were growing a massive housing bubble as far back as 2002.
Aggressive lending and other shenanigans are the natural by product of a weak regulatory environment combined with too low interest rates that almost force people to take risk to earn money.
The 'search for yield' -- a phrase quoted regularly on Wall St eventually pushes institutional investors out further and further on the risk curve once everything else is bid up and fully valued.
Craig is most correct here. And I share his view that the cause of a lot of our problems is cheap money. No one ever wants to take a loss so more liquidity is always the answer when the sh*t hits the fan. Sorry, but the wipeout is going to happen and the next time down is going to be a doozy.
Meanwhile, the budget deficit combined for the past 2 years is over $3 trillion.
No... the financial disaster would have happened regardless, and we have cheap money, aka too low interest rates for too long, to thank for it.
The Fed decided it was not going to be in the business of popping asset bubbles even though everyone with a brain knew we were growing a massive housing bubble as far back as 2002.
Aggressive lending and other shenanigans are the natural by product of a weak regulatory environment combined with too low interest rates that almost force people to take risk to earn money.
The 'search for yield' -- a phrase quoted regularly on Wall St eventually pushes institutional investors out further and further on the risk curve once everything else is bid up and fully valued.
Craig is most correct here. And I share his view that the cause of a lot of our problems is cheap money. No one ever wants to take a loss so more liquidity is always the answer when the sh*t hits the fan. Sorry, but the wipeout is going to happen and the next time down is going to be a doozy.
So much fail and partisan bitchery in this thread.
This mess all started in 1977 thanks to Jimmy Carter signing http://en.wikipedia.org/wiki/Community_Reinvestment_Act
This is what mandated banks and lending instutions to give loans to those that couldn't afford them thus starting the ball rolling.
This mess all started in 1977 thanks to Jimmy Carter signing http://en.wikipedia.org/wiki/Community_Reinvestment_Act
This is what mandated banks and lending instutions to give loans to those that couldn't afford them thus starting the ball rolling.
Yes, because when 'the government' does bad, like having an incompetent radical like Alan Greenspan set a bad rate instead of someone better like Paul Volcker, clearly the only answer isn't to have better government - by things like getting the corrupt money of corporations and Wall Street out of elections - but let, say, Wall Street run the economy.
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