Is this close to your view of the 2008 crash: "Banks got greedy and started making loans they shouldn't have, and homebuyers got greedy and took on those loans they shouldn't have, and between the two, the whole thing crashed and the government bailed out the banks on those mortgages. The irresponsible homebuyers were the biggest problem, but the banks were wrong also."
That's a myth.
Before my comments, I get to bring out one of my favorite quotes from John Kennedy:
It's a good example and reminder that these myths are so persistent because they are believable and have some bit of truth to them.
Here are some facts, courtesy of "It takes a Pillage", by former Goldman Sachs executive Nomi Prins, who left to fight for reform.
The total of the subprime mortgages in the years leading up to the crash was $1.4 trillion. That's a lot of money. It's the 'bit of truth' basis to the myth.
Here's the thing most don't understand. That was the tip of the iceberg of the problem. Just as the tip of the iceberg is 1/10 of it, the amount the government spent on the banks to save them in the crisis from the subprime mosrtgages was $14 trillion - the mortgages themselves in total value were 10% of the bailout amount.
That's because Wall Street just used the mortgages as the core of products it built on top of them, greaty expanding the amount of money involved and at risk. Actually, given the leverage they used, the actual amount they put at risk from the subprime mortgages was $140 trillion.
So, let's say following the myth at the beginning that the problem was the subprime mortgages. In that case, if every single dollar of every single subprime mortgage was completely zeroed out - which is far more of a loss than they actually were - then in the very worst case the crisis could have been completely solved if the government simply paid the value of all the subprime mortgages - $1.4 trillion. The banks lose nothing, the debt is gone, crisis over.
But that wasn't the case because the mortgages were such a sliver of the problem.
As Nomi Prins points out, the government could have used that same $14 trillion to not just buy 100% of ever subprime mortgage for $1.4 trillion, but also to pay off every residential mortgage in the country, which would have cost $11.9 trillion, and had a trillion dollars left over with which to get everyone without a place to live a place and pay for thier healthcare as well.
That shows the amount of money we're talking about. And it all went to the banks to pay them off not for the bad mortgages but the bad leveraged invetments worth far more.
Even the small amount Congress put in the bill for mortgage relief for homeowners as some small gesture to not give it all to the banks went 90% unused. The people in charge, the Wall Street crowd running treasury and the Fed, did not want to give the money to the homeowners, so they just didn't.
At the time, Elizabeth Warren was Congress' apointee in charge of overseeing the use of TARP funds. The Treasury department largely just ignore her requests for information to hide what they were doing. But she reported that the first $254 of TARP money spent by the governemnt bough $176 billion worth of assets - a $78 billion shortfall.
Hopefully these facts give a bit of perspective on the amounts involved. No offense to the thread on the spending of $60,000 on Star Trek training, but compare the amounts.
But it's in the interests of these Wall Street interests for people to fall for the myth putting so much of the blame on the homebuyers, hiding the real facts, escaping blame.
Note, Wall Street got fees for creating and selling these products - they collected $300 billion in fees alone.
The net effect of the crisis was a 40% loss of the wealth of the middle class while the big banks and billionares ended up far wealthier. Where's the outrage?
That's a myth.
Before my comments, I get to bring out one of my favorite quotes from John Kennedy:
It's a good example and reminder that these myths are so persistent because they are believable and have some bit of truth to them.
Here are some facts, courtesy of "It takes a Pillage", by former Goldman Sachs executive Nomi Prins, who left to fight for reform.
The total of the subprime mortgages in the years leading up to the crash was $1.4 trillion. That's a lot of money. It's the 'bit of truth' basis to the myth.
Here's the thing most don't understand. That was the tip of the iceberg of the problem. Just as the tip of the iceberg is 1/10 of it, the amount the government spent on the banks to save them in the crisis from the subprime mosrtgages was $14 trillion - the mortgages themselves in total value were 10% of the bailout amount.
That's because Wall Street just used the mortgages as the core of products it built on top of them, greaty expanding the amount of money involved and at risk. Actually, given the leverage they used, the actual amount they put at risk from the subprime mortgages was $140 trillion.
So, let's say following the myth at the beginning that the problem was the subprime mortgages. In that case, if every single dollar of every single subprime mortgage was completely zeroed out - which is far more of a loss than they actually were - then in the very worst case the crisis could have been completely solved if the government simply paid the value of all the subprime mortgages - $1.4 trillion. The banks lose nothing, the debt is gone, crisis over.
But that wasn't the case because the mortgages were such a sliver of the problem.
As Nomi Prins points out, the government could have used that same $14 trillion to not just buy 100% of ever subprime mortgage for $1.4 trillion, but also to pay off every residential mortgage in the country, which would have cost $11.9 trillion, and had a trillion dollars left over with which to get everyone without a place to live a place and pay for thier healthcare as well.
That shows the amount of money we're talking about. And it all went to the banks to pay them off not for the bad mortgages but the bad leveraged invetments worth far more.
Even the small amount Congress put in the bill for mortgage relief for homeowners as some small gesture to not give it all to the banks went 90% unused. The people in charge, the Wall Street crowd running treasury and the Fed, did not want to give the money to the homeowners, so they just didn't.
At the time, Elizabeth Warren was Congress' apointee in charge of overseeing the use of TARP funds. The Treasury department largely just ignore her requests for information to hide what they were doing. But she reported that the first $254 of TARP money spent by the governemnt bough $176 billion worth of assets - a $78 billion shortfall.
Hopefully these facts give a bit of perspective on the amounts involved. No offense to the thread on the spending of $60,000 on Star Trek training, but compare the amounts.
But it's in the interests of these Wall Street interests for people to fall for the myth putting so much of the blame on the homebuyers, hiding the real facts, escaping blame.
Note, Wall Street got fees for creating and selling these products - they collected $300 billion in fees alone.
The net effect of the crisis was a 40% loss of the wealth of the middle class while the big banks and billionares ended up far wealthier. Where's the outrage?
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