What Was the Financial Crisis of 2008 Like?

 

I just posted a number of items on X, a selection of charts and commentary from my blog during the Financial Crisis of 2008. 

Its all original and unedited. 

I wanted to recapture the feel for the crisis, what we were thinking and hearing, and how it unfolded in all its fraudulent ugliness and uncertainty. 

There was panic selling in the world markets.   Banks and financial institutions were falling like a house of cards.   

It was mostly a time of fear and uncertainty, as an avalanche of financial fraud and the mispricing of risk came crashing down around us.

It's worth a reminder for those who have forgotten what a serious market decline is like.

You may see the postings on X here.

 Below is a small sampling of the charts. 

 Here is a summation of the Five Major Causes of the financial crisis according to Joe Stiglitz in 2008:

1. Reagan's nomination of Alan Greenspan to replace Paul Volcker as Fed Chairman
2. The Repeal of Glass-Steagall and the Cult of Self-Regulation
3. Bush Tax Cuts for Upper Income Individuals, Corporations, and Speculators
4. Failure to Address Rampant Accounting Fraud Driven by Excessive and Flawed Compensation Models
5. Providing Enormous Bailouts to the Banks without Engaging Systemic Reform for the Underlying Causes of the Failure

I would like to say we have reformed the system of most of these failings.  But alas, we have not.

In retrospect the major bull market in gold found its start here as nations and individuals rushed to buy physical gold, dislocating the relationship between the physical and paper markets.  

Obama's failure to reform, which was the mandate that underwrote his election, was a critical failure.  And he never followed through on it over his eight years as president.  

 

 

Bank Bailouts Were Larger Than US Cost for WWII

All the Gains from the End of the Tech Bubble Bust Were Wiped Out

Stocks and Precious Metals Charts - A Conspiracy of Silence

 

"In a room where people unanimously maintain a conspiracy of silence, one word of truth sounds like a pistol shot."

Czesław Miłosz, Nobel Prize lecture, 8 December 1980

"To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny. In this world of ours in other lands, there are some people, who, in times past, have lived and fought for freedom, and seem to have grown too weary to carry on the fight. They have sold their heritage of freedom for the illusion of a living. They have yielded their democracy.

I believe in my heart that only our success can stir their ancient hope. They begin to know that here in America we are waging a war against want and destitution and economic demoralization. It is more than that; it is a war for the survival of democracy. We are fighting to save a great and precious form of government for ourselves and for the world."

Franklin D. Roosevelt, Democratic National Convention, 1936 

"The threat to our democracy is real and growing. But it didn’t start with the MAGA crowd. It started with the dark money crowd — which won’t be satisfied until it owns every member of Congress, every lifetime-appointed federal judge, and every key politician in every swing state. Until there is a groundswell in America demanding serious campaign finance reform, this is the best democracy that money can buy."

Pam and Russ Martens, American Democracy Is Under Grave Threat, 7 September 2022

"The greatest need is for intellectual reappraisal, and a good place to begin is with a statement from a paper co-authored by Minsky that “apt intervention and institutional structures are necessary for market economies to be successful.” Rather than waging old debates about tax cuts versus spending increases, policymakers ought to be discussing how to reform the financial system so that it serves the rest of the economy, instead of feeding off it and destabilizing it. 

Among the problems at hand: how to restructure Wall Street remuneration packages that encourage excessive risk-taking; restrict irresponsible lending without shutting out creditworthy borrowers; help victims of predatory practices without bailing out irresponsible lenders; and hold ratings agencies accountable for their assessments. These are complex issues, with few easy solutions, but that’s what makes them interesting. As Minsky believed, “Economies evolve, and so, too, must economic policy.”

John Cassidy, The Minsky Moment, The New Yorker, February 4, 2008

They are more openly normalizing fraud, cruelty, and injustice.  

Most leaders and their elite servants stand by in complicit silence.

Have a pleasant weekend. 

Just Gold and Silver

 

"Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves."

Norm Franz, Money and Wealth in the New Millenium