What would have happened in 2007 regarding the banking crash

Over-regulation and government fuckery was the reason why the market crashed in the first place.

>>1650747
this

>>1650747
>Take power from the government and hand it over to corporations

I don't get this argument, you're literally not changing anything at all. Business is just as incompetent as government.

>>1650740
If the government did not interfere, several more banks would have ended up like Lehman Brothers.

There was very little government regulation regarding the build-up to the subprime mortgage crisis.

The timeline is quite simple.

1970s: Mortgage-backed security is created
1980s-1990s: MBS gain popularity while being filled with increasingly shitty mortgages (subprime mortgages)
Early 2000s: tech bubble bursts and 9/11 happens at pretty much the same time. US economy goes to hell.
2002: FED decides to save the US by lowering interest rates to then historic lows. Markets become bullish because debt is cheap. Housing market takes off because it's easy to get a (subprime adjustable-rate) mortgage. This is the formation of the housing bubble.
2003/2004: CDOs filled with MBS take off in popularity as do it's spin-offs (CDO squared and synthetic CDO)
2007: adjustable rates on most of the subprime mortgages kick in, millions of people default, everything goes to hell

The government didn't play a single role in any of that. The government only stepped in when Hank Paulson came up with the idea of the famous bailout and Bush and Bernanke went with it.

>>1650747
>over-regulation

Wrong. little regulation why why the crisis happened in the first place. Ever notice that after the crisis the government cracked down extra hard on Wall Street reform? Ever hear of Dodd-Frank?

>>1650740

> Free market

The crash would have been even worse.

Look at the great depression. That's what happens when you let money men do whatever they want.

>>1650779
Thank you. I will take the easy ones:

> What would have happened in 2007 regarding the banking crash if the market was free and the government couldn't interfere with the economy at all?
A bank run, and then a depression. We've seen it before.

> Wouldn't thousands of people lost all their money?
Yes. Technically, it had already been lost for a while.

>>1650773
are you in high school?

>>1650740
Realistically, if the entire economic system switched from mixed to laissez faire overnight and this coincided with the crash then things would have been worse in the short term. The government is not completely incompetent, though free markets are relatively better they are only better to a degree and not enough to reverse the damage wrought by a crisis this huge.

Things would hurtle to rock bottom then almost as quickly there would be a rush to buy the scrap for firesale prices and the economy would start to recover. I don't know how long it would take until things are back to normal, but judging by previous crises it would probably be about 3 years or so. From this point on the benefits of the laissez faire system would be seen, businesses would have had time to adapt, consumers would have found better offers and settled into repeat trades with reputable vendors and foreign trade would boom.

File: 14792528356616.jpg (411KB, 1462x1462px) Image search: [Google]

411KB, 1462x1462px

>>1650773
>Business is just as incompetent as government.

File: 1479759103480.png (54KB, 500x534px) Image search: [Google]

54KB, 500x534px

>>1650995
>>1651057

>>1650777
>2002: FED decides to save the US by lowering interest rates to then historic lows

Well that's one way to look at it, but that effectively created the housing bubble, and the role of gov't agencies such as HUD promoted ownership to people that really couldn't afford a home--this paved the way for subprime.

People readily admit that professional economists really don't know what is going on, but we let them implement crap like "cash for clunkers" because there is a bias toward taking action, rather than Austrian/Hayek ride things out, take a little pain, but be better in the long run and not spend a trillion $ or create another bubble.

>>1651012
I tend to agree. Organizations that were good fiscal stewards and didn't get caught up in CDS etc, such as Wells Fargo, would have acquired assets at fire-sale prices. Instead, we made them accept gov't bailout money they didn't need or want, and propped up entities with questionable business models.

>>1650773
It's how they cope. Truth is, both government and corporations are corrupted, since they are run by guess what: humans.

>>1650773
You can make the argument that given total monopoly businesses would become as incompetent as the government.

But speaking of the present reality, no. Governments controls the laws and regulations to their own benefit, they get no competition and accumulate wealth by literally forcing others to legally give it to them. Most businesses have zero control over the law, and have got to maneuver the laws and outperform other businesses in order to make a profit.

>>1651612
>You can make the argument that given total monopoly businesses would become as incompetent as the government.

And guess what those businesses become when small government doesn't force them to play nice.

>But speaking of the present reality, no. Governments controls the laws and regulations to their own benefit, they get no competition and accumulate wealth by literally forcing others to legally give it to them.

Replace "Governments" with "Big Business" and you have an equally true statement.

As >>1651610 pointed out, the common thread is both institutions are run by humans, which are easily corrupted, bought out and driven by their own interests. We don't need to shrink government and 'let money make the decisions', that's already how it works- we need regulation that actually works and a government that's held accountable and not able to be bought out by big players.

>>1651634
Big multinationals do not represent the whole of the business sector.

Personal anecdote: every friend I know with a business has got to work hard just to keep it afloat and not fall behind the competition. Meanwhile most friends in politics just do the bare minimum, their position and connections alone get them (and whoever falls on their good side) set for easy life.

Also, your argument is contradictory. On one hand you're claiming governments and business are equivalent and subject to the same rules due to both being managed by humans. On the other hand you claim big businesses are bad and big government (lots of regulation) is good.

>>1650747
fpbp

>>1651669
More like fpwp. It was effectively refuted by >>1650777

>>1650777
>The government didn't play a single role in any of that
Oh bullshit.