What caused the Great Recession?

>>1655111
Influx of Immigrants, US hading to take care of them. That along with the natural business cycle hitting the Economy on that exact point, and the lack of anti-Monopoly laws.

US Had to care for Millions of immigrants who didn't contribute to the Economy AT ALL, which caused the American businesses to be affected. Job market was flooded, which caused the Natural Minimum Wage to drop to below $1 - No one could afford anything.

Pretty much a Combination of Unhealthy shit that hit the US simultaneously.

>>1655146
lulwut.jpg?

Overproduction and economic bubbles thats what caused it. Look at photos at the time - spilling milk in the streets to make a point.

Let me guess, you also believe in gold standard :)?

>>1655146
>>1655152
Er.. guys, I think he's referring to 08/09 and what followed. Not the Great DEPRESSION. Seriously OP, go read fucking Wikipedia or something. It'll be much more informative than anything you get here.

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>>1655167
Yeah I am referring to the 08-11 recession recently.

My understanding is that lenders were forced to give loans to people with bad credit because minorities were rejected for loans because bad credit. So alot of people took advantage of this and lending institutions just sold the mortgages to Fannie Mae until the payments later in the loans became too high and lots of people defaulted making those financial instruments essentially worthless.

Governments.

>>1655111
Irresponsible as fuck fractional loaning coupled with faggots being put into near negative equity homes they couldnt afford.

Saw it coming a mile away when kiyosaki said Goldman sacs would eat dicks.

>>1655111
Deregulated banks and financial markets
Incompetent credit ratings agencies
Overuse of (misvalued) credit default swaps
Lack of government intervention when it became clear that the large number of people unable to pay their mortgages was a problem
Collapsing banks
Governments bailing out institutions rather than protecting their function
Large drop in business confidence...
...resulting in uncertainty about employment hitting consumer confidence...
...which further reduced business confidence
Government does not provide a big enough fiscal stimulus to counteract the effects of a drop in private spending
State government spending cuts make things worse
Irrational fear of debt, and the truly idiotic policy of having a debt ceiling, prevent Federal government from doing what it takes to get the economy back on track.

>>1655918
This is surprisingly good for a /biz/ post.

I would add one more thing. Clinton's surpluses took wealth out of the private sector which lead to a private debt binge to recover lost wealth.

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Hate to buy into the sub-prime mortgage theory meme, but it'a pretty accurate. That mixed in with an overvalued market and the freaking-the-actual-fuck-out mentality of major investment firms at the time led to a major, well-deserved crisis brought on by years of Wall Street retadation. Damage to the average American could have been greatly mitigated had the major bailouts of AIG, GMC, etc. not occurred. The spillover was mostly the fault of a conglomerate of government agencies that had the Commie mentality of 'sharing the debt' to please their burgerfat overlords. To put it simply, investment agencies and other firms acting like children and getting what they deserved and the government actually believing that said agencies actually had any legitimacy led to a total financial meltdown that hurt the average fatfuck American and the rest of the world.

>>1655111

Your mom's pussy.

>>1655111
jews

>>1655918
And looks like it's going to happen again with our good old God Emperor taking his throne in January.

>>1655111
This will be the unpopular opinion but incompetent bankers caused the majority of it. Every managing director within the firm i'm employed by is a fucking idiot that just knows how to sell, dress, and is charismatic as fuck.

The Affect heuristic also directly played a role in the start of the recession (though it's not fair to state this as the cause as it was technically behind every recession).

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>>1655918
>Government subsidizes bad loans
>Government leans on credit agencies to improperly rate its subsidized
>Bad loans fail
>Blame it on lack of government oversight
>If only the people would spend more and more money that doesn't exist to pay for all this money that never existed then we'd have lots more real money to pay for stuff!

>>1655111
jews crashing the stock market

normies investing in the stock market with no idea on how it worked.

the end game of capitalism where a few kikes controlled enough capital to crash the market.

>>1656321
Bad loans fail all the time, but it doesn't usually cause a crisis.
The ratings agencies improperly rated the debt because of their own incompetence. The government leaning on them was a figment of your imagination.

And money exists as soon as it is borrowed. Try looking at the actual situation: the capacity to create lots more stuff exists, but industry is being prevented from taking advantage of it by a lack of money.

Fed fucking around with interest rates. Sound familiar?

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>>1655111
interest rates were too low

In the 1980s a financial instrument called the mortgage-backed security was created. The idea was that since mortgages payments are a reliable source of interest and default rate is low, banks could pool a bunch of mortgages together and sell basically a bond-- a low interest financial security backed by the mortgage payments.

Mortgage-backed securities are divided into "tranches". Tranches range from AAA (lowest risk of default, least interest), to AA, A, BBB, and BB (highest risk of default, highest interest). Eventually someone realized that you could take the worst-rated tranches out of a whole bunch of different mortgage-backed securities, and repackage them together as a CDO, or collateralized debt obligation. So even if the individual tranches were all shitty BB, by bundling a whole bunch together it counted as "diversified" so suddenly it was a AAA rated CDO.

As the CDO market grew there was more and more incentive to give out mortgages-- because mortgages were fodder for creating and selling CDOs. Standards were lowered and lowered and people with terrible credit ratings were still offered mortgages-- "subprime mortgages". Why? Because it was no longer the bank's problem if the mortgage was defaulted on because the bank sold the mortgage to some investor as part of a CDO. There was virtually no risk for banks.

CDOs always sold because they were always rated AAA even if they contained junk, because they were sufficiently diversified. Once people started defaulting on the mortgages they couldn't afford in the first place, the so-called "low risk" AAA CDOs went into default as well and the whole economy fell apart.

Read or watch The Big Short.

>>1656552
>There was virtually no risk for banks.

I should add that while this is theoretically true, in practice banks were just selling CDOs comprised of BB tranches of mortgage-backed securities to other banks which were doing the same thing to them so basically they all fucked each other.

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>>1656552
>Standards were lowered and lowered and people with terrible credit ratings were still offered mortgages-- "subprime mortgages".
you can still buy a house with a US credit score below 580.

For comparison this is about what my credit score was 6 months after a bankruptcy.

I don't know if securities practices have changed, but handing out mortgages to anyone with a pulse seems to still be going on.

>>1655111
Nice trips

>>1655111

your mom

>>1655988
This is the absolute worst explanation of the sub-prime mortgage bubble I have ever read.

>>1655111
Poor people.
Prove me wrong; protip, you can't.

Glass-Steagall was repealed and the market failed to adapt. Freddie Mac and Fanny Mae participated in repackaging sub-prime mortgages as CMOs and other financial instruments that hid or glossed over the risk while regulators said nothing so the private sector gleefully joined in.

Many other countries do not have an equivalent of Glass-Steagall so it can't really be pinned on deregulation. Speculative bubbles in a free market have existed since the tulip mania so it does not explain what changed. It was a failure to manage to sudden changes that occur after deregulation.

>>1655146
>>1655197
>white people are incapable of causing recessions

Fuck off back to /pol/

>>1655111
>What holds [the US economic success story] all together is
a massive and growing flow of capital from abroad, running to
more than $2 billion every working day, and growing...
As a nation we don’t consciously borrow or beg. We aren’t
even offering attractive interest rates, nor do we have to offer our
creditors protection against the risk of a declining dollar... We
fill our shops and our garages with goods from abroad, and the
competition has been a powerful restraint on our internal prices.
It’s surely helped keep interest rates exceptionally low despite
our vanishing savings and rapid growth.
And it’s comfortable for our trading partners and for those
supplying the capital. Some, such as China, depend heavily on
our expanding domestic markets. And for the most part, the
central banks of the emerging world have been willing to hold
more and more dollars, which are, after all, the closest thing the
world has to a truly international currency.
The difficulty is that this seemingly comfortable pattern can’t
go on indefinitely. I don’t know of any country that has managed
to consume and invest 6 per cent more than it produces for long.
The United States is absorbing about 80 per cent of the net flow
of international capital.

Paul Volker, 2007.

>>1655918
>lack of government intervention was the problem
Haha, it's like you see the opposite of reality

>>1655954
It's a horribly wrong post
>Clinton's surpluses
Hohohoboy you're one of *those* people. Do a little reading please. The Clinton surplus meme needs to die.

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>>1655111
The Great Recession was so significantly worse than previous recessions because in September 2008 after Lehman failed, Bernanke didn't cut rates at the Fed meeting because inflation from the previous 12 months was at 2.3%. If he had cut, there would've been a recession but it wouldn't have been the worst recession since the Great Depression.

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>>1655918
>>1655918
>fiscal stimulus
Monetary stimulus would've been far more effective. Could you please specify what aspects of the 1 trillion stimulus and multiple bailouts were too small for your desires?

New Keynesians have a lot of good ideas, I'm just confused as a market monetarist why you guys keep shilling the meme of not enough stimulus.

>>1657242 >>1657265
It's the combination of fiscal and monetary stimulus that's effective, but the lower the interest rates get, the less can be done with monetary stimulus. During that time, the Fed slashed its interest rate to a quarter of a percent. Opportunities for monetary stimulus were practically exhausted.

Also, fiscal stimulus can be targeted at the regions where the problem is greatest, but monetary stimulus can't.

I do agree that Bernanke should've cut rates in September 2008 rather than waiting until October. But as you say, it wouldn't've prevented a recession. And it's the government's reaction to the recession that determines how bad it is.

You may think "1 trillion, that's bignums" but merely looking big doesn't make it adequate for the task. As I said before, in reality it was simply too small to counteract the drop in private spending.

>>1657048
>Haha, it's like you see the opposite of reality
It may indeed look like that, but the perception problem's on your side.

Notice how I provided the sequence of events that actually occurred, whereas you merely compared the results to what you expected them to be?

There were indeed surpluses during the Clinton era. And though the process wasn't as direct as >>1655954 alleged, they did result in lower interest rates which enabled the private sector to take on more debt (though that was a good thing IMO).

>>1655111
Great Depression: margin purchasing.
Great Recession: sub-prime mortgages.

Both instances involved careless lending to ordinary consumers. Here's a simple, but thorough explanation: https://www.youtube.com/watch?v=bx_LWm6_6tA

>>1656841
>[lenders] repackag[ed] sub-prime mortgages as CMOs and other financial instruments that hid or glossed over the risk while regulators said nothing so the private sector gleefully joined in
Basically this. Most institutions that "rated" securities failed to rate subprime lending on the basis of their clients' actual creditworthiness, so when homeowners inevitably defaulted on their mortgages, they dragged the rest of their respective packages down with them in spite of being rated as "triple-a" investments.

So what's going to cause the crash in 2017? The Jew's will want to punish trump for winning

>>1658815
rate hike.

It was a mortgage bubble that was blown out by mortgage-backed securities, yeah?

What happens when you don't kerb 'turbulent exuberance' by increasing interest rates.

>>1658838
So that will cause a housing crash?