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[size=36]What are the lessons of the 2008 financial crisis?[/size]
Economy | 08:36 - 27/08/2019
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Financial crises will inevitably happen again and no one can predict how bad they are, says writer Nathan Shelver in an article in Foreign Policy magazine.
What lessons can be learned from the 2008 financial crisis, given what we see as a looming economic recession?
As the United States worries about another possible recession, "we should remember" how three US financial regulators helped prevent the 2007-2009 financial crisis, says Shilver, a senior researcher at the Harvard Business, Government and International Economics Unit. Of the Great Depression.
The authors point out that these financial experts are: Ben Bernanke, former Federal Reserve Chairman, Henry Paulson, Treasury Secretary under former US President George Bush, where the crisis broke out, and Timothy Geithner, President of the Federal Reserve Bank (Central Bank) in New York under Bush, and Treasury under President Barack Obama.
They could not prevent the collapse of Lehman Brothers on September 15, 2008, and with the exception of Lehman's case, their efforts to rescue the financial system were incredibly wide.
Pump money
author explains that the Federal Reserve made by March / March 2009 to pump the amount of approximately $ 7.8 Trillions (ie , more than half of the GDP of the United States at the time) to lend to financial institutions that were on the edge of the abyss, or to buy assets that were impaired, Or to prevent disaster.
He adds that the US Congress authorized the Treasury Department to spend another $ 700 billion to buy toxic or bad assets, which includes all products developed on an investment basis in the three overlapping financial sectors (banking, investment and insurance).
Regulators have used the funds to support several companies in the United States, whether government or private, including mortgage or insurance, as well as other large banks.
He says the Federal Reserve and Treasury programs to buy assets that no one else wanted to buy eventually led to billions of dollars in profits.
What lessons can be learned from the 2008 financial crisis, given what we see as a looming economic recession?
As the United States worries about another possible recession, "we should remember" how three US financial regulators helped prevent the 2007-2009 financial crisis, says Shilver, a senior researcher at the Harvard Business, Government and International Economics Unit. Of the Great Depression.
The authors point out that these financial experts are: Ben Bernanke, former Federal Reserve Chairman, Henry Paulson, Treasury Secretary under former US President George Bush, where the crisis broke out, and Timothy Geithner, President of the Federal Reserve Bank (Central Bank) in New York under Bush, and Treasury under President Barack Obama.
They could not prevent the collapse of Lehman Brothers on September 15, 2008, and with the exception of Lehman's case, their efforts to rescue the financial system were incredibly wide.
Pump money
author explains that the Federal Reserve made by March / March 2009 to pump the amount of approximately $ 7.8 Trillions (ie , more than half of the GDP of the United States at the time) to lend to financial institutions that were on the edge of the abyss, or to buy assets that were impaired, Or to prevent disaster.
He adds that the US Congress authorized the Treasury Department to spend another $ 700 billion to buy toxic or bad assets, which includes all products developed on an investment basis in the three overlapping financial sectors (banking, investment and insurance).
Regulators have used the funds to support several companies in the United States, whether government or private, including mortgage or insurance, as well as other large banks.
He says the Federal Reserve and Treasury programs to buy assets that no one else wanted to buy eventually led to billions of dollars in profits.
Payments uncertainty
The reason for these purchases is that most mortgages, commercial loans and credit card debt were not really expected payments.
If private institutions had held only those assets, and if creditors had continued to transfer short-term loans, they would have earned money in the end, and the crisis would not have been as bad as it actually did, he says.
The writer asserts that if no one felt panic, the crisis would not have occurred at all; the panic was the crisis itself.
He points out that the collapse of Lehman led to this panic, and that there was fierce political pressure on Bernanke, Geithner and Paulson to allow the bank to collapse, by Democrats and Republicans, and by liberal or conservative media.
The reason for these purchases is that most mortgages, commercial loans and credit card debt were not really expected payments.
If private institutions had held only those assets, and if creditors had continued to transfer short-term loans, they would have earned money in the end, and the crisis would not have been as bad as it actually did, he says.
The writer asserts that if no one felt panic, the crisis would not have occurred at all; the panic was the crisis itself.
He points out that the collapse of Lehman led to this panic, and that there was fierce political pressure on Bernanke, Geithner and Paulson to allow the bank to collapse, by Democrats and Republicans, and by liberal or conservative media.
Politics and disasters
The author explains that the collapse of a major financial institution such as Lehman led to fueling disasters, explaining that political decisions exceeded the authority of the Federal Reserve.
Penalties should be imposed for financial irregularities, but letting big financial firms fail is wrong.
He points out that the Justice Department under Obama did not begin serious investigations until mid-2012. The
writer notes that banks paid billions of dollars to settle complaints of civil fraud, and they promised not to commit the same fraud again, but it quickly began to commit them again and again.
Panic and pressure
writer says that financial crises will occur again inevitably, and that no one can predict the extent of Soiha, and indicates that the 2008 crisis was the worst since the thirties of the last century.
If the Fed had dealt with Lehman better and stopped financial concerns, the crisis would have been avoided that badly.
The writer refers to the Dodd-Frank Act, which bears the names of US Congressmen Christopher Dodd and Barney Frank, who launched a campaign to pass it to rein in risky practices by banks and other financial companies, passed under the Obama administration in 2010 to avoid Another financial crisis.
He says that because financial crises are strongly motivated by panic, the worry is that the Dodd-Frank Act and other regulations have weakened the Fed's ability to stop such fear, and that the financial institution will be under more political pressure than before. Finished 29 / r
The author explains that the collapse of a major financial institution such as Lehman led to fueling disasters, explaining that political decisions exceeded the authority of the Federal Reserve.
Penalties should be imposed for financial irregularities, but letting big financial firms fail is wrong.
He points out that the Justice Department under Obama did not begin serious investigations until mid-2012. The
writer notes that banks paid billions of dollars to settle complaints of civil fraud, and they promised not to commit the same fraud again, but it quickly began to commit them again and again.
Panic and pressure
writer says that financial crises will occur again inevitably, and that no one can predict the extent of Soiha, and indicates that the 2008 crisis was the worst since the thirties of the last century.
If the Fed had dealt with Lehman better and stopped financial concerns, the crisis would have been avoided that badly.
The writer refers to the Dodd-Frank Act, which bears the names of US Congressmen Christopher Dodd and Barney Frank, who launched a campaign to pass it to rein in risky practices by banks and other financial companies, passed under the Obama administration in 2010 to avoid Another financial crisis.
He says that because financial crises are strongly motivated by panic, the worry is that the Dodd-Frank Act and other regulations have weakened the Fed's ability to stop such fear, and that the financial institution will be under more political pressure than before. Finished 29 / r
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