Here's Who Really Caused the Great Recession
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- čas přidán 23. 05. 2019
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#GreatRecession #2008 #History
⚠ 📣 *MAJOR ANNOUNCEMENT:* Business Casual is suing CZcams. We have just published a feature-length documentary about our case. It is being censored. If you are a fellow creator, you need to watch this. ➡ czcams.com/video/4IaOeVgZ-wc/video.html
Everything's risky, unless you have insurance . . . until that insurance means nothing.
Just hope your insurance has reinsurance.
Tax-paid services.
And retrocession.
The irony of insurance
This is why I don’t do insurance unless it’s got great stipulations. Costs me more but i don’t want to be given a run-around to chase my claim.
And no one from AIG went to jail for fraud.
Manwalkerinpark welp politicians didnt punish them and the people blamed mexicans so we can say bot sides are even xD
some say aig was a cia front. so there is that.
It was FED fault. If they send someone from AIG, they would have to close FED.
Trillions of dollars lost/stolen and only one person went to jail for a few months. If that is not a sign of a broken system what is?
@@dongately2817 crap like this is what our party is fighting against
🤦 Steal a piece of bread ... Go to jail.
🤦Crash the global economy so that people lose their life savings ... You get millions of dollars in bonuses and a bailout.
Like they said, if ye wanna do a crime, make it so big they can't possibly touch you without jeopardizing themselves.
@Terry Grenke
Better not give up your 2nd amendment
I won’t like but hey you have a very good point 👍
The same applies to wars, annihilate with severe war crimes an entire region in the name of a country: HERO, defend your land from occupiers: TERRORIST!
A truly fucked up world of 21st century to live in, indeed.
finally got my youtuber’s PhD in business and economics
I have my university of CZcams degree of "Understanding Woke Philosophy"
Congratulations 🎊 😂
+ its free and you can join it anytime anywhere 😉
With this video, I need to re-view the movie "The Big Short" to get a continuing professional education points.
Wow congrats! That's my goal too! I am currently doing my minor in memeconomics, but that program only leads you to become a memeologist or memecountant. Do you think this minor is enough to follow the same PhD program, or do you recommend signing up for some extra courses?
"So, we are ready to sell you five million worth of credit defaut swaps."
"Can we make it a hundred million?"
"Absolutely we can make it a hundred million."
Can I take these cups?
This guy is not telling you the full story. OBAMA sued the banks and forced them to give loans to minorities who didn't qualify based on credit history.
Is there any way to do $200 Million?
*Are you sure?*
Erika Erikson you do realize that Obama came to office after the crash?
@@THEFIRE360 Do you realized that Obama was allowed to sue banks without being in office?
Dude i was a clueless 10 year old back then
Same and now I'm a clueless adult :)
Back then I associated AIG with Manchester United but I didn't knew which company was that AIG
@@sultankamysbayev1937 I swear hahaha, back then I heard "recession" and I just assumed that was the natural state of the economy because that's all I'd heard since I could remember.
I was a 2 year old
I was entering high school, watched families lose everything. Drinking habits/anger start, bankruptcies, foreclosures, stigmas. It was a fucked up time and most still haven't recovered.
Just nine years later I feel like many don't realise we're still living in the shadow of this recession, and the system that caused it continues to dictate the state of our politics today
hahahahah no
@@dumbdumber7203 wat u meen
2008: stonks down
2020: there is another
Already recovered (:
@@fraxizztv6433 for how long
@@thezodiacsignz7309 Ever heard "Evergrande"?
🤣🤣🤣🤣🤣🤣
2020 because of pandemic but 2008 because of some company
AIG did what it did because the Big Four of auditing allowed it to. It wasn't just one company that was rotten, it's the entire system, because the Big Four then are still the Big Four today
The Big Four only does what the government tell them to do. The government tell them that they should rate trash bonds Tripple A and they will.
@@ThePucko97 Actually the govt loosened regulations and allowed them to rate all kinds of trash which resulted in the mess. After all its the very essence of a free market system to allow companies to do whatever they want as long as it is profitable, govt be damned.
@@absoleet What do you expect? You can't just suddenly deregulate a market and not expect recoil? The housing market i totally and only the fault of the government.
@@ThePucko97 "totally and only the fault of the govt"? How is that? Without govt regulations requiring proper rating agencies, financial corporations could do anything they want - including buy CDO without requiring any sort of ratings whatsoever. The sort of free market thinking caused the '08 crash.
Isn't the mantra of the free market to allow corporations to do whatever they want without any govt oversight?
@@absoleet Do you think companies want to go bankrupt? Companies only start gambling with their money when they know they are too big to fail and the government will bail them out. Free market doesn't cause crashes, only "corrections", politicians on the other hand change regulations that can "crash" the market.
It must be good to be an executive. If things are going well, you get a bonus for good performance. If things are going poorly, you get a bonus as an incentive.
I lived through the Great Recession as a home owner and barely made it through it, I watched some documentaries on it, and I watched the popular and very entertaining movies focused on it. So, like most, I'd heard the buzz-words of Collateralized Debt Obligations and Credit Default Swaps many times. But *this video* really truly made all of it make so much more sense to me. I'm glad I watched it.
@@MeiinUK While I don't pretend to be even remotely close to an expert on this subject, when I watched this documentary it appeared to me that the mention of "flow of funds in the late 1990's from Russia and 'several Asian countries', beset by 'financial crises' at the time" was being presented as a factor that triggered a bunch of bank-lending to avoid the money 'just sitting around earning no interest'". The bank-lending taking form of home mortgages being offered increasingly to folks with lower credit ratings to keep the momentum churning. So, that was being presented as a triggering factor, but as the documentary continued on, the majority of the blame for the Great Recession was put on the shoulders of AIG. Because by creating CDO's to insure the in-many-cases-bad loans (or confusing tranches of both good and bad loans), they basically ginned-up (or swapped their legitimacy for the low-legitimacy of the increasingly suspect loans) the party that _had to eventually come to an end._ A _nasty_ end. AIG eventually were proved to be liars -- they really couldn't back up what they were promising to do because the entire mountain caved in. Ah... but they were "too big to fail" (probably quite true), so everyone ('the people') bailed them out. What was weird was, in the end, the bail out resulted in a profit instead of a loss. But the nasty part in-between the folds is many more or less innocent people lost their homes, their livelihoods, ... lost everything.
"AIG was too big to fail so the Govt. had to bail them out."
And this is why we need decentralisation.
Capitalism cons
Hrushikesh K until bitcoin. And other currencies.
@@MsJosh917 even that will be centralised by big companies
Bailouts aren’t capitalistic. They’re fascist. Capitalism is voluntary exchange
AIG was bailed out because all the federal pensions were through this insurance company...meaning every member of Congress...it's staffers...and every other arm of the federal government...hence they were saved ...
If you want the finance industry to be de-regulated, fine. But don't come screaming for bailouts or bankruptcy protection if you fail.
Rocket Propelled Mexican but the thing was that it was government regulation precisely what incentivized these practices.
@@MAGNATEOfficial No? How did government regulations CAUSE this mess?
Rocket Propelled Mexican, which Obama did. Bailed out everybody but Americans.
@@kingpalafox1045 He HAD to do it, unfortunately. There was no other way without wrecking the economy.
@@elli6220 government had policies that incentivized Banks to loan money to people cause "Equal Housing Opportunity is important" and they wanted to increase home ownership among minorities.
Person with money: "I like to risk my money."
Me: "bruh"
I read that in PewDiePie tone lol
Admiralex91 wouldn’t you risk it knowing the government will pay you everything of you lose ? Being royalty has its advantages over peasants lol
That’s the thing - banks don’t operate with their own money. They create it out of thin air.
Mark of Excellence only wrong. It's the federal reserve that creates money, banks only borrow and lend it.
My Wife: you’re risking too much money buying lottery tickets.
AIG execs: Hold my beer.
Janet Reno. Tied mortgages to international bonds market and then bullied the banks to give mortgages to people who could not afford them.
BULL! You are totally CLUELESS. Take your politics and go home!
drinking game, take a swig every time his accent changes country
Where is the narrator even from?
Carl H The Democratic Party.
Irish by the sounds of it
It honestly just INSANE how rotten, corrupted and disgusting out current economic system is...
I literally did a final essay about the system.
@@kevingertz448 One where the perpetrators pay the bill for their harmful actions. Is it too much to ask?
Ku Playford Valls the only thing wrong with what happened in 2008 was AIG
@@kevingertz448 Have you?
In more purist economic times banks just took all your stuff and auctioned it off with the help of the police. Loan restructuring was only for rich people.
Thanks for video dude
Wow, you are just unbelievably brilliant! Explained the whole super complicated risk cascade in just a few minutes. Where will the world be without a CZcams intellectual like you?
$165 million as "incentive" to undo years of shady dealings. Isn't it their job in the first place to prevent these things?
Aurelius Tirto Sure, but they’ll probably end killing themselves or quitting otherwise.
You’re right but I doubt anyone else would step up to the plate..
@@kawaiikohaii5143 They should have been made an example of so that no one else would follow in their footsteps. Laws should also change to make the requirements to receive mortgage more stringent, and punish those who are too willing to loan money.
Aurelius Tirto That doesn’t work but you can make strict laws and provide back ups.
Such as the FDIC insurance which was made after the depression.
Punishments on perpetrators don’t stop future crimes, they just create loop holes or do it later on.
The best thing is to hope a series of strict audits and control on the corporations can’t stop such individuals from cropping up.
Once the deed is done though you need someone to clean it up and that should be the people that caused the mess.
We can’t whip them or torture them to do it though - its illegal and they’d probably not care at that point.
However, the new ceo the government placed only had a salary of 1 dollar and that says a lot.
It's probably more the case that they were contractually obliged to pay those bonuses regardless.
I believe that's for the new executives that the FED installed when they took over.
2:00 Heres a little lesson in trickery, buy a CDO insurance policy
seasong ahh, i knew what reference is that, that's we are number one reference !
@@acetate909 Yep, that's pretty much it, thanks for explaining. CDS was not the problem, the rating fraud and bad risk management (if any) was the cause
@@acetate909 wooosh
But they are no longer N.1!
@seasong If you want to be a banker No 1.
You have to crash the economy on the run
This video was so amazing. I had a lecture, and we briefly covered Lehman Brothers. After your video, everything became more evident to me!
'm not kidding when I say that the market crash and high inflation have me really stressed out and worried about retirement. I've been in the red for a while now and although people say these crisis has it perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.
There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
@@Alejandracamacho357
@@tradekings5433 Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.
@@PhilipMurray251 Impressive! can you share more info?
Oh sister, you still think you get to retire? You dream my friend. The closest thing to retirement our generation is going to see, homesteading your own property and focusing on self sustainability. Good luck because the vast majority of people are going to starve.
It’s actually more complicated and actually more people involved.
true. he failed to mention the role ratings agencies like moody's, standard & poor etc played
@@TheGreatWent1 And media to this day give this rating companies the highest credibility like nothing happened.
...and Fannie and Freddie and so on... though AIGs involvement has certainly been understated.
The source is too much credit, which is happening right now x1000 more
Everybody- banks, developers, builders, municipalities and suppliers- had their snout in the feed bag knowing that, eventually, someone would have to pay for it. The targeted poor and minorities had absolutely no way of financing these excesses.
Now this is a return to amazing form. Great video!
Great video, thanks for the info.
Without all the sugar on top, it was single-handedly the great transfer of wealth to the top.
Billionaires got 750+ billion richer during the pandemic and this stat was from a couple months ago... Imagine how much they have transferred up by now. Hey good for them but i hope some of them have taken their history class seriously.
@@bobvance4242 bro how about now I don't even really want to know
bob vance So tell me how the billionaires stole the stimulus checks?
@@L3th4LQu4rK I dont think its that they stole the stimulus checks but moreso a failure of unregulated capitalism as a system when we allow monopolies to form. The closing of the economy allowed for the monopolistic large companies to grow fastest because many are them so big they are considered essential while many mom and pop shops were not. The big businesses were already growing the fastest which was fueled by trumps tax cut and a long history of lack of regulation allowing them to destroy all their competitors Trump was right to cut taxes for the small and medium sized business owners, but cutting taxes on the giant businesses furthered monopolistic growth. In sum, we had a nearly fully employed society where wages grew slightly, but overall wages did not grow nearly enough. We have 20 years of wages not keeping up with inflation that we need to make up for. Wages have kept up with inflation under trump, but needed to grow by far considering the low unemployment rate. The reason is that even in a society that is nearly fully employed (unemployment =3%), wages can not grow properly in the presence of monopolies. We as country have allowed businesses to become to big and eat all their competitors by having to many tax deductions for giant corporations which allows them many times to not pay their fair share of taxes and outgrow their competitors.
2020 COVID would like a word.
I’m so jealous of home buyers in 2012. They basically purchase homes at 50% off at low interest rates! 🤦♂️
Evan Fields The home I wanted to purchase in 2018 was for sale at $210K. I looked at the purchase history and saw that it was sold in 2011 for $113K! So I back out of buying it and got off the housing market. Will continue to rent to another recession. Also today home prices are higher than they were in 2006! The only difference is that interest rates are high today.
@@Eric345 waiting on important decisions for the next big recession to happen is a terrible idea
@@dfsrow Taking big decisions to aqcuire major assets while another recession is imminent is a terrible idea.
How would you like Bitcoin at 50% off ?
Buy now then.
@@williamn6133 If you want just to buy a house, waiting for a recession or a halt in prices might help out as it's something usually for life and you aren't doing it as an investment (at least immediately). However as an investor betting on bitcoin might pay up or not (so far it looks like it's worth is that investment was done years ago when its value was significantly lower than today)
AIG: All Illegal Group
Thank you. This was really interesting 👍
Video: "11 years ago"
Me: *feels old*
Christian Bale
did try to Warn us
Dint get it
@@noughtyparakh29 go Watch "The Big Short"
but it released in 2015
Amazing movie
Actually their were more people and events involved in this.. the whole system was greedy..
Very true. The mortgage industry, the banking industry, the ratings agencies and not just AIG were all complicit in this massive fraud. This multi-trillion dollar fraud was probably larger than all the previous frauds, ponzi schemes, and shyster scams in history combined. The S&L crisis of the 198090 was chump change compared to 2008/09. And over 1,500 S&L executives went to jail and yet almost nobody from the 2008/09 mega frauds went to jail. How do you reconcile that? In fact many of these banking, mortgage, etc executives who initiated the frauds became a lot wealthier instead of going to jail. Numerous hedge fund managers were in on the frauds with those in the banking industry and made billions from helping to create the fraudulent products.
I've watched a few videos on the collapse of 2008 and this by far did the best job of explaining the situation
Best quick depth explanation of how's and whys from the beginning.
Well done! This should be played on all public tv screens (airports, doctor offices, hotel lobbies, McDonalds dining areas, etc) across the US nation. Its very informative, in a way that's easy to understand. I appreciate your production with this video. Thank you!
3:52 there is a banknote with Felis/Felix From Re:zero on it!
And that's gay.
@@incription furry and gay.
@@HolyXerxes all three of you guys are children
Lmao nice
You know what....
Emilia is the best girl.
Excellent truly remarkable video quality....
A+
Brilliant explanation.
Seeing how my father aged between 2008 and 2012 as an 8 year old during the crash has really stuck with me... he began smoking profusely to cope with the stress and he almost lost our house and his business he started 30 years ago. As he used to say, the crisis affected everyone.
Crazy how you say "seeing your father age" it's such a true statement when my dad lost hit son, my brother. My god did he and my mother age rapidly over 4-6 years. What stress and grief does to a person is absolutely insane.
long time mate,thanks for the upload
You're welcome my son hope you're well too. Just know I'm proud of you. Love Dad
@@dopemusic6414 thanks dad
rao siddharth this video is great may I share this to my grandkids? xx
-Alex
The problem with saying that AIG was underwriting fraudulent policies is that they weren’t. You said that AIG was essentially swapping the credit rating of the securities for those of AIG, but that’s what insurance is anyway. The credit rating doesn’t really matter if something is insured and all your losses are covered. Not to mention they did eventually pay out all claims even if it was with bailout money.
They didn’t catch the backlash of anything because they’re not the ones who were packaging these securities, banks do that.
Love your videos dude but not sure you’re completely right on this one!
Thankyou for a different view
You forgot to mention the Community reinvestment act of 95 and remove of glass Steagill in 99.
Gary Surber Thanks to Bill Clinton who also signed cheap labor H-1B increases in 1998 and 2001 to destroy the middle class worker.
Ten Minute Tokyo 2 and when he gave China most favored nation status. It was what Ross Perot warned us about with nafta, only ten times worse.
Ten Minute Tokyo 2 those Republican bills were veto-proof. Look it up
Gary Surber NAFTA had nothing to do with China/Asia. There was no trade agreement with China. NAFTA was a Republican effort. Bush tried to get it rushed through Congress and ceremonially signed it in December after he’d lost the election. Clinton sent it back to congress to add protections for American workers. NAFTA wound up being revenue neutral for the US.
Working people voting for Republicans is like turkeys voting for Thanksgiving.
mike a and Fannie and Freddie were victims of the scheme. These banks would write bad mortgages and resell them in blocks to Fannie and Freddie.
Fannie and Freddie weren’t writing the bad mortgages. They were buying them not knowing what they were buying. Several big banks crashed doing the same thing.
I never truly understood the situation with AIG, but I will say this much. ARM ain't shit. My parents were financially challenged from a credit perspective and it was the best option. It starts stable then it escalates from there. They eventually refinanced the home and got a standard rate. Two things not mentioned in this video: was that ARM was pushed heavily by banks and the emotional attachment of having home. ah the American dream. A system based upon debt is never good for masses and only for the few at least for a time.
It was I, the financially irresponsible man!
MUHAHAHAHAHAHA!!!
Based
Get your free copy of "Fatal Risk" from Audible, in addition to a free 30-day trial!
👉amzn.to/2PU6vFV (note: as an Amazon Associate, we earn from qualifying purchases).
Business Casual Better yet read Chain of Blame to see what really happened.
Answer the currupt fed made intrest rates to 1% on loans and people took to many loans.
Lovely Video clip! Forgive me for the intrusion, I would love your opinion. Have you heard the talk about - Saankramer Debacle Collapse System (just google it)? It is a good one off guide for learning how to conquer the coming world collapse minus the hard work. Ive heard some decent things about it and my work colleague at last got excellent results with it.
I found the Courage to Act the single best resource on the crisis.
You have to understand economics isn't science, recessions give meaning to the foundational belief that capitalism destroys the old to create the new.
" Be greddy when other's are fearfully and be fearfull when other's are greddy. "
Warren Buffett.
@@jellyfishi_ It is human nature to be greedy
@@jonathano503 true
@@jellyfishi_ human nature is angel en satan so there is no perfection mate
Greddy. 🤣🤣🤣🤣
And how do you spell greedy.
In Soviet Russia market crashes you!
Actually that's what really happens all around the world
In Capitalist America bank robs you!
@@ByzantineCapitalManagement it’s not black or white, there should be something not so miserable as these two
I am always fascinated by 2008 financial crisis stories and this one fills one of the gaps for me. Good job!
this one is mostly bs.
Thx for this clear explanation of the crisis
PLEASE make a longer video on this topic.
AIG went from 1700 a share to low 50s and has never recovered.
May be there was any bonus issue or original shares were broken into severals.
Just like Manchester United that AIG sponsored until 2010. Manchester United repeated the story of their shirt sponsors after they fell in 2013 and never recovered
@@milanpaudel9624
You're both right. Zachary is right about the stock price. Cat is correct that there is a huge issue about all the Jamies of this world paying themselves huge bonuses and other benefits out of the bailout money. The big benefit is that almost all of them stayed out of Club Fed.
@@BenMarvin
Stock price is sometimes deceptive. A complete series of stock prices is far from meaningless.
If your "60%" is correct, Ben, then your "mostly" is incorrect in the ratio 60-40. 😂😎✔
@@BenMarvin that's why i don't hold any stock unless it pays a dividend
When lives of millions of people become a cube dice in the banker's hand
excellent analogy!
It was mind blowing. I had always wondered how this great recession started. Thanks for making.
You leave out an important detail. Congress encouraged banks to lend money to people who could not afford to pay it back.
He completely ignored where these lousy mortgages originated, in the CRA as amended by the well known financial genius, Bill Clinton and company.
Bingo
How ?
Because they gave them adjustable rate mortgages and they adjust one way up up up up up up until you are out the door and then they are looking for the next fool to buy on a adjustable rate and they to will be out the door funny thing about adjustable rate mortgages if you are able to afford the adjustment after 20 or 25 years you will be so far under water you will be house poor and on the way out doors buying a house is like paying rent and on adjustable rent or mortgage sooner or later you will have to find a cheaper place to live
@@hermanrogers1325 thats just human nature, if you dont like it then I dont know what to say for your life lol. still would not exist if the goverment did not change the rate
“I’m so happy cause today I found my friend. They’re in my head”
35 AIG stock holders disliked this video
Mason T they should have rotted and died in jail by now
@@InfernoBlade64 Wtf man?!? Stockholders were completely unaware of what top executives of AIG were doing. The CEO of the company should be in jail.
AIG stockholders were livid over the affair. lots of pulled hair. It's why so many investors are bald.
@@n3gi_ stock holders are in charge of electing the board of directors. they should have picked non-criminals.
@@cageybee7221 not all stock holders, not even 0.1%. Board of directors are consist of people with hundred thousands of shares in a company. If a retail trader buys 100 shares in a company then he is also a shareholders, technically he has power to vote but practically he doesn't majority shareholders are in board of directors they are the only one whose vote matters.
Hai businesses casual here I thought I thought no one could simplify the crisis like a movie or a documentary but you guys nailed it and in the shortest time frame, cudos to guys
👍👌
Awesome and very insightful updates Well i will also say this here... Even as the world still experience slow recovery in terms of economic meltdown due to the recent Covid-19 outbreak, it is best advised to find another alternative to make good income.
The stock market has plenty of opportunities to earn a decent payouts, with the right skills and proper understanding of how the market works
@Tegas Ogizeh
you are correct 👌👌 but it all depends on the individual, most people don't invest due to ignorance and bad advice from friends and family
@Tegas Ogizeh it's obviously clear why most people lavish in poverty due to ignorance
@Uzaifa Nazifi
Yeah great mind bro👊
@Uzaifa Nazifi the secret to success is just determination and sacrifice. If you must earn big, you must sacrifice
You can't lay the blame at AIG when it was Federal Government oversight that let them do it, not to mention the way Fannie Mae was encouraging the decimation of underwriting standards for mortgage origination by buying mortgages.
Just like you can't blame a killer if the govt lets them do it.
@Steve N. It was Bill Clinton's Regime. If I recall correctly, he was a democrat.
@Steve N. You don't really know the history of how this all started, otherwise, you wouldn't be stating such foolishness.
I also think its the government's whos to blame, they had the chance to stop it due to the fact they sit with all the figures. They had a possibility of stopping it, but did NOTHING and just left us with the bill
@@mrsatire9475 hmm, you blame both of them then
I've seen The Big Short and Inside Job and neither explained it as easily as this.
D Lannon if you read the book, it explains it alot better
The big short book*
This is actually too simplified.
I have seen The Big Short it explained with much more ease.
@bizkitgto aig did not originate the swaps it jump on the bandwagon of swapping that was going at that time.
What I remembered about then was that my parents and grandma were talking always talking about "THE crisis." Didn't know it was this.
It is happening again cant wait for the next one!
"Hit every continent on Earth"
HOW DID IT HIT ANTARCTIC!!??
All this was happening, and then there was me, upset I couldn’t read Goosebumps for school credit anymore.
Why did I listen to this. It was upsetting back then. Being reminded how we got screwed just brought back those feelings.
My Daughter's mom worked there since she graduated high school in the early 90's. She went through the whole process, to include being let go
I don’t know how I feel about this, In my humble opinion you are understating the contribution of banks and financial institutions such as ratings companies.
Banks, in many cases, fraudulently and aggressively pushed subprime loans, several time they have been warned that they run the risk of causing a major financial crisis , in cases such as Fannie Mae investor knew that the government will step in no matter what, these bank ceo are some of the most successful well paid financial engineers in world and I have a real hard time understanding how they could not have seen this coming. They pushed for derivative deregulation, Glass Steagall repeal, promoted toxic behavior, even betting against the same product they were selling
In conclusion, yes AIG did play a role in 08 but I believe it is the banks that ultimately play the driving role in the crisis, their failure to self regulate , their gambling and win at all cost mentality thwart AIG recklessness.
I ll give fatal risk a try and may edit this comment in the future.
Cheers
To recite another more knowledgeable persons insight into 2008 and answering some of your points. Firstly, buying and selling the same instrument is called a hedge, banks are not here to be in any position long or short term, they are here to remain neutral or risk free, as much as possible. Since they need to be thr stable of society in times of financial crisis. So what happenes when simply buying and selling the same position doesnt hedge against the risk they are taking on? They turn to insurance. In this case AIG, AIG sold a shit ton of default swaps, essencially they are banking on the american real estate and economy in general to continue to grow, massive balls, they would have been the first trillion dollar company if things went well. But there is the problem, as an insurance company, they have to be even MORE netrual then the banks, or else 2008 happens and it did. Were the banks at fault for subprime loans? Hell fucking no, the government overstepped their role and FORCED these banks to provide loans to families who does not have the credit ratings to pay it back, thus the banks are now at more risk and AIG is balls deep on the economy going one way.
This is the part one of the story, part two of the story is something a lot of people does not get a lot of insight to, the subprime loans even during the beinning of the crisis was making a shit ton of cash, guess what, the credit agencies were just jerking themselves off and giving AAA ratings to any bonds, they used complex models and formulas to price out the risks and diversify the holdings so that it was as risk free as possible. They were still making money. Now here is where the government part happenes again, sarbines oxleys act, meant to ensure shit companies like enron doesnt abuse the system and value themselves at more then their worth limited the abilities for these bonds that was still making money to be fairly priced, long story short, a lot of these bonds making millions of dollars per month was essentially priced at 0. No one was buying them, since AIG doesnt really actually have the insurance to cover the banks when shit goes tits up. So now these bonds are worth $0. Banks had to declear bankruptcy despite having the cash flow, these led to a chain reaction towards total meltdown. So the banks, who seeks to remain netrual, was first pressured really fucking hard by the government to hand out loans to people with no means to repay it, and had essentially no other ways of reducing their risks( AIG making the biggest yolo bet of the 21st centry). Now who do you think was the biggest fault in this crisis, the banks? AIG? Or the people who still wishes for the government to intervene when they dont have any idea of how even the smallest changes could massively fuck up the system.
The 1% knows when it’s going to crash and have a plan b and c. They pull their money before the crash. Then after their “bailout”. They invest everything they have into certain stocks and make double if not more in profit gains they know what they are doing. The only people that suffer is the working man middle and lower class Americans. The scam they create to get richer
Even though we were young, 2008 shaped Gen Z into the people we are today, whether we know it or not
How come
Love the name of the channel lol
I was born right in the middle of the crisis as the 4th (and hopefully final) child in my family that i grew up in.What a TIME to be born and be alive!(I was born in Eastern Europe too,and don't ask how i know english so well.)
It was Greenspan. If he hadn't of held the interest rate artificially low, investors would have been less likely to take higher risks to increase their returns. There wouldn't have been a subprime market to start with.
And don't forget the role Congress played by forcing banks to make loans available to way less qualified, lower rung first time buyers. And the bankers response ended up as the "liars loans". The stack of cards that really gained steam around 2000.
Everyone forgets that they repealed the Glass-Steagle Act which separated investment banking and commercial banking, in 1999. It took less than ten years to destroy both. For the love of money.....
I never thought I'm gonna be interested in a topic that CZcams algorithm has brought to me.
Note: Just because you watched an 8 min video doesn't make you an economic expert...
BuT i HaVe A bIg BrAiN
Hahaha vgud
You obviously don't know how the internet works...
Thanks for reminding me...
Sez u. I just watch a 3min on frogs now Im a biologist dammit
Recession is a better word. NO? HOW ABOUT DEPRESSION.
wow that's really interesting, I didn't know AIG was still in business, I actually used to buy car insurance from them
Can't wait 4 next 1.
You completely left out how many mortgages were secured by the federal government. It was just as much of not more Sallie Mae than AIG.
Mokujin Fannie Mae* sallie mae is for student loans
@@ChiefKene good catch. It'll be Sallie Mae that kills it this time around. I'm fairly confident in that.
Mokujin I agree, it will be part of the catalyst
Sallie Mae is student loans, not mortgages. You meant both Fannie Mae and Freddie Mac.
I was 27, had been pumping my 401k since I was 17 and was looking forward to retirement at an early age. That year still makes me sick to my stomach.
Also view the Frontline (PBS) documentaries on the subject
THANKS AND REGARDS 💗
Can you do a video on the Asian financial crisis?
Government induced artificially low interest rates caused banks to go frisky with loans, not foreign investment.
Yes, and after they were bailed out, received big bonuses, Our banks went to work in Europe. They sold
Worthless Dirivatives to Greece, Spain, Portugal+++, and These banks, knowing that the dirivatives were worthless, caused their
Economies to crash.
This is the same crash that The Big Short movie focused about right? If it is, then watching this is the only time when I finally understood everything about it. I was really confused with all the business jargon (searched the meanings of it also but they're too complicated for me to understand) until it was explained here.
It’s heartening to know that all these crooks will not avoid their ultimate prosecution. You may not believe but that doesn’t change the outcome.
None of that makes too much sense until you understand the government role on affordable housing policies.
How so?
@@auds9738 the government pushed the American dream so hard that they allowed people with bad credit score to get loans, also known as Subprime lending.
@Gap I thought it was the banks who gave the loans, not the government. How is the government involved in causing the crisis?
@@dstyro I thought it was the banks who gave the loans, not the government. How is the government involved in causing the crisis?
@@auds9738 bank gave out the loans because the government gave them the permission by relaxing the regulations. Later, Fannie Mae and Freddie Mac lobbied the govt to not have any agency overseeing the Subprime lending. What also is amusing is that the people with bad credit scores did not ever once stop and think that what if the banks raised the interest rates, would they be able to pay it?
So basically, if I got it right, people forgot what happened to companies that gave out more than they actually had historically and ended up repeating history... this is why we have history as a class
@The Purple Lies I'm pretty sure "social justice" does have a lot to do with economics but "political correctness" might not.
A fascinating account of the events leading to the financial collapse is "Boomerang" by Michael Lewis.
I'm over 2 years late, but I see that Felix banknote at 3:49.
Wow this is a great video!! Simple to understand. Love the channel. Thank you. Keep you the great work
Outstanding production BC! I thoroughly enjoyed that! :) Thank you
I'm just looking for those comments with the three sets of parentheses
I lost my job in March 2009 and could NEVER find another one!
Trap on the $100 bill at 3:57
your the real hero
Yep.
Thank you for content of this nature. Amazing insight! Love your work.
watched this a year ago now watching this again