After the Crisis - Mark Blyth

[@daviddisabatino9122]

Any chance of seeing the slide deck? Even better, can someone re-edit this to incorporate the slides with the audio?

[@clarestucki5151]

If repaying borrowed money (retiring bonds) is harmful to the economy, it would appear that we should outlaw borrowing, right?

[@TheLivirus]

So the rationale for bailing out big banks is that unless this is done their numerous lenders won't be able to get money from the ATM which will lead to chaos. Is bailing out the banks the only option though? What if we skip the middle-man (the bank) by buying the bank's debt and then force the lenders to retract their loans? Then the lenders will have no reason to go to the ATM and instead have to think about less risky places to invest their money. This way irresponsible banks are held responsible and at the same time their lenders remain happy. I'm sure there are numerous flaws with my reasoning, so please tell me why this solution isn't on the table! (I'm not an economist)

[@KznnyL]

+BLAIR M Schirmer - thanks for that explanation, I thought the same thing. They were worried about the 'moral hazard' of homeowners completely forgetting what the banks did in lending the money in the first place.

[@TheLivirus]

BLAIR M Schirmer I can however see how it would be politically difficult to bail out individuals in debt rather than big corporations since Americans tend to be more optimistic and less suspicious about big corporations than individuals. On the other hand, I seem to recall that the bail-out of the banks was a pretty rapid affair without much input from the public.

[@kadeqian9391]

@@TheLivirus this is might be years too late, but I do hope my response will help. the banks got bailed out in the following sense, 1) liquidity injection into the system to ensure that ATM still runs, but this is oddly misunderstood, government did not spend tax money to re-capitalise the banks if government didn't purchase part of the banks, rather Congress passed a law, and the FED typed some digits into reserve account of these banks to ensure that the banks still have enough reserve at the FED to settle transactions, the term ATM still runs is that, unless a bank has some left over at its reserve account at the FED, it cannot settle a interbank transaction, which in other words, payments. When a pays b, from bank x to bank y, a's account at x is debited, x's reserve account at the fed is debited, y's reserve account is credited at the fed, and in turn, the payment recipent;'s account at y is credited by the bank, that is how the payment system works. You have to understand that capital injection and liquidity injection and reserves are the same but different. when the government buys bank shares, that is capital injection, or nationalisation of banks; liquidity injection is fed buys some assets held by the banks and in exchange credits the bank's reserve account at the FED with some digits, this allows interbank settlement to flow without a problem. It's not really about big corporations in this bail out, but rather ensuring that the system remains functional, the last thing we want to do during a crisis, is do over the entire banking sector because it screwed up, sure it's a task for the future, but not when its credibility and functionality is at stake during crisis hour. In terms of your solution to the problem, it could work in the sense that would clean up both the bank's balance sheet and individual household's balance sheet, thereby avoiding a balance sheet recession like Japan did, the problem is, and quite a critical one, is that such policy would unavoidably contributes to a worsening of inequality, by cancelling debt, it's a transfer of have-nots to the haves, in relative terms, those who could not afford a morgtage are made worse off from government cancelling debt to these irresponsible, equally greedy, houseowners who couldn't figure out that they can't pay back the house they bought, predatory lending and house fliping both exist at the same time, so except very few prime morgtage housebuyers buying house and expect to pay off in full for living use, no one is really innoceent here.

[@msdm83]

The third speaker is a little wrong on Ireland. Ireland had pretty much unpayable debt in 2012. They only grew after QE provided cheap financing, and devalued the euro in 2012/13

[@GuntherL1]

So nothing is solved. It's just a transfer of debt.

[@johnwhite6346]

GuntherL1 and they receive money from non domicile so taxes

[@davidwilkie9551]

From personal experience and my parents experience, and so on back across history to potato famines and clearences in Scotland, the best description of "blowing up the world", meaning inciting peacenics to seek structural revolution, is Credit Squeeze, a Rhyming strategy that never repeats precisely, by making carefully arranged cheap loans, with variable upscaling interest rates, and "government austerity", crackdown measures on the "dead in the water" victims of the arranged circumstances. The recipe for Pirate Empires is built into human nature by a universal cyclical pulse-evolution physicality, in bio-logical re-evolution epochs. "What goes around comes around", but not necessarily in a specific rhythm. The nukes thing, it identifies the real "Enemies of the people", those who withhold the Power source that would solve nine tenths of the problem with Carbon Dioxide free Electric Power. (Evil is evil)

[@interactparty6629]

looks like the culprit is the forcing of repayment for non functional loans and mortgages pushed on to the public by the back route. Why not just write down instead? After all the loans are created as an incidence of double entry book keeping meaning that there was no real money lent, there was real money created - so uncreate it by writing it down since there are no real losers, certainly the banks don't have any real loss to suffer on account of non repayment for the money did not exist to be lent when it was created, hence it is money creation. Money is conceptual

[@kadeqian9391]

well no, double entry book keeping works in the sense that the credit will be destroyed when it's paid back to the bank by the borrower. When a house buyer used loans to pay another party to obtain the house, the money has left his hands, and injected into the real economy. If banks write down the non performing loans, they have to eat the loss by tanking their capital, which compared to the size of value vaporised in the housing market, is like what? 1:33? surprise, not even the banks are rich enough to eat the loss this time.

[@kadeqian9391]

the solution you are advocating for could only exist if there is only a single bank, therefore a single balance sheet to work with. second, cancelling a debt, is cancelling an asset, one's liability to the bank is a bank's asset, and given that vast sum of those CDOs, MBS, CDS are sold to oversea investors, nevermind the domestic ones, you are looking at some very sizeable cancellation of assets held by pension funds and EU banks, Chinese banks, etc etc. What you are suggesting, if executed faithfully, could have brought down international banking, and by that extent, subsequently destroyes international economy. Congrats. Second, when bank conducts credit creation, it is matched by an unequal amount of borrowing from the FED, banks needs reserves to settle interbank transactions, with more deposits created by the banks, the banks would need more reserves at the FED to settle increasing amount of transactions as loan volume increases, such reserves are borrowed by the bank from the FED. Therefore the loans lent out by the banks also have a smaller copy at the FED, (reserve ratio, go figure yourself). A loan wipe would also induce a balance sheet re-examination of each banks, do you know how many morgtages there are, and how scattered, sliced, repackaged into different finanical assets, by the time a bunch of lawyer and accountants went through them properly to settle debt cancellation, we might have reach 2030 just by the time required. It is not that simple, it is very complex, the world is too integrated and interconnected, for better or for worse. Good luck.

[@pergamonrecordings]

The third speaker seems to be a humbug talker with narcissistic tendencies. I am not saying Blyth has a deficit of the latter, he just has a very good grasp of what he has to say.

[@philgwellington6036]

Economist Professor asks " Should the banks be bailed out or the home owners? " Lol. This question says everything about the ideology of ecotheology. . and provides its own answer... its totally circular.

[@dennissalisbury496]

If the ECB printing press is in Frankfurt, then Germany actually won the WWII.

[@TheMitso]

Strange that, Germans are the ones complaining most vociferously about the ECB policies