Education in the United States
We have a thread devoted to academic freedom at universities, and we have a thread devoted to whether higher education s
I don't really see it that way, and I think that implicit government guarantees of bank solvency was only a minor factor in the financial crisis. There have been financial meltdowns that were caused by participants knowingly taking on excessive risk. But I don't think this was really one of those situations. Mortgage originators didn't think they were taking on excessive ris
Oh it wasn't about only guarantees on mortgages specifically.
It's about counterparty risk in the daily inter-bank settlement, and counterparty risk more generically.
Where there is no explicit/implicit state guarantee sophisticated dynamic models exist to ask for collateral from trading partners and whatnot. When hedge funds collapse (and they do) it's not systemic because counterparties to trade don't collapse in domino. When crypto collapses, same thing.
The financial meltdown wasn't because of mortgages default rates. It was because markets froze as LB being allowed to fail changed the rules of the game, as all participants thought that was impossible (otherwise they wouldn't have had naked counterparty exposure with opaque institutions upon which they didn't apply due diligence, collateral rules and so on).
"TBTF" institutional paper traded like tbills with micro spreads over that before. And it all traded the same. It was allowed as collateral on par with tbills or actual cash. And all of that was because of creditors feeling guaranteed by the state.
The mortgage aspect per se, with the failures of rating agencies, the repackaging and so on was problematic, but that alone would have been a mid-sized crisis.
When what you mentioned happened (necessity to liquidate at "firesale" prices and so on), markets froze because you had no way to assess what was what. If any counterparty can fail tomorrow with no state intervention, all the previously banal operations overnight to settle liquidty between institutions become risk management nightmares.
Even if you recoup your money in case of counterparty failure, it isn't necessarily there immediatly, you face liquidity risks at unprecedented scale.
The risk buildup at "systemic risk" threshold i previously mentioned repeatedly wasn't only "mortgage default risk" (although that was excessive for AIG and DB). It was in all counterparty risk including intraday not linked to MBS paper.
Back to why the FDIC, basically at the time it became (ex post) clear to institutions that the government had changed the implicit/explicit rules of the game (by allowing LB to fail) , and it LB had been a normal bank they would actually have saved it.
Look at what the possibly smartest operators at the time did: LB collapses september 15 2008, Goldman Sachs becomes a bank holding company september 21 lol.
https://www.goldmansachs.com/our-firm/hi....
LOOK AT THIS
We believe that Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,” stated Chairman and CEO Lloyd Blankfein. He noted that the move addressed market perceptions that placed a premium on the value of oversight by the Federal Reserve Board and the ability to source Federal Deposit Insurance Corporation (FDIC)-insured bank deposit to increase funding capacity
, while also providing access to a broader set of liquidity and financing alternatives.
This is what i meant! the market just had previously generalized that to TBTF institutions even if not explicitly covered by the FDIC. LB is left dying, you have to get FDIC coverage to play the game as before (be trusted as counterparty without due diligence by other agents so your paper trades like t bills and so on and on)
The risk buildup at "systemic risk" threshold i previously mentioned repeatedly wasn't only "mortgage default risk" (although that was excessive for AIG and DB). It was in all counterparty risk including intraday not linked to MBS paper.
Of course, but the housing market was the main trip wire for all of this other stuff.
yes but in a world without all that regulatory framework based on implict and explicit state guarantees (cornered on the FDIC) there is nothing systemic accumulated to explode. You only have the normal cycle.
And you can still have the provider of liquidity of last resort , Bagehot rule doesn't create excess risk in the system.
I have no idea how fdic had anything to do with what Luciom talking about ….
FDIC is just a protection of individual deposits up to 250k in bank accounts while the 2008 gfc was about defaulting on massive amounts of debts on over-leverage collateral .
That dubious link of fdic (created in 1933) is the same bad arguments of the CRA (created in 1977) for the gfc of 2008 ….
2008 is just all entities not doing their homework’s and accepting too much risks .
https://www.investopedia.com/articles/ec...
The company, along with many other financial firms, branched into mortgage-backed securities and collateral debt obligations. In 2003 and 2004, with the U.S. housing bubble well under way, Lehman acquired five mortgage lenders along with BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans. These loans were made to borrowers without full documentation.
In 2007, Lehman underwrote more mortgage-backed securities than any other firm, accumulating an $85 billion portfolio, or four times its shareholders' equity. In the fourth quarter of 2007, Lehman's stock rebounded, as global equity markets reached new highs and prices for fixed-income assets staged a temporary rebound. However, the firm did not take the opportunity to trim its massive mortgage portfolio, which in retrospect, would turn out to be its last chance.
5
Hurling Toward Failure
In 2007, Lehman's high degree of leverage was 31, while its large mortgage securities portfolio made it highly susceptible to the deteriorating market conditions. On March 17, 2008, due to concerns that Lehman would be the next Wall Street firm to fail following Bear Stearns' near-collapse, its shares plummeted nearly 48%.
7
What fdic have anything to do with that .
I tried to answer that extensively. if you care about my opinion, try to re-read my posts on that.
if you don't care about my opinion on the topic (which is absolutely something you can do), please don't ask me for an explainer as I gave it already
I did ….gfc 2008 happened in less then a decade with banks over leveraging to crazy level .
FDIC created in 1933 .
I see no correlation at all but it’s ok .
I think this is quite honestly the first time I've seen Rococo post over 2 paragraphs. Luciom, you should consider yourself lucky. He doesn't usually do that.
I don't believe that the modern regulatory system was overwhelmingly responsible. It was one of a number of contributing factors, but not the most significant imo.
I don't believe that FDIC deposit insurance was a factor at all.
Yeah, huge holders of MBS happened to often have commercial banking operations, but that didn't really matter. The investment banking sector is quite a bit larger than commercial banking and is capable of tanking the global economy and requiring bailouts all on it's own even if they had 0 FDIC insured accounts.
It was always kinda funny when you say videos of random occupy Wall St protests in Memphis or whatever angrily closing their Bank of America account and yelling at their local deposit manager..... like that was one of the few parts of BOA in 2007/2008 that was competently doing their job and also not getting paid very much.
Republican policy successes are few and far between these days, but Republicans have a good success story to tell about policies that emphasize school accountability. Those policies frankly seem to be working in more than a few red states that historically have had very poor education results. This article makes a fairly compelling case that Republicans should be be focusing on scaling those policies rather than dumb stuff like dismantling the DoE.
Rather, hope emerges in the most unlikely of places: three states here in the Deep South that long represented America’s educational basement. These states — Alabama, Louisiana and Mississippi — have histories of child poverty, racism and dismal educational outcomes, and they continue to spend less than most other states on public schools.
Yet, consider:
Louisiana ranks No. 1 in the country in recovery from pandemic losses in reading, while Alabama ranks No. 1 in math recovery.
The state with the lowest chronic absenteeism in schools is Alabama, according to a tracker with data from 40 states.
Once an educational laughingstock, Mississippi now ranks ninth in the country in fourth-grade reading levels — and after adjusting for demographics such as poverty and race, Mississippi ranks No. 1, while Louisiana ranks No. 2, according to calculations by the Urban Institute. Using the same demographic adjustment, Mississippi also ranks No. 1 in America in both fourth-grade and eighth-grade math.
Black fourth graders in Mississippi are on average better readers than those in Massachusetts, which is often thought to have the best public school system in the country (and one that spends twice as much per pupil).
Indeed, instead of trumpeting the gains in three red states and doubling down on successful policies, Republicans even in these states are pushing hard for more vouchers (which have a mixed record at best) so that children can flee the improving public school systems — thus threatening the very progress they should be proud of. Rather than trying to scale Mississippi’s gains, national Republicans have an education agenda that focuses on trans children and school bathrooms, demolition of the federal Department of Education and erasure of ugly bits of history. There are many culture war arguments about what books are in the school library, but not enough talk about how to help children read what’s on the shelf.
Republican policy successes are few and far between these days, but Republicans have a good success story to tell about policies that emphasize school accountability. Those policies frankly seem to be working in more than a few red states that historically have had very poor education results. This article makes a fairly compelling case that Republicans should be be focusing
It is still too early to feel all of the effects of school choice, but the benefits are going to be so strong that they will be impossible for dems to hide withing the next 10-15 years. The upside to all of this is that public schools will drastically improve when they have to compete with private schools - they will never be able to keep up with private schools but at least they will get better.
The gov't limiting individual's choices is so rarely what is best for the individual and this is not an exception to that rule.
It is still too early to feel all of the effects of school choice, but the benefits are going to be so strong that they will be impossible for dems to hide withing the next 10-15 years. The upside to all of this is that public schools will drastically improve when they have to compete with private schools - they will never be able to keep up with private schools but at least th
I guess that you disagree with the article.
Republican policy successes are few and far between these days, but Republicans have a good success story to tell about policies that emphasize school accountability. Those policies frankly seem to be working in more than a few red states that historically have had very poor education results. This article makes a fairly compelling case that Republicans should be be focusing
This is a very good article
It is still too early to feel all of the effects of school choice, but the benefits are going to be so strong that they will be impossible for dems to hide withing the next 10-15 years. The upside to all of this is that public schools will drastically improve when they have to compete with private schools - they will never be able to keep up with private schools but at least th
Did you read this at all?
It literally says vouchers / school choice is a separate thing entirely and could very likely be counterproductive because they choke out the poorer districts that the accountability policies seem to be helping.
It is still too early to feel all of the effects of school choice, but the benefits are going to be so strong that they will be impossible for dems to hide withing the next 10-15 years. The upside to all of this is that public schools will drastically improve when they have to compete with private schools - they will never be able to keep up with private schools but at least th
Do you know the term enshitifacation? That's where the private sector will take education once they displace public schooling. They'll never strive for improvement, only squeezing more profit once they have a monopoly.
Do you know the term enshitifacation? That's where the private sector will take education once they displace public schooling. They'll never strive for improvement, only squeezing more profit once they have a monopoly.
Only in the lower classes. Middle/Upper class parents wont accept enshitification. There would just be another round of "white flight" (except now it would be diverse middle/upper class flight) to places with "good schools."
The more Democrats attempt to lower the quality of public schools for equity purposes, the more middle/upper-middle classes will opt out.
Only in the lower classes. Middle/Upper class parents wont accept enshitification. There would just be another round of "white flight" (except now it would be diverse middle/upper class flight) to places with "good schools."
The more Democrats attempt to lower the quality of public schools for equity purposes, the more middle/upper-middle classes will opt out.
And I'm not saying the current public schooling option is some amazing scheme but privatization is just going to end up with a few big companies sucking the teet and scamming public money in the end.
And I'm not saying the current public schooling option is some amazing scheme but privatization is just going to end up with a few big companies sucking the teet and scamming public money in the end.
It doesn’t have to be private schools. The modal white flight solution is high income (practically gated) municipalities. Some school districts in Long Island and New Jersey are so posh they put Dalton to shame.
It doesn’t have to be private schools. The modal white flight solution is high income (practically gated) municipalities. Some school districts in Long Island and New Jersey are so posh they put Dalton to shame.
grizy is exaggerating a bit when he suggests that public schools in Pound Ridge, NJ will be much wealthier than private schools like Dalton, but he is correct that the public school will be very wealthy and will operate as a de facto private school.
But this phenomenon really depends on where you live. In a lot of areas of the country, there are no super wealthy communities nearby with public schools that operate as de facto private schools.
And I'm not saying the current public schooling option is some amazing scheme but privatization is just going to end up with a few big companies sucking the teet and scamming public money in the end.
Not disagreeing.
But....
"Sucking the teet and scamming public money in the end" is a good practical, working definition of government in general.
(In my always humble opinion, ofc.)
And I'm not saying the current public schooling option is some amazing scheme but privatization is just going to end up with a few big companies sucking the teet and scamming public money in the end.
This is what is going on anyways. Except it is public unions and publicly funded special interests doing the scamming, with no accountability to anyone. Privatization will likely increase the gulf between haves and have nots, but the haves will demand some accountability.
We have moved, but when when my kids were very young and we lived in Los Angeles, we went to a local public/private school. It was technically public, with the expectation parents would be donating high 4/low 5 figures/year.
Our high school is generally top ten in the state and no one donates any money outside of the dads club, band parents and volunteer fund raising.
Our high school is generally top ten in the state and no one donates any money outside of the dads club, band parents and volunteer fund raising.
I believe you. Like I said, it really depends on where you live.
This is what is going on anyways. Except it is public unions and publicly funded special interests doing the scamming, with no accountability to anyone. Privatization will likely increase the gulf between haves and have nots, but the haves will demand some accountability. We have moved, but when when my kids were very young and we lived in Los Angeles, we went to a local pub
Gun to the head I'd still rather have unions grift as opposed the blackrock board of directors
grizy is exaggerating a bit when he suggests that public schools in Pound Ridge, NJ will be much wealthier than private schools like Dalton, but he is correct that the public school will be very wealthy and will operate as a de facto private school. But this phenomenon really depends on where you live. In a lot of areas of the country, there are no super wealthy communities n
To be sure, I am not exaggerating by much. Manhasset and Great Neck for example have insane campuses. Eleanor Roosevelt High has operated practically as a private school for the risch district 2 residents forever.
And I'm not saying the current public schooling option is some amazing scheme but privatization is just going to end up with a few big companies sucking the teet and scamming public money in the end.
Most of us could organize, staff and resource a k-12 school in a couple months. This isn't rocket science.
