Khủng hoảng tài chính 2008: Cơ chế quả bom nợ dưới chuẩn và di chứng đến ngày nay

hi welcome to another episode of Cold Fusion 2008 was a pretty interesting year it was my first year of University the iPhone was 1 year old dubstep was about to explode and Breaking Bad changes television but what most people remember from 2008 was the financial disaster that came with it the world would go through one of the biggest crisis it had ever witnessed $19.2 trillion of household wealth would be lost and some of the biggest financial institutions in the world would fail the crisis would Mark everyone who lived through it without knowing it many have had their lives determined by this recession from the backlash against globalization to the erosion of trust in governments financial institutions and each other it can all be traced back to this point in time since the recession less people are having kids and it's been harder to get by and I'm even talking before Co the 2008 crisis was the death of the real economy after that point there was less productivity and more money Printing and low interest rates which disproportionately helped the richest people with the way the global economy is looking today it's increasingly important to look back at this point in history to understand exactly what happened and the parallels it has to today this special episode will be split into three parts first I'll take you through the setup of the disaster then the crash then the death death of the real economy and I'll finish with what you can do to help yourself let's begin the story of one of the biggest events in human history you are watching cold fusion [Music] TV to get the full picture we need to go back to America in 1995 during this year the fight was on to help lwi income earners the US government passed laws to decrease discrimination against poorer home borrowers the banks would lower lending requirements offering packages such as reduced payments for a number of years soon after in 1999 the US government repealed a law that stopped commercial Banks from taking part in Investment Banking activities the law that they got rid of was the glass steagle act ironically this law was made in 1933 to stop the speculation that fueled the Great Depression it was a fatal mistake from 1999 onwards Banks which had previously managed conservatively turned to riskier and riskier Investments as well as speculation all in an effort to increase their returns Banks cared less about their customers and more about Wall Street profits according to Noble economics laurate Joseph stiglets this move played a major role in the financial collapse that was to come but why worry right now things were good it was the late 1990s and there was seemingly no economic problems in sight for America the internet had taken over the minds of everyone investment Banks were throwing money behind anything that had a doom at the end the result was the launch of stupid companies like pets.com the banks didn't care though when the stock went up they would sell and make their profit this was the dotom bubble and it had arrived in full force people quit their jobs to trade stocks and shares went crazy for example shares of qualcom Rose by 2 , 69% in 1999 alone in America there was money to be made and life was good but something started to happen soon investors realized that these internet companies had no cash flow and couldn't actually make any money and by March 2000 it all came crashing down the next year the September 11th attacks would occur followed by the Enron and Worldcom corporate accounting scandals after these events the public and the markets lost trust in the economy spending trended downwards and it was looking like the economy was heading for a recession to avoid this the Central Bank of the United States the Federal Reserve decided to lower interest rates down to 1% the low interest rates would increase spending and recover confidence in the American economy with a low 1% interest rate and no systemic problems in the real economy the recovery was rapid and economic growth was ample eventually speculation started to migrate from stocks into real estate by 2003 everyone with a good credit score and a good job already owned a home if you were in the business of giving out Home Loans this was a bad sign to save their profit margins mortgage lenders relaxed credit scores to get more people in the door and increase profits these were called subprime loans as the money flowed in and time went on the lending standards got lower and lower and lower soon there were mortgage deals that required no income no job and no assets they stopped checking whether the income was even real they turned to low and no do loans so-called Liars loans no income no job no assets and they were still willing to lend but help me out here how does that make sense for the lender it would seem to be reckless in the extreme it was but the key assumption was that home prices would keep going up forever and in fact home prices Nationwide had never declined since the Great Depression people like acupuncturist roua giosmas became real estate speculators how many properties did you buy in this last 5year period I believe in the last 5year period I bought about six properties and what did you buy them for for Investments if a subprime customer defaulted it was no problem just sell the house because it was going to go up in value so you're going to still make a profit so this next part is a bit in the weeds but I need you to bear with me because it's crucial to the story so Wall Street was looking at this situation and they saw an opportunity you see there were two groups of people that could be linked here on the one side were the mortgage lenders who were profiting from a newly found Market they wanted to get rid of these risky loans because they knew that these loans were junk and had a huge liability on the other hand you had institutional investors who were looking for ways to increase their returns since interest rates were low at 1% high yield products were off the table the Wall Street Banks had an idea and they got to work offering the perfect high yielding product the mortgage back security these were a bundle of individual mortgage debts sold as shares these shares would give back the investors that bought them a safe fixed income some rather devious Bankers realized that they could use an old Financial tool in combination with mortgage back Securities to make unimaginable amounts of money if they used this tool in the housing market they could make tens of billions of dollars in just months this tool was the CDO collateralized debt obligation to give you an idea of how lovely these products were the bank that invented them went bankrupt due to a massive insider trading Scandal one way to imagine a CDO product is to think of it as a box this box gets filled with monthly repayments from a group of mortgages and other debt such as car loans and student loans the Box can generate income to investors who buy it it's divided into different levels each level represents a different risk a CDO works like three cascading trays as money comes in the top tray fills first then spills over into the middle and whatever is left into the bottom the money comes from homeowners paying off their mortgages if some owners don't pay and default on their mortgage less money comes in and the bottom tray may not get filled this makes the bottom tray riskier and the top tray safer to compensate for the higher risk the bottom tray receives a higher rate of return while the top receives a lower but still nice return the aim of this was to diversify the risk but there was a fatal flaw since the Box had safe Prime Home Loans mixed in with loans to people who had no job the whole thing was risky all of the risk was passed to investors who purchased these debt boxes meanwhile the lenders and the banks profited handsomely by charging High fees this system was a ticking Time Bomb lenders didn't care anymore about whether a borrower could repay so they started making riskier loans the investment Banks didn't care either the more cdos they sold the higher their profits as the financial assets became more complex and harder to Value the majority didn't understand how these instruments worked they turned to credit rating agencies for clarity The Hope was that these institutions would do their homework for them and determine risk correctly but as it goes the rating agencies completely screwed up they rated these debt boxes as AAA the highest possible rating this signaled that they were extremely safe good enough for Pension funds and The Wider economy to invest in but there's a question remaining why did the rating agencies rate these debt boxes as high quality well sadly it was because the rating agencies made billions of dollars in doing so if a bank came to them asking to rate their box filled with junk a rating agency would know that if they gave the product the true junk rating the banks would just go to another rating agency down the road to get the AAA rating they desired rating all of these boxes AAA meant that the money kept flowing into the rating agencies this was another key component to the disaster the these false ratings would later spread America's problems to the rest of the world between 2000 and 2007 The subprime Mortgage Debt included in the packages increased from 5% to 36% they saw remarkable success growing from an estimated 20 billion in 2004 to over 180 billion in 2007 Bankers were personally making millions to tens of millions in bonuses while this was going on there were some mad scientist in the financial industry that were creating Financial weapons of mass destruction this is where things go insane and the greed was in full swing the final stage of the greed was the invention of the mortgage credit default Swap this was a financial instrument that worked as insurance against failed Mortgage Debt products so it it's an insurance contract it is an insurance contract but they've been very careful not to call it that because if it were insurance it would be regulated this is actually the security this is the selling document for the Securities think anybody ever read this stuff I doubt very many people read it these complex financial instruments were actually designed by mathematicians and physicists who used algorithms and computer models to reconstitute the unreliable loans in ways that were supposed to eliminate most of the risk obviously they turned out to be wrong why because you can't model human behavior with math they are complex in effect mortgage science projects devised by these Nobel track physicists who came to work on Wall Street and it didn't stop Wall Street from making billions selling them to Banks Pension funds and other institutional investors all over the world how big is the market for credit default swaps we really don't know there's this voluntary survey that claims that the market is in the range of 50 to 60 or so trillion dollars it's sort of alarming that in a market that big we don't even know how big it is to within say1 trillion do this enabled Banks to bet on the direction of a mortgage price if they guessed right they' make a bunch of money think of it for a moment as a football game people in the stands may also have a financial stake in the outcome in the form of a bet with a friend or a bookie the new bet that arose over the last several years is a bet based on whether people will default on their mortgages and that was the bet that blew up Wall Street and crazier still Banks could bet on the outcome of the previous bet and Banks could bet on the BET of that bet because these are swaps and technically not Insurance the banks didn't need any cash to back up their bets if they go bad what could possibly go wrong and it used to be illegal it was very illegal 100 years ago cuz it had brought down the market in 1907 and they said we're not going to let this happen again and then a 100 years later in 2000 we rolled them all back in retrospect giving Wall Street immunity from State gambling laws and legalizing activity that had been banned for most of the 20th century should have given lawmakers pause if it sounds meaningless it basically is these products created no value in the economy but were making Banks a whole bunch of money insurance companies such as AIG saw their profits sore Financial engineering was running rampant and there was no one supervising any of these products in October 2004 the Securities and Exchange Commission or SEC bizarrely relaxed the liquidity requirements of five banks Goldman Sachs Merl Lynch Leman Brothers Bear Sterns and Morgan Stanley this lit the fire the more the banks borrowed the higher their leverage the SEC somehow decided to let investment Banks gamble a lot more that was nuts I don't know why they did that from 204 to 2007 these investment Banks each significantly increased their financial leverage this Amplified gains but also Amplified losses as they gambled more these Banks became extremely vulnerable to financial shocks in 2007 they reported $4.1 trillion in debt that was about 30% of US GDP at the time the stage was now fully set for a moment that would shake the world during 2004 as the US economy picked up pace the US Central Bank started to increase interest rates this would set off a chain reaction event because financial institutions had offered up many adjustable rate loans based on low rates home buyers would enjoy these low rates for about 2 to 3 years after this period the rates would reset to align with the market interest rate but when you combined Rising rates with lowincome subprime customers it was a disaster home buyers went from paying little to no monthly interest payments to their payments suddenly snapping up to multiple times higher to meet the market many just couldn't pay up but after two three or 5 years those rates reset they went up and so did the monthly payment so a mortgage of say $800 a month could easily jump to $1,500 by mid2 2006 an increasing number of defaults caused home prices to fall homes were now worth less than their mortgage loans many homeowners stopped paying their mortgages and went into foreclosure this is where the crisis starts gaining momentum as more foreclosures occurred home prices fell further while demand kept decreasing as well as 2007 got underway nearly 1.3 million properties were foreclosed there was a rumbling that something big was going on when the subprime specialist lender New Century Financial files for bankruptcy then one subprime lender after another files for bankruptcy by the end of 2007 2.3 million homes had been foreclosed and the subprime mortgage crisis was officially underway the high default rates by the homeowners led to a rapid devaluation of the financially engineered products from before investors were now aware of the risks and they were now trying to sell these toxic debt boxes at all costs in March of 2007 Federal Reserve chairman Ben banki tries to calm the markets he States the subprime loan issue is contained he couldn't have been more wrong Ironically in October 2022 Ben banki would win the Noel prize for economics you're about to see why this is so ironic in August of 20 07 a bombshell announcement rattles the market France's B&P parabas announces that there is no liquidity in the global market for mortgage back Securities in other words nobody wants to buy the debt boxes anymore they're essentially worthless other European Banks follow with similar announcements the real picture was becoming clear the mortgage back Securities that were supposed to be AAA and safe are in reality worthless and even worse they had spread through the Global Financial system undetected like a cancer as a result of these shock announcements there was a panic among Financial firms and Banks investors looked around and wanted to pull any funding that was thought to be vulnerable to mortgage losses financial institutions struggled to assess the values of their books what they thought was worth trillions of dollars could actually be worth close to zero the contagion continued to spread September 2007 UK Bank Northern Rock was also playing with high leverage and financially engineered products and they have to be bailed out by the bank of England investors then cued to take their money out it was the first bankr run in the UK since 1866 while all of this was going on the Federal Reserve was still clueless they forecasted that the Slowdown would be mild stating that there would still will be 3% GDP growth come on guys March of 2008 sees Bear Sterns fall Bear Sterns was a pillar of Wall Street dating back to 1923 and was the fifth largest Investment Bank The Firm carried a notional market value of$ 13.4 trillion so how did this number get so high this was because they were also being Reckless and using very high leverage which multiplied their losses bare Sterns bet big on the mortgage markets and lost going out of the markets have certainly gotten worse uh but our liquidity position has not changed at all um our balance sheet has not weakened at all and yet 48 hours later everything changes this morning Schwarz said that the firm's cash position had deteriorated sharply over the past day questions now being asked at this loss of three and a half billion dollar in market value today alone the number they were bought by JP Morgan for $2 a share just earlier in the year be Sterns was worth $170 per share Global Panic ensued and it was at a fever pitch Leman Brothers the fourth largest Investment Bank is being looked at as the next to fall it was also heavily exposed to the subprime mortgage Financial products leman's CFO Aaron Kalen calmed investors by boasting of a profit of 489 million the stock jumps 48% on the news but all wasn't as it seems a later 2010 report by the court examiner stated that Leman Executives regularly used accounting gimmicks at the end of each quarter to make their financials seem less shaky than they really were in reality their risky commercial real estate holdings were 30 times greater than their Capital Leman brothers were so highly leveraged that a 3 to 5% decline in real estate values would completely wipe out all of their Capital by June Leman Brothers reported a 2 6 billion loss which no amount of accounting magic could hide their stock Falls by 73% meanwhile other Banks such as Morgan Stanley and Goldman Sachs started betting against the mortgage Securities which they were still selling and they would make hundreds of millions of dollars while investors lost everything unbelievable at this time the US had now tipped into recession as GDP fell by 2.1% September 2008 the crisis begins to spin out of control and Leman Brothers collapses this marks the largest US bankruptcy of all time the US government said it won't bail out Leman which last week announced more than $3.9 billion in losses shares and Leman Brothers have plummeted more than 80% in 2008 alone everybody in the west at least owns a lot of people have got pensions and these pensions invest in stock markets and a lot of the shares are actually the shares of Banks and when the bank when Bank shares get hammered people's pensions get hammered so everybody loses Leman Brothers is going bankrupt after talks to pull them back from the abyss collapsed and financial markets from Asia to Europe are doing their utmost to prevent Monday from turning from dark to Black this is going to be one of the Watershed days in financial markets history it was a manic Monday in the financial markets the Dow tumbled more than 500 points after two pillars of the street tumbled over the weekend Lan Brothers a 158 year-old firm filed for bankruptcy I don't think anyone really expected a bank as big as lhan to uh you know be in a position that it's in now brought down by bad mortgage Investments lhan which has 25,000 employees will be liquidated I'm starting to find another job meanwhile meil Lynch fearing it could be next agreed in an act of desperation to a shotgun marriage with Bank of America so in just 6 months three three of the five biggest independent firms on Wall Street have now disappeared be Sterns which collapsed last spring Leman brothers and Merl Lynch treasury secretary henryson tried to reassure the banks were all scared and they stopped lending to each other and the financial system froze companies couldn't order parts pay for staff and businesses ground to a halt and if nothing was done planes would have to stop Flying we came as close as we have ever come in history to a total Cardiac Arrest not just of the American economy but the entire world economy meaning everybody's afraid to lend to everybody else credit simply freezes and an economy a modern economy can't function that way a modern economy can't function without credit for more than even a couple of hours frankly seconds GE the pillar of American manufacturing was having a hard time getting short-term credit so was Harvard University wage bills were not being paid knowing that something had to be done the infamous bailout started on September 16th 2008 the US Federal Reserve stepped in to buy AIG the largest insurer in the US while Leman was just another bank AIG presented a systemic risk to the entire Financial system or so they told us it was an $85 billion loan and this was the origin of the famous too big to fail argument we're in an urgent situation and the consequences will grow worse each day if we do not act the US government gave the banks $700 billion to purchase toxic assets and Bank shares to stop them from falling any lower it did work but the biggest banks just ended up being even larger after buying up all the other failing Banks the use of hundreds of billions of dollars of taxpayers money to bail out these Banks sparked complete outrage it was the beginning of mass distrust in institutions and governments the immediate result was the Occupy wallet movement and the invention of Bitcoin bailing out the banks was an unpopular move but the other option wasn't fun either the crash of 1929 and the subsequent Great Depression lasted for almost a decade there's arguments to be made on both sides as for now the crisis was still in full swing the Federal Reserve also cut interest rates in the hope of restoring the market in total during the fourth quarter of 2008 the Central Bank of the United States purchased $2.5 trillion of government debt and junk private assets from the banks up until that point this was the largest monetary policy action in The History of the World by 2009 the stock market has fallen 50% from its 2007 highs Pension funds were completely wiped out [Music] [Music] as we know it wasn't just the US that suffered institutions and governments around the world owned American Assets in 2008 it became obvious that the crisis was going to have Global repercussions after the fall of Leman Brothers Banks and corporations globally began to fail in the UK hbos was taken over by Lloyds and the UK government steps in to save its banking system with lending markets drying up around the world the central banks of the United States European Union Australia Canada and Japan coordinated injecting cash into debt markets for the first time since 91 November of 2008 ceased the international monetary fund approve loans to stabilize Ukraine and Iceland by December 2008 riots had broken out in Greece much of the day the clashes were sent around the Greek Parliament one of the few buildings here being adequately protected Iceland was hit particularly bad relative to the size of its economy the systemic collapse was the largest experienced by any country in economic history some of the biggest banks in the nation became worthless and their stock market fell by almost 80% here as elsewhere the police are first to meet the anger and despair amongst the population during the past weekends thousands have taken to the streets to protest against their government and allege corruption amongst bank managers for the first time in history in this tiny Nation leading politicians and businessmen are now protected by armed guards L Banky was one of three big Icelandic banks that had engaged in an uncontrolled loaning spree abroad when the international credit crunch hit they had accumulated loans worth 12 times the nation's GDP when the banks defaulted the state had to take over their debts worth more than $60 billion unlike many countries the people of Iceland actually chased out their bankers and jailed them meanwhile in the United States the top five Leman Executives walked away with $2 billion and they got to keep the money the rest of Europe was still hit hard the results of which was the European debt crisis a multi-year economic crisis that took took place from 2009 until the end of the 2010s some member states namely Portugal Greece Spain and Ireland were unable to repay or refinance their government debt until today countries like Greece are still struggling to overcome their financial issues on April 10th 2009 Time Magazine declared quote more quickly than it began the banking crisis is over but was it really problems still persisted wages and in incomes continued to languish the real economy was limping people would be out of work for a few years to come and by 2010 unemployment around the world had risen hitting almost 10% in the United States and Europe 6 million Americans lost their jobs and 8 million lost their home Oscar Munoz used to sell real estate now his company clears out foreclosed homes I wonder do you ever come to houses where the people are still here absolutely that's really a sad situation I'd rather not meet the people why not it's not easy to to come in and move a family out it's it's just our job to do it for the bank it it's it's just the nature of of what's going on in the market right [Music] now you [Music] you got nobody to I'll find you in 2010 regulatory action was finally taken the US government passed the dodf Frank act it included more oversight and transparency for financially engineered products limits on risky Bank Investments tighter regulation for rating agencies the whole aim was to stop this kind of disaster from ever happening again but unfortunately it doesn't seem to have worked today banks have reinvented the debt boxes and the tools used to speculate on them this time they're calling them bespoke collateralized synthetic obligations this time they're using corporate debt instead of mortgages 2022 saw a large spike in activity quadrupling to $40 billion in this year alone let's just hope that corporations don't all default on their debt due to a systemic shock I personally don't think we'll have another crisis EX exactly the same as 2008 but safe to say these stupid Financial experiments aren't helping I really sincerely hope that there's not more of them out there which we just don't know about so what happened next what scars did such a disaster leave on the economy well there's some strong arguments to be made that there has been no real economy since 2008 if you look at the GDP per capita but the real economy of the United States it never recovered it has been below Trend since 2008 if you're in your late 30s onwards this is probably why it felt harder for the average person to get ahead since the crash in the United States alone it's projected that an adult that lived through the crash has lost about $70,000 in lifetime earnings younger people were less affected but less employment opportunities still set them back for the first time a whole generation would be pouring poor than their parents it's not uncommon for younger people to live paycheck to paycheck funding their lives would by now pay later debt subsequently the fertility rates around the world have decreased significantly after 2008 there may be other explanations for the phenomenon but the charts are clear a financial disaster would certainly impact the way families would plan for their future after the 2008 crisis Central Banks gained more power they set interest rates low for so long that the stock market and eventually the whole financial system adjusted and settled around the state low interest rates meant cheap money people companies and governments borrowed money with virtually no interest Investments turned risky and excessive debt distorted many markets by the mid 2010s these conditions had become the scaffolding for the whole financial system growth became dependent on central banks keeping these conditions the same wealth inequality exploded as those closest to the financial industry got extremely rich while the rest of the general populace stayed the same by the late 2010s many economic commentators were referring to this as the everything bubble first it was stocks then it was housing then it's the debt market now which controls everything this next point is key to really understand standing the dep of the real economy economic productivity this is the measure of how much stuff you get out from the resources that you put in since 2008 it's been severely injured due to zero interest rates for so long after 2008 the investment that would have gone to productive areas of the economy catapulted into riskier sectors the real economy just didn't get the capital it needed to innovate and develop and do things more efficiently low economic productivity affects real wage growth living standards and quality of life even former Federal Reserve chair Janet yelen called it the quote most important factor determining continued advancements in living standards this is why when our leaders told us that the economy was booming in the 2010s it really didn't feel like that to many people productivity was gone it's a missing piece of the 21st century economic story that's often left out then we come to 2020 and the pandemic saw central banks respond much quicker with a lot of force printing trillions of dollars as the economy was slowing to a halt there's no denying that this mitigated the pain but was this an overreaction many think so economic Professor Jeremy seagull called it a Monumental mistake regardless the stock market loved it and vaulted to alltime highs then investments into risky assets like nfts shot up eventually there was too much money money in the system and not enough goods and the prices of everything started to rise aside from the Fallout of Co and the war in Ukraine a component of inflation today comes from the actions of central banks in the latest stage of this roller coaster central banks have panicked at the large inflation and have started raising rates this was to slow down the economy and reduce demand and this is supposed to bring down inflation but as stated low rates and easy money had become the scaffolding of the financial system raising interest rates reverses these conditions that the financial system was used to this is why as soon as interest rates start Rising everything seems to be falling apart stock markets are crashing and companies are laying off staff the whole system just isn't used to a normal interest rate environment today there's a lot more debt in the system than in 2008 and this was thanks to central banks keeping interest rates near zero for more than a decade increasing rates would make this large volume of debt harder to man AG for individuals and governments countries like Australia Canada and the UK have a lot of variable rate mortgages which will snap higher to Market rates over the next few years subprime car loans and credit card loans are seeing increase defaults meanwhile credit s is in trouble and they're selling part of their domestic Bank Central Bank liquidity swaps are going crazy in Switzerland doubling in the past couple of weeks it looks like we're going to have another recession but what happens beyond that ises anyone's guess after almost 15 years the 2008 recession has taught us several lessons it was the loose lending standards and low Central Bank interest rates that started the problem Financial engineering spread it to the world bad policy accounting fraud and poor credit rating agencies fan the Flames although structural reform has taken place since 2008 we should also take a deeper look into central banks and their decisions they always seem to print and leave rates too low for too long distorting markets and blowing up bubbles only to pop these bubbles later it's a scenario that seems to be playing out again today all in all the real lesson that we as a society never seem to learn is to keep those in charge accountable and also to plan for the unpredictable so for you personally what can you do if you're worried and don't trust our expert leaders the key is to avoid risk if you inclined to keep your money safe think about assets that have little to no risk or financial engineering behind them some believe physical gold and silver as boring as they may seem are the ultimate riskless assets others believe government bonds are others still think plain old cash is best talk to a financial professional to make that personal decision and to sleep easier at night so before I finally go I do want to hear some stories from 2008 from you guys I know I was too young to be impacted directly but I did know and I got a sense that the world was changing while I was studying in University so what do you remember from this period anyway a massive thanks for watching this episode did take a lot of effort to bring to life so I do want to thank you for sticking till the end if you did like it take a look around the channel there's a lot of interesting stuff on science technology business and finance in the next episode we'll move away from Finance for a second and take a look at an interesting story did you know that apart from Steve Jobs and Steve wnac Apple had a third co-founder and he sold 10% of his Apple shares for a measly $800 in 1976 well I'll see you next time in that episode my name is toogo and you've been watching cold fusion cheers guys have a good [Music] [Applause] one Turn the Lights in this place and she sh like a star [Music] and I just don't know cold fusion it's new thinking