Cramer on 2008 crisis: It could happen again

[Yo_Mama_Been_Loggin]

Something similar to the 2008 financial crisis could happen again because the offenders then did not suffer any significant consequences, CNBC's Jim Cramer argued Friday.

The main reason something bad could happen again is because no one went to jail the first time," Cramer said "Squawk on the Street."

Ten years ago, on March 16, 2008, J.P. MorganJPM agreed to buy failing Bear Stearns, an early sign of the financial storm to come. The deal, which was backed by the Federal Reserve and the Treasury, avoided a collapse of the venerable investment bank suffering under the weight of bad mortgage debt.

Speaking generally, without naming names, about those responsible for the toxic investment vehicles of the time, Cramer said "They didn't rob a 7-Eleven, where they would go to jail. They robbed us."

https://www.msn.com/en-us/money/markets/cramer-on-2008-crisis-it-could-happen-again/ar-BBKj2ed?ocid=spartandhp

[lkinwi]

1. Wouldnt surprise me at all.

[MrsCoffee]

2. Should I be Worried about Bear Stearns? NO! NO! NO! Jim Cramer

http://www.dividend.com/how-to-invest/10-hilariously-wrong-bullbear-calls/

Should I be Worried about Bear Stearns? NO! NO! NO! – Jim Cramer
Jim Cramer on Bear Stearns

This list would not be complete without an entry from Jim Cramer. Cramer has made his fair share of wise investing decisions, but he has also had a few epic flops. His most memorable comes from his call about Bear Stearns on March 11, 2008, just before the crash. When asked by a viewer if they should be worried about Bear Stearns, Cramer emphatically replied “NO! NO! NO! Bear Sterns is fine. Don’t move your money from Bear, that’s just being silly.”

Five days later (3/16/2008), after scavenging for and failing to get a loan from the Fed to remain liquid, Bear was purchased by JP Morgan (JPM ) for $2 per share, less than 7% of what the stock was worth the day before. When Cramer spoke on 3/11/2008, Bear was trading around $60 per share. The stock opened at just over $3 per share on Monday 3/17/2008 after JPM made the purchase over the weekend.

[PoindexterOglethorpe]

3. Of course it could happen again.

Especially now that Congress has done away with any effective regulation of the financial industry.

The details will be different the next time. In 2008 a lot of the crisis was fueled by the mortgage market. At least 2 years earlier it was obvious to the most casual observer that banks and financial institutions were making mortgage loans to people who had no business getting them. And that housing prices in many parts of the country were in a bubble.

A decade and a half before there was an earlier housing bubble that people seem to have forgotten, but that one didn't result in a major recession. Back then, in the late '80s early '90s, people were being sold houses with an initial low interest rate that then either went up each year, sometimes dramatically, or led to a balloon payment after 3 or 5 years. The underlying rationale was that you'd refinance at good rates.

My husband and I backed out of a home purchase that would have involved a balloon payment. We loved the house, but it really was a bit more than we could afford, and let the realtor do that mortgage. Before we went to closing we decided it was just too risky, so we called the realtor, told her we were backing out, and we fully understood we'd probably lose our earnest money. But our amazing realtor resold that home in something like a week, for more money than we would have paid, and got our earnest money back. A couple of months later we bought a different home in that city, one that we really could afford, and got a conventional 30 year mortgage for it. We were always glad we made that decision.

[dixiegrrrrl]

4. I knew a woman who was showing off her new house, with pride.early 1980-ish.

But I knew that she had no job and no income, so was curious how she could do it.
She explained in a very offhand manner, that the Realtor had arranged for a no money down,no payment for 2 years contract.
She had plenty of time to find a job ( with few skills, btw)

Well, not really, as it turned out in court later, when she failed to make any payments on the loan.
She claims the Realtor lied, the Realtor, who of course had gotten the commission, claimed she lied on her application, said she did have a large income.
So they sued each other.
turns out she lied on the forms, cause she was too damn stupid to think the forms would prove it,
and turns out he did not bother to check any of her financials, cause he wanted the commission, and he had a "friend" at the bank loan dept, who turned out to be his girlfriend.
And of course the bank just packaged up the mortgages into bonds that it sold.

the original house sellers sued the realtor also.

this was in a small town. I was trying to imagine how much of that con was going all over the state and country.

[PoindexterOglethorpe]

7. Sad. And sadly typical of many of the real estate transactions

that happened, although most of the ones like the one you've described happened in the early 2000s.

Currently I live in a city, Santa Fe, NM, reputed to be so expensive only the very wealthy can live here. Trust me, I'm not wealthy. But I've been able to buy a small home in a not upscale part of the city. About 900 square feet. Two bedrooms, two baths, three skylights. I frequently tell people I can afford it. My mortgage payment is more than reasonable, and is just above 25% of my monthly income, which is exactly where it should be.

I think one huge problem for almost all of us is that we constantly see images, especially on television, of people living a far better life than most of us are living. We see ads that suggest that we can finance the good life on credit cards. Or we see movies or TV shows that have people of modest means living in homes or apartments that they actually could not afford in real life. That makes it very easy to either think there's something wrong with us, or get sucked into overspending.

When I moved to Santa Fe ten years ago I didn't buy a TV for somewhat complicated reasons -- didn't want to spend the money on a TV screen, didn't want to pay for cable or satellite, there was not good place in my apartment to locate a TV set. I honestly viewed no TV as an experiment and assumed that after a while I'd get one and the requisite cable or satellite hookup. But then I discovered that I could watch an amazing amount of stuff on line, and the best part of watching on line was no commercials. Which is especially wonderful during an election year. No commercials also makes it much easier to live on a limited income. I'm not constantly bombarded by messages to buy, buy, buy.

I know very well how easy it is to think you need a new car, a bigger house, more clothes, a vacation in the Caribbean. Or whatever. I actually feel fortunate that I stumbled into my no TV lifestyle.

Sorry for the digression.

[dixiegrrrrl]

8. I hear ya clearly.

Esp. the no tv, for the same reasons that you discovered. Online gives us choices and the time spent is under our control.
Also nice to save that monthly bill for cable.

[PoindexterOglethorpe]

9. Here's something else about no TV I've discovered.

When some sort of breaking news happens (like the pedestrian bridge collapse yesterday in Florida) I simply google TV stations in that city, and invariably at least one of them has gone to live streaming. The local live streaming is, in my opinion, much better than what you get on the network feed. So there's no need to miss important (however you define important) news stories.

And it's vastly better than watching CNN or MSNBC all day, because those networks will get caught up in a news loop, and may not always be all that informative.

[Wounded Bear]

5. I think he means "will"...

I'm kind of surprised it hasn't happened yet, TBH.

[RussBLib]

6. and with Congress rolling back Dodd-Frank

Well, maybe they'll finish the job this time