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> To keep investment rates high, the Fed coordinated changes to regulations so that private mortages could be sold as investments.

This is just factually wrong. Private mortgage securitization has been legal in the U.S. since at least the 1970s. Most of the subprime-mortgage-backed securities that failed in the crisis were not even subject to regulation by the Fed because they were funded and securitized by private funds and investment banks (the Fed only had jurisdiction over commercial banks at that time).

Was talking here about the regulatory requirements for mortgages to be accepted in the first place as well as the rather lax regulatory regime (in practice) that was in effect at the time.

Yes, Glass-Steagall's removal of the separation between depository and investment banks had its own effects.

>The Fed continuously lowered regulations to feed the market in an attempt to prevent it from crashing.

Uh... like what?

One would be the suspension of mark-to-market accounting procedures, where the requirement to value a bank's assets under current market conditions was suspended and they could value them under "ideal market conditions", which was fairly subjective.

Wasn't the bubble burst based on subprime loans in the housing market? That's all I've been told, and I'd be surprised if that's incorrect. (Citations would be appreciated)

I found this Wired article [0] to be a good start behind what actually happened in the math. The problem was not that subprime loans were being made. The problem was that bundles of those subprime loans were being tranched and sold as high-quality investments, even though none of the underlying assets were anywhere close to high-quality.

And all of this was foreseen by people who actually understood the math. And they were promptly ignored because listening equated with lost profit, commissions, etc.

[0] https://www.wired.com/2009/02/wp-quant/

Subprime loans (all a subprime loan is is a loan that doesn't have the best interest rate) were the murder weapon, but the murderers were the mortgage industry approving those loans based on fraudulent data they created in order to push the loan through (eg certifying the data in the loan application was correct when they hadn't verified it or even when they had purposely lied in filling it out) and then various financial industries bundling those loans up into securities and then assessing them on that fraudulent data (knowing it was fraudulent since they were the ones who audited or were supposed to have audited it) and selling them to investors (ie pension funds, IRAs, 401ks, and institutional investors) as being much much less risky than they actually were.

Subprime loans (all a subprime loan is is a loan that doesn't have the best interest rate)

That way over-simplifies, and misses a key point: the loans don't "have the best interest rate" because they are assessed to be loans at higher risk of default. The way you say, it sounds like the house buyers just didn't shop around enough for mortgages.

I left it off, because i don't think the higher assessed risk of default than prime loans is relevant for explaining that the true cause is the fraud and purposeful misstating of actual risk. The same thing could have happened with prime loans as well. Yeah, subprime loans are riskier than prime, but that doesn't matter when something is being repackaged as being less risky than it actually is.

And even when we talk about why the loans defaulted, the issue isn't that the loans were subprime instead of prime and that that was due to a higher risk of default. It's that the loan was given based on falsified data to cover up reasons that should have prevented the loan from being given (almost always due to a debt:income ratio that was much too high), the borrower was advised by fiduciaries to take more than they should have given their income, and the preferred loan type was one where the the necessary payment ballooned massively after a set time period, which meant that when the payment when up the borrower would be unable to pay the higher payment because of how far they were stretched by the base payment, because the borrower was advised that they would be able to refinance at a lower rate due to an expected-by-their-fiduciary rise in equity.

I left it off, because i don't think the higher assessed risk of default than prime loans is relevant for explaining that the true cause is the fraud and purposeful misstating of actual risk.

So the already-risky loans were made more risky due to fraud and deceit on the part of loan writers. Fair enough, I have no argument with that as a major contributor, if not root cause.

Is your argument that everything everywhere was completely 100% good except for the bad US mortgage packaging and other similar products? Because I don't remember hearing many good things about, say, Greece and Spain for example, during the fallout.

The US may have been the initial trigger, but it by far did not supply all the snow in resulting avalanche.

Didn't Greek hide their debts for so long mainly with huge Goldman Sachs help?

"At the beginning of 2010, it was discovered Goldman Sachs and other banks helped the Greek government to hide its debts." [0]

Yes, it seems that Goldman Sachs was involved in helping cook the books.

Let me clarify here that I did not intend to communicate that "everything everywhere was completely 100% good except for the bad US mortgage packaging". This was my miscommunication and I own it.

There were (and are) lots of problems in the financial sector.

This is what I got by trying to distill down a very complex process into an easily readable list.

Sounds like a bad case of Goodhart's law

"Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes."

Source: https://en.wikipedia.org/wiki/Goodhart%27s_law

> Are we interpreting the bailout of a global US-created financial crisis "saving the world" now?

Welcome to the wonderful world of spin. As a former subscriber, it saddens me to see how much barrons has fallen after being bought by news corp. I guess if you live long enough, you get to see it all.

> The U.S. and European economy is still recovering.

After increasing the national debt from $8 trillion in 2008 to nearly $20 trillion today.

I remember adam smith saying something about how the two ways to enslave a person or a nation is by force or debt. And that debt is the smarter choice.

What ever happened to banks being too big to fail and needing to break them into smaller banks so that they don't pose a systematic risk to the US and the world? Oh, that's right, they got much bigger.

https://money.cnn.com/2017/11/21/investing/banks-too-big-to-...