Question: Current Crisis vs. S&L Crisis

[Romanus]

Here's something I've seen very little discussion about, though I think it's highly topical. Though I was pretty young at the time, I do vaguely remember the uproar over the S&L crisis in the late 80's and early 90s. Monetary layouts aside--don't need to be a math whiz to see that the money difference is incomparable even adjusting for inflation--I (and probably others who were out of the loop at the time) would really like to know:

1.) The fundamental differences between that crisis and this one.

2.) Whether the reasons given for the bailout were much the same ("It'll be the end of the world™ if we don't.").

Your answers will be much appreciated. :)

[HenrikOlsen]

1.) The fundamental differences between that crisis and this one.
30 more years of deregulating the banking industry, with the result that the bankers could pretty much write their own rules.

[PraedSt]

Here's something I've seen very little discussion about, though I think it's highly topical. Though I was pretty young at the time, I do vaguely remember the uproar over the S&L crisis in the late 80's and early 90s. Monetary layouts aside--don't need to be a math whiz to see that the money difference is incomparable even adjusting for inflation--I (and probably others who were out of the loop at the time) would really like to know:

1.) The fundamental differences between that crisis and this one.

2.) Whether the reasons given for the bailout were much the same ("It'll be the end of the world™ if we don't.").

Everyone will have a different view, and you usually can't say they're wrong. Unfortunately, this isn't physics or maths. :)

Fundamental differences: no.
1. Money. Too much of it in the years leading up to both crises.
2. Regulation. Either not enough, of the wrong kind, or lax application.
3. Greed and the madness of men.

Reasons. I don't know, probably. Big bailouts such as these have to be sold to the public. The "end of the world" pitch works.

[PraedSt]

...
If you're really interested, here are some papers on this crisis:

St Louis Fed (http://timeline.stlouisfed.org/index.cfm?p=articles&ct_id=10)

[publius]

I agree with the above, but I want to add the overiding "root cause" of this mess is too much debt, and the wrong kind of debt at that. As I've been getting into this and learning over the past few months, I've come to the conclusion that we've reached "peak debt", the saturation level. This applies to everything, public and private.

It's just not sustainable, and we've hit the wall.


-Richard

[novaderrik]

i'd say the biggest difference is the 24 hour news cycle and the internet.
and, as of right now, there haven't been any current or former high ranking government officials brought up on charges in relation to the mess- so they are better at covering their tracks now.

[Romanus]

Thanks for the replies thus far!