I originally published this essay on TOP in December 2015; it received 352 recs back then. I have decided to republish it here today with minor revisions because I, like many others, am outraged by Hillary Rodham Clinton's horrificly insensitive remarks about Sanders supporters. #BasementDwellers What is ESPECIALLY UPSETTING to me is that we wouldn't be living in basements if it weren't for the actions of her husband and the elite financial institutions that are her biggest donors. FUCK THIS SHIT!

The stock market crash of 2008 basically ruined my life (think "eat cat food in old age"), and I've been driven to understand why it happened, do you know what I mean? It’s actually taken me a few years to figure out WTF was even happening to me. I once was a highly skilled software engineer (Java, databases, yada yada), who decided to avoid the latest round of layoffs at my company by taking a personally financed sabbatical. It was lovely for a short while ... and then the stock market crashed! Woo-hoo! It was great.

Do you remember that time when nobody was hiring because we all thought the world was coming to an end? Yeah, that time helped me meet the requirements of becoming “long-term unemployed”, without me even realizing it. Add to that an industry that loves young people, and voila! My options were seriously limited. But I am not alone, many, many other families were hurt in the crash, and hurt far more than me. I especially grieve for low-income families, thousands of whom lost their homes. Did they get all their money back afterwards? No. And Republicans actually BLAME the entire crisis on them.

FYI, I found a certain episode of a show called This American Life to be especially brilliant at enabling me to understand what was behind the crash.

"The Giant Pool of Money" is an episode of the radio show This American Life which originally aired on May 9, 2008. The episode described to a general audience the causes and factors which led to the subprime mortgage crisis. Specifically, the show aimed to show the chain of people who were "participants up and down the subprime food chain".[1] The show featured Adam Davidson, a business correspondent for National Public Radio and Alex Blumberg, a producer for the show, interviewing and reporting on the financial crisis. Blumberg described it as trying to answer the question “why are they lending money to people who can’t afford to pay it back?”

Link to Show 355: The Giant Pool of Money (and transcript). Short blurb on the website:

A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s?

Quick Summary: the economic meltdown was not the fault of evil poor people who had been taking out mortgages that they could not afford. No, the meltdown was caused by a financial industry that was creatively coming up with a great new way FOR THEM to make money. One of their great ideas was to invent something called the “No Income No Asset” loan, or NINA. TAL’s Alex Blumberg says: “People in the industry called it a liar's loan. They expected people to lie.” Think about that for a minute. Then think about it again.

Here’s a quote from the show,

Now that same week, a few days earlier, across the river in Brooklyn, I went to a completely different kind of gathering. It was not black tie. It was put on by the Neighborhood Assistance Corporation of America. It was people on the opposite side of the mortgage crisis, people facing foreclosure, trying to figure out how to keep their homes. I met this one guy, Richard. He's a marine. He's this big guy, over six feet tall. And when he came back from Iraq a few years ago, he bought one of these fancy new mortgages with an adjustable rate. Recently his rate reset. It has gone up by more than $2,000 a month. And he has fallen behind on his payments. Richard It got to the point where-- one point, my son had $7,000 in a CD. And I had to break it. And I mean that really hurt, because I was saving that money for his college. I mean, I put $2,000 back. But it's like you can't have a future. They put you in a situation where, after a while, you're going to fail. It's hard.

The idea of a father having to resort to taking money put aside for his child’s education ... what else can I say?

I now understand that the crash came about because Wall Street types and bankers and insurance guys were doing brave, new, and often fraudulent things because it was very, very lucrative for them to do so. As it turns out, part of the deal was that innocent lives happened to be destroyed. Too bad, so sad. Only they're really not sad at all. Families like mine were merely collateral damage, and will be again in the future if sufficient reforms aren't enacted to ensure that "it never happens again".

The root cause of the crisis, IMHO, was the fact that bankers started to behave in a radically different way toward mortgages. “Back in the day” one would apply for a mortgage, and then wait ever so nervously for the bankers to “approve your loan”. The waiting was awful. You see, if they didn’t think you were financially strong enough, they would deny the loan and you wouldn’t get the house. And that was because the bankers had skin in the game .

Then, something happened so that liar’s loans became possible. All of a sudden, you didn’t have to be financially strong to get a house anymore, and the loans were set up in such a way that you could actually lie on them, get it?, and you would STILL BE APPROVED FOR THE LOAN! And that was because, and most of us didn’t even know or realize this, bankers no longer had skin in the game . And even better, the bankers MADE MONEY when selling the loans, and so they truly, sincerely, did not give a shit whether or not the loan made any sense at all. In fact, they had a financial incentive to sell bad loans.

Can you guess what happens next? Tons and tons of people who were not qualified to be getting loans were getting loans. What could possibly go wrong?

Why were bankers behaving in a radically different way toward mortgages? I think it was this new thing called a CDO, which is kind of a very hi-tech and complex financial instrument, that most normal folks don’t have the math skills to understand (and even those who do still have problems).

These CDOs have been called "the engine that powered the mortgage supply chain" for nonprime mortgages,[7] and are credited with giving lenders greater incentive to make non-prime loans[8] leading up to the 2007-9 subprime mortgage crisis.

It’s all quite complicated, but the subject of “risk” seems to have been approached in a significant new way, and the banks starting taking out insurance policies on the crappy loans that they were making in order to “protect themselves”. AIG sold that insurance but they screwed up massively, didn’t calculate the risk properly, and failed.

When AIG fell down, all the banks who had insurance policies with AIG were like dominoes ready to all fall down too, because now those lovely insurance policies were essentially worth crap. And all of the bad loans that the financial giants had been making came back to haunt them in a very bad way. It was really fucking scary. But now it’s all just a distant memory and nobody seems to even care.

At the end of the day, the banks got bailed out, and even got fat bonuses (within a year? Or at the end of that year? I forget), meanwhile many, many, many completely innocent people got massively hurt. People like me. And as far as I can tell, most people who want to vote for HRC don’t really give a shit about the people who got so massively hurt when humpty dumpty fell off the wall, because OMG, Hillary is so completely awesome and if you disagree you are just a hater!!!

Unless significant reforms are made to the financial industry to prevent this situation from happening again, IT WILL HAPPEN AGAIN, and more innocent people will see their lives crushed.

I fail to understand how so many Democrats can feel that discussion of this issue is completely inappropriate for the 2016 elections and the Democratic primary. What has happened to the soul of the Democratic Party? My answer: it got massively infected by a nasty bacterial infection called Clintonitis.

OTHER USEFUL LINKS