[panphora]

Anger about the 2008 bailout makes sense. Yen carry unwind deserves attention. However, the trading call to action fails on market structure.

Key counterpoints:

- Global FX turnover runs near $9.6T per day (BIS, April 2025). A retail wave of calls will not move USD/JPY in a durable way at that scale.

- /6J options settle on /6J futures. When you buy calls, you mostly push dealer delta hedging into futures, then dealers unwind as exposure changes. No sustained spot yen demand comes from that flow.

- FXY calls track an ETF wrapper, not spot.

- “Widowmaker trade” most often refers to repeated losses from shorting Japanese government bonds, not a long-yen crowd squeeze.

[dist-epoch]

That $9.6T is mostly back and forth non-directional HFT.

Otherwise it would not take a day to swap $500 mil for commercial reasons (think buying a couple Boeing plane with Euros) to avoid too much market impact as documented in multiple interviews with currency dealers stating it takes them 1 day to "work" a $500 mil order.

Retail can move FX, if it piles into one pair. But unlike the Boeing order they will also need to exit the trade at some point, which makes them vulnerable.

[bandrami]

> Anger about the 2008 bailout makes sense

Does it?

It cost the taxpayers nothing (in fact it made us money), it destroyed 4 of the 5 largest investment banks in the US, and it sent over 200 bankers, brokers, and auditors to jail.

What part of that are people mad about, and why?

[Aurornis]

The people angry about the 2008 bailout usually have little interest in the facts. I’ve had countless conversations where I’ve tried to tell people that the bailouts were a net positive or that people were, in fact, sent to jail. Outside of people familiar with finance, most people refuse to believe it.

A lot of people I’ve talked to about it weren’t even adults when the bailout happened. They weren’t watching the news and didn’t care at the time. They only know it through pop culture and from fiery speeches from politicians and influencers.

The idea of a bailout has become synonymous with the government handing hard-earned tax dollars over to banks, no strings attached. The facts don’t really matter.

[coryrc]

2008 was caused, in part, by the governments deciding many "banks" were "too big to fail".

The fix was for the government to pick some winners, coercively lend them money and force them to buy the failing banks.

Now we have fewer, bigger banks. People who were conservative with money, saved instead of over-leveraging, did not get to buy assets cheaply, because the government propped up asset prices with unlimited, cheap money.

And TARP did eventually produce weak positive returns. So I'm glad they didn't lose money, but I'm not happy I was prevented from buying fire sale assets. I'm also not happy residential housing prices are 2x what they were in 2010 (and still well over 1.5x the peak of the bubble).

[throw0101c]

> 2008 was caused, in part, by the governments deciding many "banks" were "too big to fail".

Perhaps worth noting that Ben Bernanke, who was the chair of the Fed at the time, was/is one of the most top experts on Great Depression (it's the work he later won the Nobel Prize for). So as bad as the GFC was, Bernanke thought it could get really bad and pushed for measures that he probably thought would prevent another 1930s scenario.

[coryrc]

So, the NPE isn't a real Nobel Prize :) but if the only allowable decisions are to concentrate wealth at the top, then we're just delaying and amplifying the collapse.

[Aurornis]

> but I'm not happy I was prevented from buying fire sale assets.

This is another common misconception about bailouts: That if the government hadn’t stepped in, individuals would have been better somehow or been able to take advantage of a collapsing economy for personal gain.

You wouldn’t be buying fire sale assets and getting great personal returns. That would have gone to corporations, family offices, and people in higher tax brackets.

[pjc50]

> I'm not happy I was prevented from buying fire sale assets

People who want a society-wide crisis so they can profit off it are far more morally reprehensible than people who said "we'll loosen the mortgage criteria a bit so people can buy houses, houses always go up in value right?"

[coryrc]

Uh, no, we're having a generational crisis because wages are flat and rent cost has been growing for decades. That's quite reprehensible. Unfortunately, in our push for home ownership, we now have a majority of people being homeowners and opposed to lowering prices, and a few companies who can make a profit lobbying to ensure prices only go up.

[momoschili]

None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?

[bandrami]

Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century (and there have been some pretty huge ones competing with it)

[x-complexity]

> None of the highest up were sent to jail. CEOs perfectly fine taking responsibility for the profits, but what happened to taking responsibility for the fraud they enabled?

> > Literally dozens of CEOs went to jail, which is again why I think this may be the biggest ball-drop of the media this century

The GP's remark is centered around the *sentiment* that none of the C-suite / execs in the Big Banks (Merrill, Goldman, BoA, Citi) were jailed for their involvement / excessive speculation in the 2008 crisis.

The keywords there being "Big Banks": If it's a national household name, OR if their positions are coveted by finance employees, it's a Big Bank. Otherwise, it's not a Big Bank.

> > > Your Google skills may need some work because this is the first result for "bank CEO jailed by TARP":

1) This is a goalpost shift from "bank CEOs jailed for causing / excessively speculating up to the 2008 crisis".

2) TARP was established as a result of the crisis (i.e. AFTER it happened), and therefore cannot be used to mark execs that were jailed for their involvement / excessive speculation in the 2008 crisis.

3) "TARP defraudment" is a different matter, and not "Causing the 2008 crisis" or "excessive speculation"

> > > https://archives.fbi.gov/archives/atlanta/press-releases/201...

The case cited only tangentially involves TARP, when the bulk of the case was about the President of FirstCity Bank & his associates defrauding the bank with loans that *they themselves had involvement in*.

[bandrami]

If you want to argue the wrong 200 bankers went to jail I think that would be a great discussion to have, but that's absolutely not where the public narrative is right now, which is that these convictions simply never happened

[momoschili]

yet you have failed to provide even a single name as of yet. It's easily google-able that all of the major players got off scott-free.

[rcxdude]

This seems to corroborate the story: https://www.steptoe.com/en/news-publications/borrower-beware...

Though it sounds like they're mainly talking about bankers jailed for fraud related to the TARP loans themselves, as opposed to the mortgage fraud that precipitated the crisis.

[bandrami]

There was an entire damn database put out by TARP of the hundreds of people they jailed before DOGE killed it. All you people who claim you care about this intently never even bothered to read it. Which is why I don't actually think people cared; they just want an excuse to be mad.

[bandrami]

I didn't really expect people to lose the ability to Google this quickly:

https://www.housingwire.com/articles/38536-failed-bank-ceo-g... https://www.justice.gov/usao-md/pr/former-president-and-ceo-...

https://oig.federalreserve.gov/releases/news-bekkedam-senten...

https://www.washingtonpost.com/news/business/wp/2015/09/02/b...

[samat]

Grok disagrees, chatGPT disagrees, freaking google disagrees. Could you provide names please?

[bandrami]

Your Google skills may need some work because this is the first result for "bank CEO jailed by TARP":

https://archives.fbi.gov/archives/atlanta/press-releases/201...

[sublinear]

I think you just perfectly demonstrated why everyone hates AI summaries.

[afpx]

What about Pershing Square? in 2008 Bill Ackman gave a presentation on how to crash the housing market and profit from it. Looks like he's still out there destroying peoples' lives.

[tasuki]

I see it differently: the crash was coming anyway (the market was being irrational). He can't crash the housing market, unless there's a good reason for the housing prices to crash. Turns out there was a reason.

[Aurornis]

Do you have evidence that he committed a specific crime?

Jailing people is for crimes committed, not for punishing people you dislike.

[boxed]

Even more fun: people are mad about the bailout here in Sweden. But none of the Swedish banks took any bailouts! Not a single one.

[stefanfisk]

I can’t really remember hearing a Swede complain about bank bailouts in relation to the 2008 crisis. The 90s crisis and related bailouts are however often referenced when complaining about the banks making huge profits these days. Whether that’s reasonable or not is another question.

[api]

Most of the anger from regular folk comes from the reinflation of the housing bubble, continuing to price two generations out of home ownership.

If you want to see why people are mad look at what is actually causing them pain. For young people it’s mostly housing costs.

Many blame the bailouts. That may be wrong, but it’s a visible scapegoat.

[sdellis]

Anger also comes from many retirees whose retirement savings tanked. Everyday people lost a lot of money, many their homes, and no one bailed them out. It appears to many that those responsible were above the law. It's the same reason people are furious about the Epstein Files, where the only person in jail for what happened is a woman. We see our neighbors dragged out of their houses or cars without a warrant because they don't look "white" and may have committed the misdemeanor of not having proper documentation. And yet, not a single CEO was held accountable for far worse crimes committed -- in fact, they kept their bonuses! These people recklessly inflicted a huge amount of pain on the public, through lost investments, millions of people losing their homes, most young people not being able to buy homes, and creating an even greater divide between the 1% and the rest of us. It is truly weird to read comments that seem to defend them.

[BobbyTables2]

I was an adult and my anger is in the sense that banks and car companies got a safety net while the rest of us don’t!

Think of all the small businesses that would love to take particular risks if they knew they wouldn’t have to suffer the normal consequences associated with failure…

[snapcaster]

Who got access to credit and who was left to go bankrupt and have their lives destroyed? seriously crazy that you can't understand that

[tired-turtle]

If I had to guess, Americans say they dislike the 2008 bailouts to mean they dislike how Wall Street banks caused a recession.

[bandrami]

I think most people think that TARP cost the government money (rather than the opposite) and that "only one banker went to jail" is still true (it hasn't been true since 2013). Which is honestly a pretty shocking indictment of the news media.

[momoschili]

Nobody that mattered went to jail. A few lackeys might have been thrown to the wolves, though it seems only 1 spent significant time in jail. Meanwhile the board members, C-suite of Lehmann, Bear Stearns, WaMu, etc didn't spend a second in jail. What's really shocking is you burying the lede.

[bandrami]

There are dozens of people still in jail, including C suite officers. Like I said the media just absolutely dropped the ball on this.

[momoschili]

Can you name any of them? As far as I know none of the CEOs of the major banks spent any time in jail. They tried to get the CEO of Wamu but he successfully countersued (LOL) to get the Feds to drop the charges?

edit: it's unfortunate that you can't bring up any actual evidence to support your assertion

[MonkeyClub]

> (in fact it made us money)

And caused a global recession along the way. The loan repayment interest didn't (and couldn't possibly) cover even a fraction of the backlash, which includes lives destroyed world-wide.

Externalities?

[pjc50]

Need to be clearer about "it" here: the crash caused the recession, not the bailout. The recession was inevitable because some of the growth was illusory, based on leveraged gains from house prices.

[duxup]

>And caused a global recession along the way.

They're talking about the bailout. I think the bailout came after the cause of the recession.

[m101]

When you lend money at 1% but market rates are 30% then you are, in fact, losing money. Except under your definition you are not losing money.

[roenxi]

> It cost the taxpayers nothing (in fact it made us money)

Pull the other one, it has bells on it. If the government is involved in a financial transaction it is because nobody in the private sphere with money wants to be involved. That means either the return wasn't commensurate to the risk or there was dodgy accounting going on that nobody would actually thought represented a reasonable real return. If there was actually a prospect of making a reasonable return, money would have been found. Even the creditors might have been willing to make deals.

I bet the average taxpayer would much rather have the money given to them in their capacity as an individual and would have profited off it more than the hypothetical return the US government may claim it made.

> What part of that are people mad about, and why?

The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke.

It is a terrible idea to be printing money to prop up asset owners. If that is the basic plan anyway, it shouldn't be mandatory to have incompetents mediating the handout process.

And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food. Maybe set up a special welfare system for people who lost their life savings if something has to be done, but for heavens sake, taking (and I repeat myself) known, verified incompetents and guaranteeing them ongoing control of the financial system is wildly stupid. It is on par with a scheme like mandating people all buy in to cryptocurrencies.

[YZF]

We don't know what the other options look like. A broader collapse of the economy, runs on banks? If the government stayed out then the outcome could have been worse for the average taxpayer.

I do agree it looks bad if bankers can take huge risks and benefit (personally) from the upside without a downside risk. But it's not necessarily the bailout that's the problem here and the taxpayers do have the theoretical power to vote for people who can change this.

[roenxi]

> We don't know what the other options look like. A broader collapse of the economy, runs on banks? If the government stayed out then the outcome could have been worse for the average taxpayer.

What courses of action does that argument not justify? "We had a predictable emergency and decided to panic and hand out money. Don't expect us to really think about alternatives." is not the course of action that really speaks to me for getting good results for taxpayers, or anyone except the people directly getting the money.

We have a playbook for getting a statistically good outcome when people run out of money. It is called bankruptcy. I can see how a banker could confuse that with a bailout because they both start with a "b" and there are a lot of letters - but the stark truth is they are different words.

[YZF]

But the issues here were systemic and there was worry of contagion. I guess a question would be whether the people who made the decision had conflicts of interest that impacted those decisions.

So this argument doesn't justify any course of action but is does justify a course of actions with poor optics that seems reasonable given the risks.

[pjc50]

> The gross unfairness of it all. I mean, it is bad enough that the failures in charge of the banking system got bailed out despite being incompetent at their jobs, but the average person had to guarantee them their high status role in society? It is a sick joke.

This is a very valid narrative, although if you say it in public people will call you a socialist. It applies to people like Fred Goodwin of RBS (eventually stripped of knighthood) and Sean Quinn of AIB (who did actually serve jail time).

> And it isn't like bankruptcy is that terrible. All the physical assets still exist. There is still food

I think you're really underestimating how terrible "retail banking stops functioning" would have been in the short term. The loans allowed the problems to be addressed over the medium term. "Every retail bank has ceased trading" is a problem you have about three days to solve before the inability of people to buy food and petrol starts a much larger collapse.

Besides, some of the bailouts were very close to "flat-pack" bankruptcies. Northern Rock and Bradford and Bingley were fully nationalized! Equity holders lost everything, that's a bankruptcy!

(Americans will say "who" there, but again: it was a global crisis. It more resembles climate change. It's very difficult to say that any individual is responsible for it, but somehow Australia ends up on fire as a result of unsustainable emissions, and the banking system collapsed as a result of unsustainable lending emissions.)

[sdellis]

So your argument to the valid narrative of gross unfairness and people being above the law is to look the other way because you are afraid of being called a "socialist"? Holding criminals accountable for bad and reckless behavior is not socialism by any definition of the word.

[pjc50]

It's not my solution, I'm not in charge of the SEC! I'm broadly supportive of anti-inequality measures against the financial industry. It's just that if you say that the peanut gallery will call it socialist.

I would however like people to be a bit more specific about what they think the crime was, who specifically committed what, and whether it was actually illegal at the time. It's a word people love to throw around. It's not actually illegal to make poor business decisions.

https://en.wikipedia.org/wiki/Se%C3%A1n_Quinn for example, while his misconduct cost the collapse of AIB, the thing he was actually jailed for was failing to comply with court orders.

[bandrami]

> either the return wasn't commensurate to the risk

It's because the markets were frozen up; I was actually alive then and you can't really gaslight me about this

[n_u]

what does "frozen up" mean?

[bandrami]

Corporate bonds were simply not being bought, at any price. Same with commercial paper. Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.

[n_u]

> Nobody knew what firms were going to still exist in a week so nobody was willing to lend any money at all.

Perhaps I'm misunderstanding, but isn't this another way of saying it was too risky for people to invest? That seems to be the same concept as the quote you cited from the parent comment: "either the return wasn't commensurate to the risk".

[snapcaster]

That "special" people got access to credit while normal people have their lives destroyed duh

[n_u]

> It cost the taxpayers nothing (in fact it made us money)

I was surprised to learn that the "bailout" was in fact a loan that was repaid with interest for a "net profit of $121 billion" [1] rather than just giving the banks money. After learning this, I polled many people around me and few had understood the terms of the transaction. So I think there may be significant public misunderstanding there.

Even if people do understand it was a loan, there's an argument to be made that the money could have been spent in better ways (e.g. early education improvement, preventative healthcare etc. that also give long term returns in preventing crime and reducing healthcare costs). If you believe not giving the loans would have caused the total collapse of the economy and worsened of all of those things (crime, healthcare, education etc.), then it seems a worthwhile investment. But not everyone may share that perspective.

> What part of that are people mad about, and why?

Another element of the controversy was the payment of $218 million of bonuses to the executives of AIG which was being bailed out and effectively run by the federal government [2]. Apparently the government allowed the bonuses because Geithner said there was no legal basis for voiding the bonus contracts.[3]

Some people think controversy over government mortgage relief spawned the Tea Party movement based on this speech by Rick Santelli [4] about his dissatisfaction with the government's bailing out the "losers" who couldn't afford their mortgages.

Some people also feel there could have been more regulation of the financial sector or breakup of big banks [5] or more stipulations attached to the loans.

Just some suggestions based on my understanding of the history.

[1] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#...

[2] https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy

[3] https://youtu.be/uYJLyGoWbzY?si=geM87strQlH7EURN&t=1079

[4] https://youtu.be/5v1EtiEuSEY?si=055bAuiZiIq-YHXy&t=3023

[5] https://en.wikipedia.org/wiki/Brown%E2%80%93Kaufman_amendmen...

[rcxdude]

It seems only the very simplified narrative actually sticks, especially when it is convenient for anti-establishment types to do so (and realistically, approximately no-one really _likes_ Wall Street). But I think it's important to consider that while probably the government didn't go as far as it could, it did for the most part help prevent the crisis from getting worse for those who were not responsible while for the most part not doing much for the people working in finance, especially those that they could nail for outright fraud.

[shimman]

People are mad because the government bailed out banks over people, the last time this happened FDR bailed out people over the banks.

If you can't understand why people are angry that the government continues to give away large amounts of corporate welfare without protecting people, then I'd definitely read up on people movements because a few are brewing across the country and all of them want blood.

[pragmatic]

https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much...

What's your source?

[dumah]

This is one of the most sustained bad-faith arguments I’ve seen on HN.

The idea that 4 of the largest investment banks in the US were destroyed is not just utterly false, it’s hard to imagine how one could interpret the outcome in this manner.

Why would anyone be happy that the government offered handouts that were stolen, low-level criminals prosecuted, meanwhile every single principal who was culpable went unpunished?

I don’t need to hear from you how this is off-base or I’m misunderstanding. I’m close to principals involved in the crisis and worked for years in the response to it, and have heard what went on in the meetings dramatized afterwards.

[pjc50]

> every single principal who was culpable went unpunished?

Who, specifically, was culpable for what? I appreciate that anger is not a charge sheet, but .. we could actually do with a more enumerated list of who specifically did which specific illegal act, in order to have a proper discussion.

[BobbyTables2]

What about the car companies bailed out…

Now they act like they’re doing us a favor by negotiating to sell a vehicle only a little above sticker price.

Excuse me while I vomit…

[dash2]

More generally, be very suspicious when someone offers you investing advice dressed up as a call for solidarity and revolution. It’s intellectually dishonest and emotionally manipulative.