Financial Crises: 2007-2008 and History’s Lessons

Published on
April 23rd, 2018
25 minutes

Financial Crises: 2007-2008 and History’s Lessons

The Expert View ·
Featuring Richard Sylla

Published on: April 23rd, 2018 • Duration: 25 minutes

In this second part of a two-part piece, Richard Sylla, Professor Emeritus of Economics at New York University, shares his idiosyncratic view about the factors that led to the credit crisis. He also provides a historian's perspective about the potential pre-crisis signs that investors might want to look out for. And he discusses the extent to which history has or has not prepared us to deal with the next crisis. Filmed on March 12, 2018 in New York.


  • LJ
    Lucille J.
    27 May 2018 @ 23:27
    If everything is great- Why did Trump get elected.
  • WG
    Wade G.
    9 May 2018 @ 23:07
    Well, that didn't stand up to Part 1, but maybe it was unrealistic to hope so. I can't help but wonder what a future Fed will learn after the present period completely unfolds. Perhaps enough to find other employment.
  • BM
    Bryan M.
    24 April 2018 @ 00:26
    I fell asleep after a couple of minutes. Did I miss anything???
    • BP
      Bryn P.
      24 April 2018 @ 02:54
      Impossible to sleep with that music..........c'mon Realvision find some tune thats less jarring.
    • JS
      John S.
      24 April 2018 @ 06:04
      Find guests less jarring than economists!
    • DS
      David S.
      24 April 2018 @ 21:23
      If you were asleep how do you know what you might have missed? DLS
    • JM
      John M.
      27 April 2018 @ 03:37
      Well you missed how we should be very grateful for Bernanke's leadership.....
  • LV
    Luís V.
    26 April 2018 @ 14:10
    Can only imagine what would have been if James Grant did this interview with Sylla. It would have been priceless.
  • dm
    dude m.
    24 April 2018 @ 20:23
    Another good vid, RealVision. As another viewer intimated, Raoul and Grant are very intelligent, well spoken and great personalities! I'd like to see more of them, listen to their ideas and even cross-interview each other. Great people to watch and learn from. Thanks RealVision! Your the best!
    • BC
      Burton C.
      25 April 2018 @ 02:09
      This vid was fine.. nice commentary, but didn't tell us anything that the average subscriber didn't already know. Simply nothing new. Would have liked some analysis
    • BC
      Burton C.
      25 April 2018 @ 02:19
      Actually Mr Sllya lives in La La land. Several times he states how the FED learns from mistakes and previous crisis. Seriously? Please list for me recessions that the FED has forecasted? Ans: 0 Ben Bernanke was the best man for the moment? Gwaaad!
  • PD
    Peter D.
    23 April 2018 @ 12:55
    Poor Sylla is getting foggy in the head. "The 1930s financial reforms gave us 70 years of financial stability." "Bernanke was the right man at the right time." Sylla seems to forget America's 1971 global gold default, which launched systemic exponential global credit creation, which continues to this day, and sits like a time bomb, ready to implode at any time. As for Bernanke, didn't "save" the system .... his work played a key role in brining it down. ****** Sylla's work in updating Sydney Homer's classic book The History of Interest Rates, makes him an invaluable source. However this interview suggests that it may have been Homer that did the heavy lifting on that book.
    • JM
      John M.
      23 April 2018 @ 23:27
      Well said.
    • DS
      David S.
      24 April 2018 @ 21:49
      You are attacking the symptom not the cause. The cause is out of control spending in Washington - all sides. We will always have bubbles caused by greedy people, but US governments at all levels need to turn-their-ships- around. Congress is trying to push the expenses down to the states, the states are trying to push the expenses to the counties and cities. Where did Congress get the idea that Social Security is an entitlement? I believe that my employers and I paid for this insurance with every paycheck. Then Congress "borrowed" the money and added a lot of entitlements to the Social Security Program which were unfunded, of course. Where are term limits? Regardless we are in a pickle of our own making. DLS
  • AM
    Alonso M.
    23 April 2018 @ 16:46
    Sylla mentions the economy runs on credit. Given his knowledge of economic history, it would have been good for him to reference data that shows the unmistakable decline in the marginal productivity of debt. Whereas credit expansion keeps economies "moving", it is the pace of movement that seems to be in terminal decline. The declining marginal productivity of debt over the past few decades is not something that can be turned around unless the quantity of debt is reduced and/or eliminated. Hence, it seems the monetary system will need a reset at some point, perhaps through a slow, steady, and almost manufactured process.
    • DS
      David S.
      24 April 2018 @ 21:30
      Good comment. Higher interest rates - short and long term -will help to correct the misallocation of funds. DLS
  • CW
    Casey W.
    23 April 2018 @ 17:35
    I’d agree with the consensus here. His version of “history” seems a bit peachy vs others on the same topic. I’d throw out a couple other PHD’s that could take on the counterpoint Dr. William Boyes, Dr. Robert (Bob) Murphy, Dr., and Dr. Thomas Woods to name a few.
    • DS
      David S.
      24 April 2018 @ 21:28
      Are dramatized reading of history better history? DLS
  • SW
    Scott W.
    23 April 2018 @ 23:42
    Dr. Bob Murphy is an outstanding counterpoint candidate. What's interesting about Murphy are the aftermath predictions he made with fervor and regularity circa 2011, 12, 13 but with diminishing frequency as the "recovery" extended. He at one point conceded that much of his predicted consequences from QE and Fed action had not materialized and offered explanations for why, hinting that was perhaps early rather than wrong. And this is the crux of the matter. Does the Fed still have control? Did they ever really? Is Sylla wrong but late to Murphy's right but early? RV, perhaps we could queue a discussion between Raoul and Grant on this matter. Raoul seems he might hew to the "Fed-in-control" camp while Grant has long argued control was lost via runaway debt some time ago.
    • DS
      David S.
      24 April 2018 @ 21:26
      The Fed only has bad options with all of Washington and the deficits out of control. DLS
  • KS
    Kathleen S.
    24 April 2018 @ 19:08
    This is all about the end of empire and at the end you see this out right plunder, it is disgusting. Bastiat wrote about this in "The Law" which was written in 1850, but could just as easily have been written yesterday - when outright fraud and theft are legalized the end can not be far off.
    • DS
      David S.
      24 April 2018 @ 21:21
      Kathleen, please give several short specifics. I enjoy reading your comments, but I need help with this one. DLS
  • BP
    Besar P.
    24 April 2018 @ 15:38
    A nice dose of reality for long term investors. I particularly liked his comments that we might see higher short term rates due to expansive fiscal policy so late in this cycle. That was a good point
  • tW
    tgwtom W.
    24 April 2018 @ 13:27
    So he knew the bottom but now vague concerns but not calling (knowing) a top.
  • JM
    John M.
    23 April 2018 @ 23:23
    He thinks there will be another crisis? Not in our lifetime, according to Janet Yellen! Bernanke was the right man, in the right place, at the right time?
  • FB
    Floyd B.
    23 April 2018 @ 22:46
    Some of the criticisms of this video seem a little harsh. The major point is know history and the mistakes throughout history if not you will think this time is different and you will repeat them. Having a sense of where you are in a cycle is good advice.Having an understanding of human nature is good advice as well. This simple advice is ignored by novice as well as some of the greatest investors at their peril.
  • TE
    Tito E.
    23 April 2018 @ 16:31
    How does a beautiful forest or an ocean benefit from simplistic meddling? It does not. This is simply a story of extremely large and growing unintended consquences. The hubris of these people, to think they have such laplace-demon-style hiveminds as to do better than a natural system is astounding. I have no big qualifications, with all due respect; Benanke didn't learn anything and neither did you Professor.
  • JS
    John S.
    23 April 2018 @ 11:21
    Only towards the end did he even mention shadow banking. How about explicitly stating that the exponential growth in housing was an avenue for Eurodollar-based credit expansion? The housing bubble was Eurodollar financed! Here we are with a dysfunctional global monetary system 10 years post 2007/8 and economists still haven't figured it out the need to reform it into a stable, functioning system. To quote Jeff Snider - 'The technocracy doesn’t work because it isn’t technically competent'. The Fed seems to have learned little to nothing.
    • VP
      Vincent P.
      23 April 2018 @ 14:38
      Something went wrong when Sylla compared a Macy's sale with a stock price. Perhaps the analogy is a "depreciating asset"??? Also, "sniffing out" a market move makes him look like a bridge troll looking for a poor lass passing over it. With 2x debt to global equity, I'd say money will not and and cannot ultimately resolve this gigantic slow moving train wreck! It does not cease to amaze me how much risk people are STILL willing to take for nominal returns that do not keep pace with rising standard of living expenses for the average person. Amazing!!
    • EK
      Emil K.
      23 April 2018 @ 14:55
      Let me take this opportunity to request more Jeff Snider. (For those unfamiliar with this work it is not easy to understand at first but it is well worth your while and quite possibly the most accurate understanding of the last ten years freely and regularly available to the public.
  • SS
    Sam S.
    23 April 2018 @ 14:45
    Pretty sure we heard Janet Yellen say, she didn't really know why the 2007-2009 crisis even happened, as though it was more engineered than not. Also heard that Goldman Sacks has a long history of battles with Lehman Bros and Bear Sterns, buying lots of political influence to bring down their competitors, when the Fed could have saved these companies (they chose which ones to save or not) with a pretty small amount of capital compared to 4 Trillion that Bernanke "clicked" into the banks/investment houses. Cash Option exposure for LB was like $190 Million-----Ask Trader Vic. The truth in hiding in the bull-sh******t. Mr. is right about using your instincts to pay attention and protect yourself.
  • GM
    Greg M.
    23 April 2018 @ 14:10
    RTV - Lets see a debate between him and Robert Murphy (battle of NYU). Two views in economics that are opposed. I find this interview humorous that he can't comprehend a world without a central bank. He forgets to mention Basil II in relation to the banks buying mortgage backed securities. The ratings agencies gave these securities AAA and the banks needed to fill out their capital structure. I remember talking to people and they knew this stuff was junk but they didn't have a choice. By the way - the housing bubble started bubbling in the 1990s with Andrew Cuomo at HUD. The Federal Reserve and Greenspan dumped the gas with 1 percent interest rates. The fundamental disagreement I have with him is if you distort the price of money then you distort the entire capital structure of production.