On reflection, Perhps we should perhaps have gone with a higher figure, but chose the conservative figure'. So, we are thinking of increasing the "4 trillion" to "over 10 trillion" to reflect a mid-point between the variation in estimates. Thanks for pointing it out!
Yeah, but the bulk $12 trillion number is unrealized GDP, due to the recession. If your going to count that, you need to count the excess GDP generated in the years leading up to the crisis by free and easy credit as the bubble inflated.
Here's the irony, banks needed to be bailed out because they were sitting on bad assets. The bad assets typically were mortgages which were not being paid. But the loans had been made -- that money was sloshing around the economy all though 2004-2007. That isn't to say people who took vacations on cash-out mortgage refi's are the bad guy. I don't think they are.
My take is the large financial crisis, that is the giant asset bubble which burst in 2008 was ultimate caused by many players, both small and large, making (in retrospect) imprudent decisions in good faith.
I am all for outing fraud and market rigging, and all sorts of other illicit shenanigans, but the crisis itself was brought on by credit and leverage, like every other crisis before it.
Better Market estimated at 12.8 trillion: http://bettermarkets.com/sites/default/files/Cost%20Of%20The...
IMF said $4 trillion dollar: http://www.imf.org/external/pubs/ft/weo/2009/01/pdf/text.pdf
On reflection, Perhps we should perhaps have gone with a higher figure, but chose the conservative figure'. So, we are thinking of increasing the "4 trillion" to "over 10 trillion" to reflect a mid-point between the variation in estimates. Thanks for pointing it out!