Lending – our fault or the Banks?

Understood, but I was actually being tactful 🙂 There aren’t enough *’s around to cover what I really think of our elected representatives, be they red, blue or yellow (or green)..

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The US and everyone else’s subprime market was a creation of the credit based model that the Fed and Golden Gordo used – the roots are back in the nineties.

I don’t know anything about the gold selling to be honest, it just seems like poor judgement to me! What happened to the proceeds? What does the UK have to show for it?

There’s a reason I’m in Japan – even after earthquake, tsunami and meltdown I’m still reluctant to come home for good in October! Actually if you want a real good financial disaster story have a look at Japan’s one – it’s a corker!

I might actually research this a little! A lot of what I’ve written could be obllocks 🙂

Well quite! I’m still at a loss as to how Gordon Brown played a part in the US subprime market. Maybe after you’ve done your research it’ll come clear.:)

Gordon Brown sold a proportion of the gold reserves when the price was decreasing. It levelled out after that sale and stayed level for a while before climbing – I’m not sure how he could forecast the steep rise in gold price, especially when it was falling at the time.

Oh and another fing! Fred and Fanny Mac were lenders to high risk home buyers as well: as soon as the economy started to cool a little, their foreclosures went up and the housing market contracted.

Bad luck chaps.

I might actually research this a little! A lot of what I’ve written could be obllocks 🙂

Ahhh, but the root of the real estate collapse was the so called “toxic” debt being traded to fund lenders like Fred and Fanny (or whatever they were called!). That toxic debt was high risk, high interest credit (biggest risk, biggest return) and when that end of the debt chain saturated it was realised that a lot of wealth only existed as potential repayment of debt: that is, nothing. Fred and Fanny collapsed when the debts they owned started to be dishonoured and the whole lot fell down from there. I’ll try to work out where Northern Rock fits in, but I reckon it had the same root causes – poor investment choices with toxic funds.

Noo Labour removed safeguards and controls on borrowing, following the US lead and allowing an economy built on money that had not been earned yet (and the pillock sold the gold too).

This is my understanding of it anyway, feel free to discuss.

Post 700! Woohoo!

But that ignores the real cause of the credit crunch which was the collapse in the US real estate market causing major financial institutions to collapse. I don’t think Gordon Brown or indeed Tony Blair had a hand in that. I don’t recall the government making credit easier post 9/11 either.

As far as I am concerned the gummint used the easy availability of credit to stave off a recession throughout the late nineties and post 9/11. Gordon Brown promised no return to boom and bust and the only way was to allow people to finance their lives by credit. It was like giving everyone a virtual payrise without an immediate impact on inflation.
The banks were happy cos they could charge interest, and the retailers were happy because people bought stuff on credit and remortgaged their homes to finance depreciating items like cars. Remortgaging artificially inflated the value of property which meant that more lemmings leapt after the fast buck. Then “they” realised nothing was holding the whole lot up (bit like a 2 year old learning to walk – they suddenly realise that they are not holding on to anything and fall flat on their ****), the **** hit the fan and we all got covered.

The daft Scotsman thought that smiling Tony (the oh so successful Middle East Peace Envoy and WMD believer) would step down, and he (Gordon) could lose the next election before the whole unsustainable smoke and mirrors game collapsed and it could therefore be blamed on the Conservatives.

And people wonder why I don’t trust politicians…

Simples the banks have a reserve of Gold when they started lending such huge sums of money they sold the gold to cover the loans, hoping they would recoup the money to buy the gold back unfortunately that didnt happen so the banks found themselves unable to cover what us the “public” had borrowed so they had to get all the Gold back sharpish (Remember all the adverts on TV for selling your Gold?) when we the public didnt sell our Gold back they the “banks” had to be bailed out.

They the “Banks” dont want you the “public” to know that so they blame you the “public” for borrowing too much when in fact the “Bank” should never have leant the money in the first place because they the “Bank” didnt have enough Gold to cover the loan in the first place!!!

As for a “Bank” saying you have to give two days notice thats absolute rubbish the bank by law has to have enough cash in to cover what might be withdrawn in one day plus a certain percentage above that, What they really wanted to do was invest your £2000 on the stock exchange or wherever to gain perhaps half or more back so they wouldnt loose all your £2000

Clear as day aint it??? No its not and thats the way the banks want it 🙂

Then you end up miles away and petrol is nearly £1.40 a litre then you lose your job and there you are….debt crisis. Is that the individuals fault? I don’t think so. You can be as responsible as you like but there are circumstances beyond your control. I have been fortunate enough to remain in full-time employment since I started work. Others haven’t been so lucky.

It has always been the case that a stretch in the finances is required to buy your first house. We were no different. It worked out well for us.

When you buy at the market peak as I did you have no idea if the house prices will continue to rise, stabilize or plummet. You feel you need to get in there before it gets beyond reach.

It is not an issue, if you mean a problem, it is a choice which people have to make. Yes it would be better to pay £1000 for your own property, but only if you can afford it. If you can’t then you continue to pay £800 to rent, don’t you. Or you go somewhere where £800 per month will get you a house.

And I have no doubt it is difficult for first time buyers in “expensive” areas, but then you start somewhere else, don’t you? My wife and I put our foot on the bottom rung well away from where we wanted to be because that’s all we could afford at the time.

In recent years the market hasn’t fallen though, certainly not to affordable levels. I could not afford the house I live in if I had to buy it now and I’m glad I didn’t hesitate in 1989. Financially it was tough and Chancellor Lamont didn’t help, but I would not be in the position I’m in now.
It must be grim for first time buyers, especially in expensive areas. A 2 bed bungalow round these parts is around £180000; a mortgage would cost £1000 a month; rental would be £800 a month. Why give someone else £800 when you could get a foot on the property ladder for an extra £200? That’s the issue.

As with many “institutions” and organisations it is often proper that the government has a regulatory or overseeing role to play as our representative. Banks are corporate entities and corporate entities cannot have responsibilities in the same way that individuals must have.

I am not sure how to answer your second point. If we make a decision to borrow we have to way up all the consequences. You used the word “need”. Surely the more appropriate phrase should be “would like”. Many people carried on renting because they were more cautious than others and decided to wait in the hope, which was realised, that they could get on the ladder when the market fell. The more people borrowed the greater the demand and the higher the prices rose.

Governments job is to regulate the banks, which it did until the legislation was relaxed and in the case of the USA, repealed. It is not government’s job to regulate its citizens. We should be responsible for our own actions.

Maybe you could tell us why citizens should be responsible for their own actions but banks need to be regulated. Why shouldn’t the banks take responsibility for their actions as well? Are you saying that banks can’t be trusted but citizens can be?

It is very easy to criticize those that have borrowed too much but think of this. If you need to buy a house when the market is at its peak then the market plummets and you’re in negative equity, whose fault is that? I did exactly that in 1989. Bought a flat for £48000, sold it in 1997 for £36000. Still had a £48000 mortgage though. I could afford the hit (just about) but there were many that couldn’t and lost everything. Sometimes it is necessary to overstretch to get on the housing ladder.

You can blame the Banks. I went into my local branch, to get 2 grand out, to buy something, and was told I had to “Order ” my money 2days in advance.

I think the princpal reason for that is that they need time to get the physical banknotes in. They wouldn’t want stacks of thousands of notes lying around (not earning them interest) on the offchance that someone might want to make a large withdrawal. It would have been helpful for them to explain that to you.

And I too blame both the banks and the borrowers (but mostly the banks).

Le mot juste, Sky High.

Governments job is to regulate the banks, which it did until the legislation was relaxed and in the case of the USA, repealed. It is not government’s job to regulate its citizens. We should be responsible for our own actions.

So I think we are all agreed that there was fault on all sides, which was pretty obvious from the start.

S.H. I certainly rest MY case, what annoys me, is that the Government let them do whatever they want, whenever they want.and do S** all about it.

Lincoln .7

So I think we are all agreed that there was fault on all sides, which was pretty obvious from the start.

Don’t let the thread drift into ammonia.

So, it has been suggested that it is the lenders fault for borrowing beyond their means.
It is also a problem that the vehicle to borrow beyond their means is provided by the Banks.

Discuss.

Javelin, Horse juggling.

You can blame the Banks. I went into my local branch, to get 2 grand out, to buy something, and was told I had to “Order ” my money 2days in advance. I stated that I was not very happy, as it was MY money, and I should be able to withdraw it as and when I wanted it.
Considering the low rate of interest I get from my savings, I DO blame the Banks for the state we are in.
The only thing you can count on Banks for, is even though we as Tax payers bailed them out, they can still afford Millions in bonuses for themselves.

Lincoln .7