Perhaps if poor people had managed their finances better
The global economy wouldn't be in the state it's in.
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 9:36, 54 replies)

but then they wouldn't be poor?

( Finite "Aardvark sorted out my shit!" on, Tue 15 Jun 2010, 10:00, closed)

But if the poor weren't poor, would the rich be rich?

(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 13:15, closed)

If banks...
... had thought about who they were lending money to, and for what, neither the "poor" nor the banks would be in the situation they're in.

Always blew my mind that one... "Can I borrow £100k to buy a home to live in which you can repossess if I get into difficulty?" = No.
"Can I borrow £20k to spend on holidays and other crap leaving nothing to show for it, by the way I have no capital assets whatsoever so if I default on payment it's tough luck for you." = Yes.
(golddust QOTW now revolves around being a cunt, Tue 15 Jun 2010, 10:06, closed)

Hey, the worlds best voodoo economists came up with that
they promised 10 years of unmitigated growth and that's what we got with a massive crash at the end
( Colonel Dracula Two manky hookers and a racist dwarf, Tue 15 Jun 2010, 10:15, closed)

like a tick?

(likeajackhammer, Tue 15 Jun 2010, 10:28, closed)

But was paid for...
...by allowing house price inflation to grow unchecked for ten years.

With both banks and government (thanks a bloody bunch New Labour) doing all they could to inflate the price of brick and mortar assets but hyping the market demand and restricting supply, the net wealth of British banks was kept artificially high.

Moreover, banks could afford to authorise high risk loans because the deregulated banking market allowed these debts to be sold on the open market to third party companies willing to take this debt on.

The fact that the Treasury used their own methods of tracking inflation which ignored key pointers meant that they had very little warning that the supply of money was running out.

The biggest kick in the teeth isn't just that the government have allowed the cost of housing to escalate to unsustainable levels, but that they were so anxious to avoid the negative equity which led to the downfall of the Conservatives in the 1990s, so they borrowed against future economic growth to ensure house prices remained inflated during an election year - didn't want to upset middle class Daily Fail reading voters did they?
(Bicycle Repairman "you're also a bit of a wanker", Tue 15 Jun 2010, 11:38, closed)

I love the fact that people totally blame the government for this.
house price inflation is mostly driven by two things. lack of supply (yes, the government has had some say in this, but mostly it's because we live on a fucking island with a fairly high population density and a generic obsession with green fields) but mainly by the fact that people will pay that much. That's more or less bugger all to do with the government, really. It's down to this insane British obsession with owning your own house. As far as I know we have by far the highest ownership percentage in Europe. Other countries just rent.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 11:59, closed)

You're partly right...
...but successive governments have encouraged home ownership to grow by first allowing council tennants to buy their own accomodation and then failing to build new social housing.
(Bicycle Repairman "you're also a bit of a wanker", Tue 15 Jun 2010, 12:06, closed)

While that's true
if people weren't obsessed by buying rather than renting it still wouldn't matter. It's a British mindset thing, and added to this viewing of property as an investment rather than a roof over the head means people move more often. People moving more often drives up prices.

More renting and 25 year fixed mortgages would help. But it's a mindset thing, and that's mostly driven by the press and public attitudes rather than the government.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 12:28, closed)

No, mostly it's because we live on a fucking island where
a quarter of the population owns half the houses or more, artificially restricting supply.

The rental market should not exist. And I will quite happily blame any and all governments for allowing, nay, encouraging people to own more than one house, advertising it to the populous as some kind of "shrewd investment".

All the 40% Capital Gains tax on selling second homes does is encourage people to not bother selling. We need a cripplingly high income tax on second home rent and 0% capital gains on sales.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 13:20, closed)

"the government"
does not advertise anything to the populace as a "shrewd investment"

I'm not disputing your numbers or your reasoning. But I'm fairly sick of "the government" being invoked as a bogeyman to blame for the behaviour of the people. Most other european countries run by similar rules to us but don't have this problem, because the populace view things differently.

Incidentally, there isn't anything specifically "wrong" with a small proportion of the population owning a large proportion of the property. Unless you think that regardless of your financial situation you have an inalienable to own a property? Because that's the whole fucking problem, right there.

A fair and just society would allow all a roof over their heads regardless of circumstance. In an ideal world. This country is obsessed with the individual owning that roof, and it needs to fucking get over it if it ever wants a stable housing market. The government is hardly entirely to blame for humanities greed. Unless you want to take the dumb catch-all route of blaming Thatcher as well?
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 13:43, closed)

That's where we're going to have to agree to disagree and leave it there
because I think we all have an inalienable right to own a property.

I live in a place where huge city bonuses directly affect local inflaction and where one in three properties are a rented second home, and the people who live in them can pay the rent just fine (which covers the mortgage payments nicely) but can't afford to 30 grand or more for the mortgage deposit.

The artificial squeeze on the supply of houses increases demand and increases prices. We do not have a shortage of houses in this country, we just have a set of classes from middle upwards who have been educated to believe that the next best place to put your money after your own home is...another home.

Maybe I'm wrong to blame the government for this "education", maybe I should blame the press. But who should I blame for the taxation structure which allows this horror?
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 13:56, closed)

Well, it'd be a dull world if everyone agreed. But I'd be interested to know why you think that's a right?
Do you think you have an absolute right to own other things you can't afford? I'd quite like a Lotus Evora, for instance.

but, again, the taxation rules aren't really the problem. Again, notice, they aren't a problem in other countries where the rules are similar. It's what people choose to do with their money which is the problem, and a government that seriously interferes with that isn't a democracy, it's a dictatorship.

If you mean areas of London by the way, the "city bonus" property price theory is a bit of a red herring. It's more driven by foreign investment these days and has been for some time. That's probably about the only area where maybe the government could change things, but they'd struggle with EU legislation and free trade I suspect. One reason why Switzerland isn't in the EU is that they can prevent non-Swiss nationals from buying property. But it has some horrible downsides, particularly for resident non-Swiss natives.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 14:24, closed)

lol, think we're talking at cross purposes here...
I'm not talking about any right to own things I can't afford, I'm just lamenting a world where I can't afford them due to others' greed.

Or rather, I could afford them if I were willing to put myself in a crippling amount of debt, and in the process inslave myself to my boss and anyone else who might otherwise impair my chances of repaying.

I quite like saving for things and buying them, and having enough of a buffer in the bank that I know I could walk out at any time if I wanted. I'm nice to people because I generally want to be, not because I'm watching my back.

Unfortunately, saving might once have got me a house, car, comfortable life...but not these days.

I find these things very sad, Badge, and I like to imagine it's the government's or the banks or the media's fault, cos I don't think it's mine...but maybe you're right and we only have ourselves to blame.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 15:37, closed)

It's probably a little bit of everything
but we made it that way, I'm afraid. These things are sad but they appeal to the masses, whether because they lack the capacity to see the bad shit behind it or else they like to pretend it isn't there. But where you are right, in that 50 years ago saving would get you all those things, people these days demand them NOW and fuck the consequences. There is an extent that you have to accept that because the majority want it that way, and the country/world can't run another way for you or me's benefit. Sadly.

May I suggest leaving London and coming to Edinburgh? property's much cheaper ;)

But the greed that denies you these things? It's nice to blame the banks or some bankers or whatever, but it's humanity what done it. Sorry.

Oh. And I also advocate burning this fucking world.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 15:55, closed)

That would be lovely,
I've been to Edinburgh, it's a gorgeous place. Unfortunately I quite like where I am, too. Not London, can't stand the place...Brighton - where the londoners like to spend their bonuses.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 16:47, closed)

Except it has a shit beach

( sandettie light vessel automatic New Twitter - @bollocksreally, Tue 15 Jun 2010, 17:49, closed)

But people
are entitled to fancy cars, holidays to Ibiza, gigantic flat screen TV's without doing any work whatsoever. It's the noughties maaahnnn.
( whenanimalsattackhumans clad in global hypercolour, Tue 15 Jun 2010, 10:57, closed)

This, basically sums everything up in one short post.

( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 15:59, closed)

Now why didn't I think of that?

( The Teviot Moose major 5th., Tue 15 Jun 2010, 16:18, closed)

I don't think so.
I think the banks had a responsibility - one that they shirked in exchange for cash - to assess people more fully when they applied for the loans as to whether the potential recipient of said loan could be reasonably expected to be able to pay it back.

I mean - aren't banks meant to be expert institutions in finance? It's like saying "Well, humanity was going to breed the ebola virus, and you know what people are like - so the scientist dropped the petri dish and now it's got into the air conditioning - well - it's not our fault. Humanity shouldn't have wanted sophisticated bio-weapons with which to attack people in the first place."
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 16:24, closed)

Yes, they are.
what they aren't are our moral guardians, which is what you seem to want them to be.

And I fail to see how your other example does anything other than prove our point, not yours. You're saying that you really think in that situation it's the scientist's fault and not humanity's?
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 16:45, closed)

You mean you've not seen all the satanic rituals that bankers have to perform in order to get a job.
Boy, have you missed out!
( The Teviot Moose major 5th., Tue 15 Jun 2010, 16:47, closed)

See below re appetite for risk
Which, I might venture (ha!) a naive person could be forgiven for thinking might have been driven by greed.
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 16:57, closed)

And also driven by the need to provide a return to shareholders.
Who needed that return to fund their mortgage/loan payments... You cannot blame one group alone for what happened, and your abdication of any personal responsibility smacks of desperation.
( The Teviot Moose major 5th., Tue 15 Jun 2010, 17:04, closed)

They, er ... they would have provided a return to their shareholders anyway.
Wasn't it about the speed and grandure that was the issue, as opposed to the provision of a return?
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 17:05, closed)

I doubt anyone was in it for the speed and grandeur. These deals were usually quite private and very complex
They certainly weren't "get your coat, you've pulled" sort of material.

Provision of a return to shareholders is one of the key drivers of a public company, and the ability to provide the return "expected" by the market/investors led to increasing pressure to originate loans.
( The Teviot Moose major 5th., Tue 15 Jun 2010, 17:18, closed)

It's not "greed"
Greed is a simplistic concept applied to an individual. A PLC doesn't have emotions. It runs to generate money for it's shareholders. These returns support the investments and pensions of half the western world. i.e. all of us. We demand returns. The banks take risks within the operating conditions of the systems they work in. Shit, as they say, happens.

Incidentally, I particularly like the fact that the people who go "banks are responsible for lending to high risk customers who defaulted, they ruined the economy" are often exactly the same people that go, "fucking hell, I can't get a mortgage or a loan now for love nor money, they want 25% deposit and I missed one fucking credit card payment 2 years ago and it's not FAIR" ... and miss the 5 tonne irony truck crashing straight into them.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 17:35, closed)

It's not "greed"
It's avarice
( sandettie light vessel automatic New Twitter - @bollocksreally, Tue 15 Jun 2010, 17:51, closed)

It's not avarice either.
You can't apply singular human characteristics to a company.
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 17:54, closed)

There's nothing inherently wrong with wanting a sensible middle ground
or being slightly exasperated when things bounce from one extreme to another. There's always a goldilocks zone.

The great philosopher and poet Mr F Bulsara knew well the value of a comfortable middle-ground. As he once wrote, 'too much love will kill you - just as sure as none at all'. Given the nature of his death, you have to admit that he had a point.
( Happy Phantom has been to Hastings, Brighton, and Eastbourne too, Tue 15 Jun 2010, 22:57, closed)

well, yes.
But the idea of a goldilocks zone, while it works in basic quantum physics, isn't likely to in economics, because we are affected by what the world does as well as what our country does, and we only have any degree of control of the latter. It's a nice idea, but since a goldilocks zone is something that a universe reaches naturally (or more rather, must be in, because if it wasn't, that universe wouldn't exist) then surely it's a self-fullfiliing proficy? If there was one, we would be in it.
( the mighty badger Aphrodite, on a bar stool, by your side, Wed 16 Jun 2010, 9:11, closed)

The banks assessed people as fully as the ever have.
It was the bank's risk appetite that was too great, as well as their assumptions on the levels of default. Add in a regulatory environment that allowed them to take that risk and the development of ABS and CDO securities, and the reasons those loans were allowed becomes more murky. As mentioned in a previous thread, it's not a simple case of "it was the greed bankers wot did it!".
( The Teviot Moose major 5th., Tue 15 Jun 2010, 16:46, closed)

Hang on, I'm confused
Their appetite for risk (and therefore high returns) was too great... but it wasn't the greed of the banks that was at fault?

Simultaneous greed and no greed? You are clearly a heavy-duty philosopher!
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 16:53, closed)

^What she said^

( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 16:56, closed)

*giggles*
Oh, stop it you.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 17:18, closed)

I don't disagree that there was fault in the greed of the banks, and the controls (or lack of).
However, to blame the banks alone is rather overly simplistic. Much like blaming the arms race for WWI. Yes, it was a factor, but there are numerous other interconnected factors. To blame one group solely is far too simplistic.

Also, the banks believed that they could sell these debts to other, more risk-taking investors. And in alot of cases did - especially since the ratings agencys (who are obviously not to blame, since it was all the devil banker's fault) rated various tranches of the securitisations as AAA.
( The Teviot Moose major 5th., Tue 15 Jun 2010, 16:57, closed)

Pffft.
"We didn't do it, and anyway - they said it was OK to!"

I see.

No responsibility.

In other news, I tripped over in the street the other day while wearing big shoes. So I'm going to sue the council.
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 17:03, closed)

I'm not arguing that bankers are blame free. Far from it.
I'm arguing that bankers are not solely to blame, which seems to be your stance.
( The Teviot Moose major 5th., Tue 15 Jun 2010, 17:09, closed)

In the words of Justin Sullivan "Everybody feels guilty, so anyone can pay", right?
Right.

I'm just off to rape a few grannies. Society should have brought me up better.
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 17:25, closed)

^^ I can't help but feel responsible for this
I'm going to go out and buy a shitting big TV to cheer myself up.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 17:33, closed)

So lets sum up here
Bankers - to blame
People who went to the bank for a mortgage and were told they could borrow more than they thought - to blame
People who were a bit short and wanted second mortgages even though they had already borrowed much of their "credit rating allowance" and were granted them by their bank - to blame
People who sold the loans pretending they were assets (bankers) - to blame
People who resold the loads pretending they were assets (bankers) - to blame
People who consolodated the loans because they'd been bought and sold too many times and had little return value left unconsolodated (bankers) - to blame
People who thought this kind of risk, getting millions of tiny returns on many-times-consolodated-and-resold loads which, ultimately, relied on the economy expanding forever and house prices rising stupidly quickly wasn't completely insane (bankers and banking regulators) - to blame

Yes, I can see why you might think we can't simply blame the banks.
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 17:29, closed)

Or alternatively
Bankers - to blame
People who went to the bank for a mortgage and were told they could borrow more than they thought (Joe Public) - to blame
People who were a bit short and wanted second mortgages - to blame
People who sold the loans pretending they were assets (bankers) - to blame
People who were a bit short and wanted second mortgages - to blame
Ratings agencies who the loans pretending they were assets as higher quality than they should (Ratings Agency) - to blame
People who didn't provide any sort of rules around what you could or couldn't lend or repackage (Regulators) - to blame
People who didn't fund the regulatory framework appropriately (Government) - to blame
People who put pressure on banks to make ever bigger profits (Investors) - to blame
People who encouraged people to borrow more and more with a have it now attitude (The Media) - to blame
People who relied on the economy expanding forever for the feelgood factor that resulted in their reelection (The Government) - to blame

Yes, you can see why I might think we can't simply blame the banks.
( The Teviot Moose major 5th., Tue 15 Jun 2010, 17:36, closed)

Couldn't have put it better myself
Though I tried to...
b3ta.com/questions/badmanagement/post755518

There are many forces at work in this country which have caused the problems we have..."Cheap" money being lent to people who have been conditioned by advertising in to a constant state of want...

I think you are right that banks, government, advertising and no regulation are at fault, and I think Badger is right that we all need to face up to the fact that it is all our own greed and responsibility as a society.

But who will win? There's only one way to find out...
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 20:36, closed)

You've missed
"all of society who have any investments or pensions or any non-property based financial provision for the future who demand dividend profits on PLCs, therefore fueling the whole risk/reward financial strategy"

You can't win. you don't want people investing in property for their future (I don't necessarily agree but I can see your point there) and now you can't have people having shares or pensions either in case it encourages companies to try and make a profit?
( the mighty badger Aphrodite, on a bar stool, by your side, Tue 15 Jun 2010, 17:39, closed)

I don't want to live in a society which is obsessed
with the idea that everything can be payed back later, but that the only way to "get ahead" with "real investment" is to buy three houses and rent them out, selling them later at a profit. If you do this, there are three fewer houses available to buy and the rest go up in price. This particular example is a huge bugbear of mine, as you probably guessed.

But with your bit about investments, you're trying to put words in my mouth. I never said I was against pensions, shares, buying and selling, general bartering...these are things that our economy is built on and it kinda works.

What doesn't work is where a loan shark sells the debt to a bailiff before the debt is due, who sells it to another who sells it again. Then when the bailiff goes knocking on the door, he finds a frail old lady. And this is basically what happened a couple of years ago.

There's two things you both need to watch: A series on YouTube called, "Money as debt" and Michael Moore's "Capitalism: A love story".

In fact, everyone should watch the first one, as it proves quite well that money is a figment of its own imagination.

Apologies for carrying this on so late, been a long trip back from work... :-)
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 20:47, closed)

The idea that debt can be paid later
is a cornerstone of modern capitalism. Unless you want to live in China or Cuba, good luck avoiding that ;)

I'll check out that YouTube thing, but I'm not sure you're not slightly missing the point. You've ascribed human characteristics again (a frail old lady) to a system of corporations which can have no such properties. I'm not saying that the issues with the banks are either good or desirable. Only that they are an difficult-to-avoid byproduct of a system which rewards short-termism. And we (the public) want a system that does that, because we want pensions and savings and to be comfortable later in life. Divends=short-termism. It's like spending years and years training a dog to attack intruders, and then blaming the dog when it bites you.

As an aside, for the love of god, fucking don't pay any attention to Michael Moore. He's an attention seeking, lying, scheming arsehole with no more morals or integrity than the things he seeks to attack. Almost all his writing and proclomations are also wrong and very easy to show as wrong.
( the mighty badger Aphrodite, on a bar stool, by your side, Wed 16 Jun 2010, 9:06, closed)

That's the trouble with these debates...
we both think the other is missing the point.

The "old lady" in my analogy was the person who owed the original debt, not the corporation.

The corporations in this case, forgot that the person who owed the original debt was a real person who can have real problems repaying that debt, and forgot that the debt wasn't an asset, and saw repayment of that debt as a "revenue stream".

The more times the debt is sold on for a profit, the smaller that "revenue stream" gets. Then it is so small, that only when thousands of these sold debts are consolodated do they give any return - but that return could be big if enough are consolodated.

This consolodated debt then gets bought and sold on the open market, the same as other stocks, shares and bonds.

But if the economy doesn't grow, and, instead, doubt grows, lots of people get affected by certain news, the original "revenue streams" disappear in people's bankrupcy, and pretty soon you have institutions which have come to rely on these streams as sources of large revenue in a lot of trouble. What should be a "blip" becomes absolutely critical, as the economy has been taken right to the wire.

I'm not attributing human emotions to large corporations, I'm attributing absolute stupidity in over optimism and a complete removal of their view of reality - they could only see the numbers. "woods" and "trees" spring to mind.

But there is another view, that those large corporations are made up of individuals who each (should) have their share of sense, decency and responsibility and who should have each realised and made each other aware of the utter naivity and insanity of what they were doing.
(MrOli is ugly, but in the morning you will be sober, Wed 16 Jun 2010, 11:28, closed)

fair comment
but in companies that big, it's in reality impossible to easily judge on a case-by-case basis. And individuals don't really effect the way things are run. And in any case, from the "company model" kind of thing, it's not naive and insane. This is exactly how it's supposed to work. Of course from an individual human point of view, it's not.

Mind you, at the risk of sounding like (even more of) a cunt here, why does it matter if it's a little old lady that owes the money? Still a debt. And a debt is a revenue stream. To consider it otherwise is a bit foolish. A bank doesn't lend money through the good of it's heart. Maybe smaller, more "personal" banks might judge situations on a more individual basis. But then they don't make as much money, and we don't get as big a pension, yadayada.

All of the stuff you're saying I basically agree would be better, from a "nicer life" kind of view. I'm jut trying to explain why reality isn't like this, and why it's largely down to us that it isn't.
( the mighty badger Aphrodite, on a bar stool, by your side, Wed 16 Jun 2010, 11:51, closed)

But that's exactly my point
At the end of that "revenue stream" is a little old lady who could die, get her pension cut, be forced into greater poverty by inflation, lose her husband. She defaults, no more revenue stream. It's the extreme example, but one which was repeated enough times with other debts and cirumstances to bring down all these "Investments".

To consider it as a revenue stream is fine - that's what it is. To consider it as an asset which can be sold at a profit, then consolodated and resold, then bartered for on the open market is madness.

Picture it not as a set of loans, picture it as a bet on the economy increasing in size at a rate of, say 3% a year. And picture it so close to the wire because of the continual bartering that a growth of only 2% can shake it.

Picture those loans as secured against houses, where if the bank forcloses it can sell the house - except it can't, because no one can afford them. But then again, if you default on a debt which has been sold, broken, joined, resold, buried in soft peat for 5 years and resold as firelighters, who sells the house, who gets the money from the sale and does it cover the debt?
(MrOli is ugly, but in the morning you will be sober, Wed 16 Jun 2010, 12:24, closed)

I shouldn't be doing this today
I'm far, far too busy.

Seriously, go watch "Money as Debt".

Been fun though :-)
(MrOli is ugly, but in the morning you will be sober, Wed 16 Jun 2010, 12:26, closed)

You could also sue your ringmaster for unfair conditions,
poor work uniform safety and being forced to drive a car others may consider "silly"
(MrOli is ugly, but in the morning you will be sober, Tue 15 Jun 2010, 17:21, closed)

Ooo! Good point!
*thinks*
( Je suis un vagabond is an unfunny, up your own arse middle class knob, Tue 15 Jun 2010, 17:24, closed)

So you accept no responsibility for your choice of footwear?

( The Teviot Moose major 5th., Tue 15 Jun 2010, 17:25, closed)