Do you want to bail the banks out?

[Geoff Kilpatrick]

I see that it's been proposed that the UK taxpayer bear the risk for mortgage securities to 'unfreeze' the housing market. So, you take all the risk and get none of the reward, and all to try and bail the banks and the government out of the mess!

 

http://news.bbc.co.uk/1/hi/business/7530273.stm

[Boris]

Does that mean we will all live in State owned accommodation?

 

Perhaps they should nationalise oil, gas, water, electricity too!

[Lovecraft]

Does that mean we will all live in State owned accommodation?

 

Perhaps they should nationalise oil, gas, water, electricity too!

 

Then sell them off to a Quango for next to nothing.

[Geoff Kilpatrick]

Does that mean we will all live in State owned accommodation?

 

Perhaps they should nationalise oil, gas, water, electricity too!

 

Nope, you'll just part own the financing, although you won't benefit from the ownership!

[Coco]

Why is today's or yesterday's price for housing the 'right' price?

 

Allowing the short sharp shock of the market finding the equilibrium price for housing is surely preferable to the drawn out death slide of Brown's attempts to nationalise the housing market?

[Geoff Kilpatrick]

Why is today's or yesterday's price for housing the 'right' price?

 

Allowing the short sharp shock of the market finding the equilibrium price for housing is surely preferable to the drawn out death slide of Brown's attempts to nationalise the housing market?

 

Correct, but it is politically expedient to attempt to 'save' (over borrowed consumers, builders and lenders) the housing market from 'collapse' (correction).

 

It'll have as much success as it has had in the States, IMHO.

[coppercrutch]

I see that it's been proposed that the UK taxpayer bear the risk for mortgage securities to 'unfreeze' the housing market. So, you take all the risk and get none of the reward, and all to try and bail the banks and the government out of the mess!

 

http://news.bbc.co.uk/1/hi/business/7530273.stm

 

What a joke eh...

 

Nothing frozen about the houseng market. There are houses for sale. There are people looking to buy. There are mortgages available for sensible borrowing. What exactly is frozen about that ?

 

Oh yes I forgot about he only problem - the hideously over inflated prices that people & developers expect for their houses.

 

What amazes me is the lack of reality from so many politicians and so called 'experts'. I have seen 2 big polls conducted for the BBC and both came out with the clear mesage that far more people wanted house prices to fall than to rise. Yet at the same time we see all this 'helping the housing market' nonsense spouted from those 'in charge'.

 

It is clear who they are trying to look after, and it is not the average person.

 

They are looking after themselves and their buddies in the banking sector.

 

House prices fall by 40% = everything is back to normal.

 

Fine a good few people will be bankrupted by it, the building companies that have no clue will go bust and a few banks will go the same way.

 

So what. That is what is supposed to happen in a free* country...

 

* Allegedly

[Lovecraft]

Like Marx said, to continue growth under capitalism, a certain amount of capital must be destroyed/devalued so the cycle can start again.

 

The difference this time is they are trying to get the government to cover the bust period instead of taking the hit themselves.

 

Extracting the urine with a massive hose pipe.

[footieman]

Its all good, by 2012/13 the National Housing Federation, in England, are predicting that house prices will be rising at a rate of 9% again.

 

http://news.bbc.co.uk/1/hi/business/7529144.stm

 

[King of the North]

What a joke eh...

 

Nothing frozen about the houseng market. There are houses for sale. There are people looking to buy. There are mortgages available for sensible borrowing. What exactly is frozen about that ?

 

Oh yes I forgot about he only problem - the hideously over inflated prices that people & developers expect for their houses.

 

What amazes me is the lack of reality from so many politicians and so called 'experts'. I have seen 2 big polls conducted for the BBC and both came out with the clear mesage that far more people wanted house prices to fall than to rise. Yet at the same time we see all this 'helping the housing market' nonsense spouted from those 'in charge'.

 

It is clear who they are trying to look after, and it is not the average person.

 

They are looking after themselves and their buddies in the banking sector.

 

House prices fall by 40% = everything is back to normal.

 

Fine a good few people will be bankrupted by it, the building companies that have no clue will go bust and a few banks will go the same way.

 

So what. That is what is supposed to happen in a free* country...

 

* Allegedly

 

 

House prices falling by 40% is far, far from desirable. Neither is a good few (try a good few thousand) people going bankrupt.

 

Much as I hate the idea of bailing out banks, I would take a hit in terms of tax to do so if it meant my biggest asset was going to make me money in a few years when and if i decide to sell it.

 

For the record, i bought my first place two years ago and have watched it go up in value about 30 grand in year 1 and return to what it was worth two years ago by now.

[coppercrutch]

House prices falling by 40% is far, far from desirable. Neither is a good few (try a good few thousand) people going bankrupt.

 

Much as I hate the idea of bailing out banks, I would take a hit in terms of tax to do so if it meant my biggest asset was going to make me money in a few years when and if i decide to sell it.

 

For the record, i bought my first place two years ago and have watched it go up in value about 30 grand in year 1 and return to what it was worth two years ago by now.

 

I am afraid it is. People that have borrowed too much need to learn their lesson. That goes for individuals, banks and the Governments. Of course there will always be people that have just been unlucky and been sucked in by the hype. Happens to us all at some stage. I don't expect to get bailed out when I am the chump who gets sucked in so I don't expect to have to pay everyone else. Fair enough IMO.

 

Petrol prices down by 40% - Woohoo !!

Food prices down by 40% - Woohoo !!

Clothing prices down by 40% - Woohoo !!

Gas bills down by 40% - Woohoo !!

 

House prices down by 40% - End of the World Armaggedon.....

 

Many people in this country are brainwashed and mental. End of story.

[Geoff Kilpatrick]

House prices falling by 40% is far, far from desirable. Neither is a good few (try a good few thousand) people going bankrupt.

 

Much as I hate the idea of bailing out banks, I would take a hit in terms of tax to do so if it meant my biggest asset was going to make me money in a few years when and if i decide to sell it.

 

For the record, i bought my first place two years ago and have watched it go up in value about 30 grand in year 1 and return to what it was worth two years ago by now.

 

There's another hidden problem here. Since Brown taxed pension funds in 1997, coupled with the property boom, it has appeared to most folk that "my property will be my pension". Except, as people should know, concentrating all your assets in one asset class is a recipe for disaster.

 

So, having attacked the pension industry and seen the complete flop of stakeholder pensions, one of the unintended consequences of the property boom has been to inflate people's expectations of the value they can obtain when they come to retire, ignoring fundamental issues such as the demographics at that time (more sellers than buyers) and the fact that the generations currently leaving school and university are completely over-borrowed and can't afford to get on the ladder anyway.

 

If they perform the 'bail-out' now there will be inflationary consequences and higher interest rates resulting from that.

 

The market needs to correct itself and it should. It may correct itself even quicker if unemployment starts to rise rapidly, which is the only reason why it hasn't.

 

Personally, I'm glad I sold up last year and I'm renting over here (Australia would be going through the same if migrants weren't travelling here in numbers but if unemployment starts rising it might choke that off as well).

[King of the North]

I am afraid it is. People that have borrowed too much need to learn their lesson. That goes for individuals, banks and the Governments. Of course there will always be people that have just been unlucky and been sucked in by the hype. Happens to us all at some stage. I don't expect to get bailed out when I am the chump who gets sucked in so I don't expect to have to pay everyone else. Fair enough IMO.

 

Petrol prices down by 40% - Woohoo !!

Food prices down by 40% - Woohoo !!

Clothing prices down by 40% - Woohoo !!

Gas bills down by 40% - Woohoo !!

 

House prices down by 40% - End of the World Armaggedon.....

 

Many people in this country are brainwashed and mental. End of story.

 

Ignoring your last comment, your comparison of houses with petrol, food and clothing just doesn't make sense. Of course consumer goods dropping in price is a good thing. Houses are more like investmentsIf people's investments, be they property, shares, trust funds etc were going to drop in value by 40% then understandably people are concerned.

 

I'm guessing you don't own a house?

[coppercrutch]

Ignoring your last comment, your comparison of houses with petrol, food and clothing just doesn't make sense. Of course consumer goods dropping in price is a good thing. Houses are more like investmentsIf people's investments, be they property, shares, trust funds etc were going to drop in value by 40% then understandably people are concerned.

 

I'm guessing you don't own a house?

 

And there we have it. The root of this entire problem. As I have already said many people are simply brainwashed. Houses are for living in. They provide a function, just like clothes or petrol. People historically buy houses to live in - to give them a place to call their own - a HOME. To not have to worry about moving about from place to place all the time. NOT AS A MONEY MAKING MACHINE.

 

Go out and ask any OAP property owners if they bought their house as an investment. I can tell you the answer will be close to zero. Greed is the problem here, nothing more nothing less. If you bought your home to live in then good luck. If you can afford to pay the mortgage then how much your home is 'worth' should have little impact on your life.

 

And as you are asking - no I do not own a house - either do you.

 

I will simply not pay stupid over inflated prices for something that will (99.9% likely) ,some time in the future, revert to its long term average.

 

This being average house = average wage x 3-4 times.

 

That will happen. When it does I will consider buying a house. I won't even think about it before then.

 

As you say your house has goen up by 30k then down by 30k. Has that had any huge impact in your day to day life ? Other than telling people how much your house is 'worth' ?

 

Not getting at you just trying to point out the sad state this country is in, where a home is seen more as an investment rather than a shelter. Sad.

[King of the North]

And there we have it. The root of this entire problem. As I have already said many people are simply brainwashed. Houses are for living in. They provide a function, just like clothes or petrol. People historically buy houses to live in - to give them a place to call their own - a HOME. To not have to worry about moving about from place to place all the time. NOT AS A MONEY MAKING MACHINE.

 

Go out and ask any OAP property owners if they bought their house as an investment. I can tell you the answer will be close to zero. Greed is the problem here, nothing more nothing less. If you bought your home to live in then good luck. If you can afford to pay the mortgage then how much your home is 'worth' should have little impact on your life.

 

And as you are asking - no I do not own a house - either do you.

 

I will simply not pay stupid over inflated prices for something that will (99.9% likely) ,some time in the future, revert to its long term average.

 

This being average house = average wage x 3-4 times.

 

That will happen. When it does I will consider buying a house. I won't even think about it before then.

 

As you say your house has goen up by 30k then down by 30k. Has that had any huge impact in your day to day life ? Other than telling people how much your house is 'worth' ?

 

Not getting at you just trying to point out the sad state this country is in, where a home is seen more as an investment rather than a shelter. Sad.

 

Dont get me wrong - I bought my house as a place to live in, and i intend to be in it for quite a while. But the idea of 'bricks and mortar' as an investment is not new, nor confined to 'gullible' people who have mortgaged themselves into serious bother (which thankfully i havent).

 

I reckon the predictions that prices will start to rise again in a serious way by 2011 is pretty spot on - thats the free market, and if developers are struggling to justify building new houses (which they are) then soon enough demand will begin to have a serious impact on prces.

 

However, as you say, since I have no plans to sell, its fairly academic. During the last month prices could have risen and fallen by 100% and it would have made no difference to me whatsoever.

[coppercrutch]

Dont get me wrong - I bought my house as a place to live in, and i intend to be in it for quite a while. But the idea of 'bricks and mortar' as an investment is not new, nor confined to 'gullible' people who have mortgaged themselves into serious bother (which thankfully i havent).

 

I reckon the predictions that prices will start to rise again in a serious way by 2011 is pretty spot on - thats the free market, and if developers are struggling to justify building new houses (which they are) then soon enough demand will begin to have a serious impact on prces.

 

However, as you say, since I have no plans to sell, its fairly academic. During the last month prices could have risen and fallen by 100% and it would have made no difference to me whatsoever.

 

The demand is for credit not houses. Have a look at what happened in Japan and Hong Kong to see how flimsly the entire 'demand outstrips supply' argument is.

 

House prices are down to credit. Credit has now been reigned in to sensible levels. As long as that continues house prices will drop to sensible levels. Nothing more really people need to know.

 

How many houses get built and how much 'demand' there is for them really means very little.

 

Good to see you have not bought as an investment though. However amongst all the articles and predictions about house price predictions it is interesting to see you have chosen to quote the one that is the most bullish.

 

People believe what they want to believe. Being outside the whole 'property bubble' at the moment allows me to look at things more objectively than most. I can only see one outcome - and it certainly doesn't contain any sort of new 'boom' in property come 2011.....

[Boris]

And there we have it. The root of this entire problem. As I have already said many people are simply brainwashed. Houses are for living in. They provide a function, just like clothes or petrol. People historically buy houses to live in - to give them a place to call their own - a HOME. To not have to worry about moving about from place to place all the time. NOT AS A MONEY MAKING MACHINE.

 

Go out and ask any OAP property owners if they bought their house as an investment. I can tell you the answer will be close to zero. Greed is the problem here, nothing more nothing less. If you bought your home to live in then good luck. If you can afford to pay the mortgage then how much your home is 'worth' should have little impact on your life.

 

And as you are asking - no I do not own a house - either do you.

 

I will simply not pay stupid over inflated prices for something that will (99.9% likely) ,some time in the future, revert to its long term average.

 

This being average house = average wage x 3-4 times.

 

That will happen. When it does I will consider buying a house. I won't even think about it before then.

 

As you say your house has goen up by 30k then down by 30k. Has that had any huge impact in your day to day life ? Other than telling people how much your house is 'worth' ?

 

Not getting at you just trying to point out the sad state this country is in, where a home is seen more as an investment rather than a shelter. Sad.

 

Agree with you CC.

 

You have the makings of quite a leftist!

[coppercrutch]

Agree with you CC.

 

You have the makings of quite a leftist!

 

You reckon ? I just want most things left to go their own ways. The Government getting invovled in this sort of thing does not have a history of working out very well....

[The Brow]

"I am afraid it is. People that have borrowed too much need to learn their lesson. That goes for individuals, banks and the Governments. Of course there will always be people that have just been unlucky and been sucked in by the hype. Happens to us all at some stage. I don't expect to get bailed out when I am the chump who gets sucked in so I don't expect to have to pay everyone else. Fair enough IMO"

 

Coppercrutch hits the nail on the head as far as im concerned. Why should i pay because other people have speculated to accumulate and its gone tits up? Tough luck. You reap what you sow.

 

I own my own house, I can afford it even if my mortgage goes up another few hundred (which it wont but im making a point) because I DIDNT OVERSTRETCH MYSELF. Whatever happened to living within your means? People seem to think they have a divine right to own a house. All you ever hear is "its so hard for first time buyers on 20k a year". So it bloody should be! Whats wrong with renting? In loads of other countries owning a house is not the norm but in Britain we expect it?

[Coco]

"I am afraid it is. People that have borrowed too much need to learn their lesson. That goes for individuals, banks and the Governments. Of course there will always be people that have just been unlucky and been sucked in by the hype. Happens to us all at some stage. I don't expect to get bailed out when I am the chump who gets sucked in so I don't expect to have to pay everyone else. Fair enough IMO"

 

Coppercrutch hits the nail on the head as far as im concerned. Why should i pay because other people have speculated to accumulate and its gone tits up? Tough luck. You reap what you sow.

 

I own my own house, I can afford it even if my mortgage goes up another few hundred (which it wont but im making a point) because I DIDNT OVERSTRETCH MYSELF. Whatever happened to living within your means? People seem to think they have a divine right to own a house. All you ever hear is "its so hard for first time buyers on 20k a year". So it bloody should be! Whats wrong with renting? In loads of other countries owning a house is not the norm but in Britain we expect it?

 

In 1979 about 1/2 the British population lived in Council Housing. Now that has gone to 12%. Another proportion (which I don't have to hand in rental housing owned by private landlords.

 

Owning a house was not a right in the very near past. Many have forgotten that.

 

We hear about what people on average wages should expect to be able to buy with that. I suspect that never before in British history - except in the recent credit boom - have people on average wages owned (even in its mortgaged form) their own house. Perhaps we will return to a landlord/rent situation in the future.

[coppercrutch]

In 1979 about 1/2 the British population lived in Council Housing. Now that has gone to 12%. Another proportion (which I don't have to hand in rental housing owned by private landlords.

 

Owning a house was not a right in the very near past. Many have forgotten that.

 

We hear about what people on average wages should expect to be able to buy with that. I suspect that never before in British history - except in the recent credit boom - have people on average wages owned (even in its mortgaged form) their own house. Perhaps we will return to a landlord/rent situation in the future.

 

I think you will find that since the 50's the average person has been able to buy their own house if they wanted to work hard for it. Of course they may not get the nicest house but the possibility was there.

 

I don't want houses to be as cheap as chips. I don't want every single person in this country to think they have a divine right to be a 'homeowner' or even think it is the 'done thing'.

 

I would just like a situation where house prices are at a reasonable level. I think the vast majority in this country would think the same. Other than greed and hype there is no reason for it to be any other way....

 

As yourself and 'the Brow' have stated people have been their own worst enemies. They have dived in when they could not actually afford it. If they had stayed out the silly prices we have witnessed would never have been reached.

 

A self perpetuating mess if ever I have seen one.

 

What annoys me most about when we are shown 'examples' of poor souls on TV is they always have children !! As if the only people who are suffering are poor families with kids.

 

I do feel a little sorry for these people - but where are the masses of 20 year old spiky haired idiots who simply have been foolish with their money ? There always has to be some sort of 'sympathy'.

 

A simple "You couldn't afford it so you were stupid to buy it - you made your bed now lie on it" will never suffice. Even if it is the truth.

 

**** this nation we live in really is weak with a capital W.....

[Coco]

I think you will find that since the 50's the average person has been able to buy their own house if they wanted to work hard for it. Of course they may not get the nicest house but the possibility was there.

 

I don't want houses to be as cheap as chips. I don't want every single person in this country to think they have a divine right to be a 'homeowner' or even think it is the 'done thing'.

 

I would just like a situation where house prices are at a reasonable level. I think the vast majority in this country would think the same. Other than greed and hype there is no reason for it to be any other way....

 

As yourself and 'the Brow' have stated people have been their own worst enemies. They have dived in when they could not actually afford it. If they had stayed out the silly prices we have witnessed would never have been reached.

 

A self perpetuating mess if ever I have seen one.

 

What annoys me most about when we are shown 'examples' of poor souls on TV is they always have children !! As if the only people who are suffering are poor families with kids.

 

I do feel a little sorry for these people - but where are the masses of 20 year old spiky haired idiots who simply have been foolish with their money ? There always has to be some sort of 'sympathy'.

 

A simple "You couldn't afford it so you were stupid to buy it - you made your bed now lie on it" will never suffice. Even if it is the truth.

 

**** this nation we live in really is weak with a capital W.....

 

As I said, I doubt that the average person in British history - by definition on average wages - ever owned their own house until this era. 50% of people housed by the Council in 1979. I guess that ever since mud huts before that the average person - median by earnings - would not own have owned their own house. The 'right to house ownership' is a modern society construct.

 

With regard to your 'deserve it' comments. They are way too harsh. The financial knowledge of many people in this country is very limited. And couple that with the sociological herding instincts of bubbles and it is unsurprising that people see 'property' as a one way bet. Or did anyway. As GK suggests above it has been used as savings substitutes.

 

By the way there are very good reasons why the Government would support banks. Bank runs - real bank runs - are a very serious matter for the economy. There is something of a 'put' on bank equity as a result.

[coppercrutch]

As I said, I doubt that the average person in British history - by definition on average wages - ever owned their own house until this era. 50% of people housed by the Council in 1979. I guess that ever since mud huts before that the average person - median by earnings - would not own have owned their own house. The 'right to house ownership' is a modern society construct.

 

With regard to your 'deserve it' comments. They are way too harsh. The financial knowledge of many people in this country is very limited. And couple that with the sociological herding instincts of bubbles and it is unsurprising that people see 'property' as a one way bet. Or did anyway. As GK suggests above it has been used as savings substitutes.

 

By the way there are very good reasons why the Government would support banks. Bank runs - real bank runs - are a very serious matter for the economy. There is something of a 'put' on bank equity as a result.

 

I totally agree. I also have to admit I feel a small amount of sympathy for some of these people. However I was in exactly the same situation 2 years ago. I thought everything I was 'supposed to'. I decided that seeing I was considering taking on a massive responsibility I would really look into it. Took me about a week to start to realise why that would be a bad move.

 

I am no economist. I am no real estate agent. I am no property or market expert. All I did was do a bit of work on google...

 

So whilst my thoughts may be a little harsh as you say - I think they are actually quite easonable.

 

These people who have dived into massive debt - two footed - are the reason so many people like me will have to wait years until this mess all sorts itself out, before thinking about buying a place.

 

If someone signs on the dotted line for 150k and doesn't actually know what they are doing, why should it end up any different for them...they deserve to be left in the doo doo. Fair enough IMO.

 

I have been quite sensible and not ****ed my money against the wall. I deserve to be rewarded. Whether that happens remains to be seen however. Depends on what crackpot ideas Brown and Co. come up with just to TRULY destroy this country...

 

As for the banks I hear where you are coming from and agree to a point. However even though I am getting paid from a bank just now and they are important to the economy............................I can't help thinking how nice it would be if one of the biggies went bust.

 

Would be a lesson that NEEDS to be learned. IMO.

[Seats]

There's another hidden problem here. Since Brown taxed pension funds in 1997, coupled with the property boom, it has appeared to most folk that "my property will be my pension". Except, as people should know, concentrating all your assets in one asset class is a recipe for disaster.

 

So, having attacked the pension industry and seen the complete flop of stakeholder pensions, one of the unintended consequences of the property boom has been to inflate people's expectations of the value they can obtain when they come to retire, ignoring fundamental issues such as the demographics at that time (more sellers than buyers) and the fact that the generations currently leaving school and university are completely over-borrowed and can't afford to get on the ladder anyway.

 

If they perform the 'bail-out' now there will be inflationary consequences and higher interest rates resulting from that.

 

The market needs to correct itself and it should. It may correct itself even quicker if unemployment starts to rise rapidly, which is the only reason why it hasn't.

 

Personally, I'm glad I sold up last year and I'm renting over here (Australia would be going through the same if migrants weren't travelling here in numbers but if unemployment starts rising it might choke that off as well).

 

Wow! Geoff, you seem to know what you are talking about as far as pensions are concerned! How did that happen?!?!?

 

Only joking mate, what are you up to in oz?

[Serge]

Banks are full of mod edit.

 

Banks produce nothing, but make huge profits! They are gamblers who are gambling with our money. When they win they pay themselves huge bonuses, build themselves palacial office complexes, throw money away by sponsoring poncy rugger games and are seen popping bottles of Bolly in tiger lily.

 

When they lose money we should sell all bank employees houses, make their kids clean chimneys, put their wives on the game and pay off the debts that way.

[argyjambo]

Banks are full of mod edit.

 

Banks produce nothing, but make huge profits! They are gamblers who are gambling with our money. When they win they pay themselves huge bonuses, build themselves palacial office complexes, throw money away by sponsoring poncy rugger games and are seen popping bottles of Bolly in tiger lily.

 

When they lose money we should sell all bank employees houses, make their kids clean chimneys, put their wives on the game and pay off the debts that way.

 

Phew! I'm glad I'm an ex-bank "mod edit"

 

I disagree with your assertion that banks produce nothing. Outside our dwindling manufacturing base in this country does anyone produce anything?

Banks make capital available for those projects that they think are viable, in turn & in most cases this capital fuels the economy & keeps people (maybe even you) in a job.

 

Using your analogy does this mean that the families of anyone doing all their money at the bookies should suffer the same fate as "Bank mod edit"

 

Your grasp on economics is hoboesque!

 

mod edit!

[doctor jambo]

I find it mind blowing that with the record profits banks have posted year on year on year that they have no reserve left

Years of multi billion profits, yet one year of hardship and the begging bowl is out

Same with the building industry- massive profits, then a six month tail off and mass redundancies

Why have the banks not got huge reserves?

Surely our "world renowned" financila institutions saved for a rainy day?

If not why are heads not rolling in thier offices at the top level?

Staggering

[Geoff Kilpatrick]

I find it mind blowing that with the record profits banks have posted year on year on year that they have no reserve left

Years of multi billion profits, yet one year of hardship and the begging bowl is out

Same with the building industry- massive profits, then a six month tail off and mass redundancies

Why have the banks not got huge reserves?

Surely our "world renowned" financila institutions saved for a rainy day?

If not why are heads not rolling in thier offices at the top level?

Staggering

 

Profit numbers should be seen in the context of the balance sheet. The banks have had their assets decimated as a lot of them appear to have been polished up turds which are actually worthless. Therefore, that is why they have had to raise the capital to compensate.

[coppercrutch]

Phew! I'm glad I'm an ex-bank "mod edit"

 

I disagree with your assertion that banks produce nothing. Outside our dwindling manufacturing base in this country does anyone produce anything?

Banks make capital available for those projects that they think are viable, in turn & in most cases this capital fuels the economy & keeps people (maybe even you) in a job.

 

Using your analogy does this mean that the families of anyone doing all their money at the bookies should suffer the same fate as "Bank mod edit"

 

Your grasp on economics is hoboesque!

 

mod edit!

 

To be fair I do think the Pyramid Worshipper has a point. What exactly do the banks 'produce' ? Yes they provide a service but all they do is essentially shuffle paper (These days code) around and take a chunk off the top for themselves.

 

In fact these days most of the paper they shuffle about is not even their own. It has been magicked out of thin air through the complexities of fractional reserve banking.

 

As the Doctor points out where exactly have all these massive paper profits gone ? Up in a puff of smoke that is where - and all after just one year of tougher times.

 

It is shocking but our country is dependent on the financial sector so what do we do.....

 

To start with we should start jailing a few of the Bank Execs for fraud etc.. I imagine there will be a few 'token gestures' made but people need to be made accountable. Corporate responsibility laws and all. Hang em high.

[coppercrutch]

Profit numbers should be seen in the context of the balance sheet. The banks have had their assets decimated as a lot of them appear to have been polished up turds which are actually worthless. Therefore, that is why they have had to raise the capital to compensate.

 

In other words they are all bankrupt....

 

How ironic.

[Therapist]

To start with we should start jailing a few of the Bank Execs for fraud etc.. I imagine there will be a few 'token gestures' made but people need to be made accountable. Corporate responsibility laws and all. Hang em high.

 

Losing money does not equate to fraud.

 

The current difficulties are the result of many parties in the financial markets having inadeqate valuation and risk models, not asking enough questions about what these models are telling them, and getting carried away. The credit crunch is 2008's version of the dot com bubble.

 

For long term panic-proof investors such as myself, this is a tremendous buying opportunity.

[Serge]

Using your analogy does this mean that the families of anyone doing all their money at the bookies should suffer the same fate as "Bank mod edit"

 

mod edit!

 

Isn't that what happens?

 

If someone loses everything at the bookies, then his family does pay the price.

 

I'm saying if some corporate guy bets with my money and loses, then he should pay it back and not be bailed out by the person whose money he's just gambled with.

[argyjambo]

Isn't that what happens?

 

If someone loses everything at the bookies, then his family does pay the price.

 

I'm saying if some corporate guy bets with my money and loses, then he should pay it back and not be bailed out by the person whose money he's just gambled with.

 

Banks do suffer "bad debts " from time to time, its a risk we take. new Capital adequacy regulations introduced throughout the EEC (Basel II) have made banks take a far more risk based appraoch to lending decisions.

 

If you dont like the idea of banks investing your money (and all banks do it) dont operate a bank account. Remember that pension funds, insurance companies, investment trusts all invest in banks & financial institutions.

One of the reasons for the credit crunch is that some banks, not all, did not conduct enough due diligence when buying a portfolio of mortgage business from US banks, and found out that a lot of the borrowers were very poor credit risks.

 

This led to banks being suspicious of each other & not lending each other money (wholesale) as was the norm, hence banks needed to fund more of their borrowing from "retail deposits" ie your current/deposit account balances.

 

Bank profits are mostly distributed to stockholders by way of dividends that go back into your pension insurance policy etc or even your account if you are a shareholder. In this way the banks keep the economy moving. Of course the government would miss the huge amounts of tax the banks collectively pay to the treasury.

 

So in all,its in no-ones interest for banks to be weak. The reality is that save for a couple of building societies UK banks balance sheets are very strong and can withstand the re-valuation of certain assets in difficult time.

 

Any banker who regulary gets it wrong re lending decisions will not last long, but remember, THAT ANY LARGE DEAL SAY OVER ?5MILLION MANY PEOPLE WILL HAVE HAD AN INPUT INTO THE PROPOSAL therefore blaming one person for any specific deal going mammaries skywards is far too simplistic. Many thousands in Scotland would be out of work if the banks failed in a major way, & thats only bank employees the fallout for the rest of the economy would be horrendous.

 

Be careful of what you wish for.

[coppercrutch]

Losing money does not equate to fraud.

 

The current difficulties are the result of many parties in the financial markets having inadeqate valuation and risk models, not asking enough questions about what these models are telling them, and getting carried away. The credit crunch is 2008's version of the dot com bubble.

 

For long term panic-proof investors such as myself, this is a tremendous buying opportunity.

 

The current difficulties are as a result of greed. Simple as that.

 

As for fraud I would imagine there has been a lot going on that comes very close.

 

Apparently there is no "precise legal definition of fraud". However this is a decent description:

 

"Generally, the term is used to describe such acts as deception, bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement, misappropriation, false representation, concealment of material facts and collusion. For practical purposes fraud may be defined as the use of deception with the intention of obtaining an advantage, avoiding an obligation or causing loss to another party"

 

http://www.internalaudit.bham.ac.uk/audit/fraud.shtml

 

I would be highly shocked if most of the Banks have not been deeply involved in at least the underlined above.

[coppercrutch]

Banks do suffer "bad debts " from time to time, its a risk we take. new Capital adequacy regulations introduced throughout the EEC (Basel II) have made banks take a far more risk based appraoch to lending decisions.

 

If you dont like the idea of banks investing your money (and all banks do it) dont operate a bank account. Remember that pension funds, insurance companies, investment trusts all invest in banks & financial institutions.

One of the reasons for the credit crunch is that some banks, not all, did not conduct enough due diligence when buying a portfolio of mortgage business from US banks, and found out that a lot of the borrowers were very poor credit risks.

 

This led to banks being suspicious of each other & not lending each other money (wholesale) as was the norm, hence banks needed to fund more of their borrowing from "retail deposits" ie your current/deposit account balances.

 

Bank profits are mostly distributed to stockholders by way of dividends that go back into your pension insurance policy etc or even your account if you are a shareholder. In this way the banks keep the economy moving. Of course the government would miss the huge amounts of tax the banks collectively pay to the treasury.

 

So in all,its in no-ones interest for banks to be weak. The reality is that save for a couple of building societies UK banks balance sheets are very strong and can withstand the re-valuation of certain assets in difficult time.

 

Any banker who regulary gets it wrong re lending decisions will not last long, but remember, THAT ANY LARGE DEAL SAY OVER ?5MILLION MANY PEOPLE WILL HAVE HAD AN INPUT INTO THE PROPOSAL therefore blaming one person for any specific deal going mammaries skywards is far too simplistic. Many thousands in Scotland would be out of work if the banks failed in a major way, & thats only bank employees the fallout for the rest of the economy would be horrendous.

 

Be careful of what you wish for.

 

You are Gordon Brown and I claim my ?50.

 

The above claim is ridiculous. Balance sheets are very strong !! Jeez is this the comedy club or something.....

[Geoff Kilpatrick]

You are Gordon Brown and I claim my ?50.

 

The above claim is ridiculous. Balance sheets are very strong !! Jeez is this the comedy club or something.....

 

The balance sheets were significantly weakened by the CDO/SIV fallacy. However, now the rights issues have occurred the balance sheets are much, much stronger.

 

The reason they haven't dived back into the mortgage market is the need to ensure that the credit they do have is used wisely as the over-supply of credit that existed has disappeared. It's a different world.

 

I honestly think you fancy yourself as Ambrose Evans-Pritchard out of the Daily Torygraph.

[david mcgee]

Banks do suffer "bad debts " from time to time, its a risk we take. new Capital adequacy regulations introduced throughout the EEC (Basel II) have made banks take a far more risk based appraoch to lending decisions.

 

If you dont like the idea of banks investing your money (and all banks do it) dont operate a bank account. Remember that pension funds, insurance companies, investment trusts all invest in banks & financial institutions.

One of the reasons for the credit crunch is that some banks, not all, did not conduct enough due diligence when buying a portfolio of mortgage business from US banks, and found out that a lot of the borrowers were very poor credit risks.

 

This led to banks being suspicious of each other & not lending each other money (wholesale) as was the norm, hence banks needed to fund more of their borrowing from "retail deposits" ie your current/deposit account balances.

 

Bank profits are mostly distributed to stockholders by way of dividends that go back into your pension insurance policy etc or even your account if you are a shareholder. In this way the banks keep the economy moving. Of course the government would miss the huge amounts of tax the banks collectively pay to the treasury.

 

So in all,its in no-ones interest for banks to be weak. The reality is that save for a couple of building societies UK banks balance sheets are very strong and can withstand the re-valuation of certain assets in difficult time.

 

Any banker who regulary gets it wrong re lending decisions will not last long, but remember, THAT ANY LARGE DEAL SAY OVER ?5MILLION MANY PEOPLE WILL HAVE HAD AN INPUT INTO THE PROPOSAL therefore blaming one person for any specific deal going mammaries skywards is far too simplistic. Many thousands in Scotland would be out of work if the banks failed in a major way, & thats only bank employees the fallout for the rest of the economy would be horrendous.

 

Be careful of what you wish for.

 

Complete and utter head in the sand bumkum!

[davemclaren]

Losing money does not equate to fraud.

 

The current difficulties are the result of many parties in the financial markets having inadeqate valuation and risk models, not asking enough questions about what these models are telling them, and getting carried away. The credit crunch is 2008's version of the dot com bubble.

 

For long term panic-proof investors such as myself, this is a tremendous buying opportunity.

 

If you have the cash and can sit it out for at least 5 years then this is a good time to buy imo.

[david mcgee]

The balance sheets were significantly weakened by the CDO/SIV fallacy. However, now the rights issues have occurred the balance sheets are much, much stronger.

 

The reason they haven't dived back into the mortgage market is the need to ensure that the credit they do have is used wisely as the over-supply of credit that existed has disappeared. It's a different world.

 

I honestly think you fancy yourself as Ambrose Evans-Pritchard out of the Daily Torygraph.

 

Aye right, the RBS shed out billions to buy ABN Amro at the height of the market.

The entire value of RBS is now far less than they paid out for ABN Amro.

Their rights issue merely papers over the cracks.

I hope RBS are not teetering on insolvencey, but to avoid it they will have to sell many profitable assets at the bottom of the market.

[david mcgee]

If you have the cash and can sit it out for at least 5 years then this is a good time to buy imo.

 

If you have wads of cash you can currently put it in an account earning you 6% plus per annum.

 

If you think this is the bottom of the housing market, go out and buy property.

 

If you think this is the bottom for stocks and shares, stick it in the stock exchange.

 

Read all of the above and think about what you said.

[Geoff Kilpatrick]

Aye right, the RBS shed out billions to buy ABN Amro at the height of the market.

The entire value of RBS is now far less than they paid out for ABN Amro.

Their rights issue merely papers over the cracks.

I hope RBS are not teetering on insolvencey, but to avoid it they will have to sell many profitable assets at the bottom of the market.

 

I was talking about banks in general but you have a point about RBS in terms of their aggressive strategy across the world. That's been funded by leveraging as well and so they're probably the British bank suffering the most from the fallout. That said, they did the right thing in jumping first with their rights issue.

 

The interesting question for RBS is what they sell Direct Line for. If it is sold for significantly under value then questions will be asked.

[coppercrutch]

Aye right, the RBS shed out billions to buy ABN Amro at the height of the market.

The entire value of RBS is now far less than they paid out for ABN Amro.

Their rights issue merely papers over the cracks.

I hope RBS are not teetering on insolvencey, but to avoid it they will have to sell many profitable assets at the bottom of the market.

 

Good to see someone else whos head is out of the sand !!

 

To put it bluntly British Banks are, in general, ****ed.

 

Whether they actually go bust or not is another matter.

 

Let us also remember they have been writing off losses due to the US sub prime market. Their losses due to the UK housing market crash have barely begun...................

[coppercrutch]

I was talking about banks in general but you have a point about RBS in terms of their aggressive strategy across the world. That's been funded by leveraging as well and so they're probably the British bank suffering the most from the fallout. That said, they did the right thing in jumping first with their rights issue.

 

The interesting question for RBS is what they sell Direct Line for. If it is sold for significantly under value then questions will be asked.

 

HBOS - Britains biggest mortgage lender..

 

Northern Rock - Bankrupt...

 

Alliance and Leicester - Rescued as they were about to go bust....

 

Bradford & Bingley - As above.....

 

Barclays - Looking dodgier by the minute........

 

Aye everything is just fine and dandy. Balance sheets are doing just fine.

 

That is always the first thought I have when they come literally begging for any penny they can get their hands on...

[davemclaren]

If you have wads of cash you can currently put it in an account earning you 6% plus per annum.

 

If you think this is the bottom of the housing market, go out and buy property.

 

If you think this is the bottom for stocks and shares, stick it in the stock exchange.

 

Read all of the above and think about what you said.

 

I've no idea if it's the bottom of the stock market but I reckon the FTSE will be a lot higher than it is now in 5 years time.

[Geoff Kilpatrick]

HBOS - Britains biggest mortgage lender..

 

Northern Rock - Bankrupt...

 

Alliance and Leicester - Rescued as they were about to go bust....

 

Bradford & Bingley - As above.....

 

Barclays - Looking dodgier by the minute........

 

Aye everything is just fine and dandy. Balance sheets are doing just fine.

 

That is always the first thought I have when they come literally begging for any penny they can get their hands on...

 

 

Keep dreaming! You want one to fail, as per the Wreck. It won't happen. Some will get taken over and a more prudent approach to lending will appear and the world will move on.

[david mcgee]

I've no idea if it's the bottom of the stock market but I reckon the FTSE will be a lot higher than it is now in 5 years time.

 

I reckon your right, but i think the property and stock market will continue downwards for the next 12-18 months.

Keep your wads earning you 6% plus for the moment and invest when everybody else has reached desperation point.

[coppercrutch]

I've no idea if it's the bottom of the stock market but I reckon the FTSE will be a lot higher than it is now in 5 years time.

 

Well if you had got into the footsie in the year 2000 you would still be waiting.....the idea of being in 'shares for the long run' seems to have stalled for the last decade...

 

Unless of course you can work out exactly when to get in and out of certain areas. Seeing as the experts have great difficulty doing this the hope for us individual investors is slim...

 

Keep dreaming! You want one to fail, as per the Wreck. It won't happen. Some will get taken over and a more prudent approach to lending will appear and the world will move on.

 

The only reason it "won't happen" is because my taxes are paying to bail them out.

 

If it had been left to go its own way at least 3 or 4 large British Banks would be gone already.

[Sherlock]

HBOS - Britains biggest mortgage lender...

 

Britains biggest mortgage lender is Abbey.

[Geoff Kilpatrick]

Well if you had got into the footsie in the year 2000 you would still be waiting.....the idea of being in 'shares for the long run' seems to have stalled for the last decade...

 

Unless of course you can work out exactly when to get in and out of certain areas. Seeing as the experts have great difficulty doing this the hope for us individual investors is slim...

 

 

 

The only reason it "won't happen" is because my taxes are paying to bail them out.

 

If it had been left to go its own way at least 3 or 4 large British Banks would be gone already.

 

No. It won't happen because the BoE won't allow Northern Wreck, now that the folly of the regulation system has disappeared.

[coppercrutch]

Britains biggest mortgage lender is Abbey.

 

Well you write to the Council of Mortgage Lenders and let them know their error then...

 

http://business.scotsman.com/personal-finance/Abbey-looks-to-take-top.4336867.jp

 

No. It won't happen because the BoE won't allow Northern Wreck, now that the folly of the regulation system has disappeared.

 

I agree they probably will do all they can to avoid a repeat. However in reality these banks are going bust. Just because they are geting bailed out by us taxpayers doesn't change that.