Better call Saul Posted October 7, 2008 Share Posted October 7, 2008 Please Sir !!! What does it actually ALL mean ?: What is the worst case scenario that could happen if it continue's to deepen ? Link to comment Share on other sites More sharing options...
Chad Sexington Posted October 7, 2008 Share Posted October 7, 2008 Please Sir !!! What does it actually ALL mean ?: What is the worst case scenario that could happen if it continue's to deepen ? Link to comment Share on other sites More sharing options...
kannymann1 Posted October 7, 2008 Share Posted October 7, 2008 Superb! Link to comment Share on other sites More sharing options...
kannymann1 Posted October 7, 2008 Share Posted October 7, 2008 Please Sir !!! What does it actually ALL mean ?: What is the worst case scenario that could happen if it continue's to deepen ? Scotty: I wouldnae worry unduly about something that we can effectively do nothing about! It's a global thing which has to right itself if we're honest. If you imagine a well oiled piece of machinery.....every component part depends on the others pulling their weight. if one piece gets a bit rusty, the other pieces have to work harder to get a result. That's what is happening in the world at the moment. Some huge money countries are having to stop buying because they're protecting their own "customers". Take Germany for example. Yesterday they guaranteed savers that their money would be 100% safe in their respective bank accounts, building society savings accounts etc etc. This means Germany withholding billions of Euros to keep their promise to their people. This in turn means they won't be spending as much on commodities such as coffee, tea etc. having a knock-on effect for the rest of the world. Panic sets in and prices are pushed higher to try and make up for the shorfall caused by the Germans!! Let's blame them, or the French. TBH Scotty it's not worth bothering about! The wee guys like you and me have no say what happens. Anyhow, I'm reliably informed that Mr. Romanov will bung all the Jambos a few quid if we're struggling. So nothing to worry about eh . Oh and by the way, I'm not sure if what I have just been rambling on about is totally true to the letter. So for all the purists out there, dinnae gie me grief if I'm a million miles out. But I don't think I am. Link to comment Share on other sites More sharing options...
spud Posted October 7, 2008 Share Posted October 7, 2008 Please Sir !!! What does it actually ALL mean ?: What is the worst case scenario that could happen if it continue's to deepen ? http://news.bbc.co.uk/2/hi/business/7521250.stm Timeline on why and what. Link to comment Share on other sites More sharing options...
Better call Saul Posted October 7, 2008 Author Share Posted October 7, 2008 Scotty: I wouldnae worry unduly about something that we can effectively do nothing about! It's a global thing which has to right itself if we're honest. If you imagine a well oiled piece of machinery.....every component part depends on the others pulling their weight. if one piece gets a bit rusty, the other pieces have to work harder to get a result. That's what is happening in the world at the moment. Some huge money countries are having to stop buying because they're protecting their own "customers". Take Germany for example. Yesterday they guaranteed savers that their money would be 100% safe in their respective bank accounts, building society savings accounts etc etc. This means Germany withholding billions of Euros to keep their promise to their people. This in turn means they won't be spending as much on commodities such as coffee, tea etc. having a knock-on effect for the rest of the world. Panic sets in and prices are pushed higher to try and make up for the shorfall caused by the Germans!! Let's blame them, or the French. TBH Scotty it's not worth bothering about! The wee guys like you and me have no say what happens. Anyhow, I'm reliably informed that Mr. Romanov :)will bung all the Jambos a few quid if we're struggling. So nothing to worry about eh . Oh and by the way, I'm not sure if what I have just been rambling on about is totally true to the letter. So for all the purists out there, dinnae gie me grief if I'm a million miles out. But I don't think I am. Some good info there thanks http://news.bbc.co.uk/2/hi/business/7521250.stm Timeline on why and what. Cheers Link to comment Share on other sites More sharing options...
Better call Saul Posted October 7, 2008 Author Share Posted October 7, 2008 Thats where I am already I just happen to be in an internet cafe place my trolley with its three wheels is parked up outside:eek: Link to comment Share on other sites More sharing options...
BigC Posted October 7, 2008 Share Posted October 7, 2008 Bill Clinton gives the best explanation I've heard. It starts at around 5.30 in the first video then continues.... http://uk.youtube.com/watch?v=i5GBWOx6bKU http://uk.youtube.com/watch?v=azWIvxEkQts&feature=related Link to comment Share on other sites More sharing options...
coppercrutch Posted October 7, 2008 Share Posted October 7, 2008 Someone asked me for an explanation last week so this is what I put down. All from my head so if any of it is wrong feel free to correct me. ---------------------------------------------------------------------- Basically it all stems from banks lending too much money to people that couldn't affrord it. People took the money coz when it is offered many people can't say no !! Apart from just giving people these loans they packaged them up into little packages (Mortgage backed securities) and sold them to others. Sold on a "share of the debt" so to speak. Banks/Pensions bought these for sum and were promised a return on them. Fair enough when it all works. These loans are called 'sub prime'. As in higher than normal risk. So say Mr Smith owes ?500 interest on his mortgage payments every month. RBS gets most of it. But they have sold some of it on to a pension company. So they get a piece of the pie too. The pension company sold it onto an investment company. So they get a piece of the pie too. Etc.. This all works until Mr Smith stops paying his mortgage as he loses his job. He doesn't pay RBS. They don't pay the pension company. They don't pay the investment company. Every one is out of pocket. Now this all wouldn't be a huge deal as these firms write off money all the time. Howeve the sheer number of 'Mr Smith's' that cant afford their mortgages anymore is huge. So all the banks and investment firms are taking a mega hit. The really messy bit is that when all these 'sub prime' debts were packaged up they were mixed in with perfectly 'good' debts into packages. So you have a massive amount of 'packages' out there just now that have 'bad' debt within them. Nobody know how much bad debt is in each one so nobody wants to buy them at any price. Imagine you are offered 10 pints of ice cold lager, but one was poisoned. Would you take even one ? The 'good' debt has been packaged up with the bad debt and sold. This has left banks with massive write offs due to the fact they bought this debt and now nobody wants it. As the housing market crashes the number of 'Mr Smiths' that can't afford their mortgages grows and grows. The bad debts grow and grow. The problem grows and grows. Every banks knows that other banks may be in the **** so don?t want to lend them any cash. Reasonable enough - would you lend someone cash you thought was about to go bankrupt ? Also a lot of the dodgier banks like B & B / Northern Rock actually have been lending out money they don't even have !! They access this from the international markets at a certain rate then loan it out at a higher rate. Again everyone is so **** scared that this market has siezed up. The cost of B & B to borrow the money was more than they were getting from their customers !! Hence even more problems. The whole banking system is based on confidence. Once the confidence goes everythign goes with it. People need to be content that if they want their cash from the bank they will get it. When they start to doubt that a bank is in trouble. That is because a bank never has enough money sitting there to pay out all its deposits. Most of it is out there in one 'investment' or other. This is what the US bail out plan is for. Ask all the banks for their 'bad debts' that nobody wants - and take them off their hands. Then all the banks wont be so scared to lend to each other as they think they are all safer - problems slowly go away. I don't think it will be that easy though. Even if it is the US taxpayer is on the hook for all these dodgy debts nobody wants. They will be paying for it for years to come. This will slow the economy even more so even more pain to come. I have learned most of my stuff from the website below: http://www.housepricecrash.co.uk Their forums and blogs are really good. You can get away with asking dumb questions too. Most people on the site are pretty decent and clues up. Some ***** but arent there always. Lots of stuff about house prices but these days more info on the economy in general. Hope the above was useful. Just from my head so may have got some things wrong. The jist is there though for you to get what the ***** is going on !! Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.