Who do you blame for the recession

Dr Who said:
Indeed, look at for example Barclays Bank, who were recently fined a huge sum by the FSA and ordered to make amends on a fund they sold which was rated incorrectly for risk. The end result was they pulled out of regulated advice making thousands more redundant
Click to expand...

Not entirely correct.

The fine was not the reason that Barclays withdrew from regulated financial planning advice. It may have had a small influence, but it most certainly was not the reason that Barclays withdrew from this market.

Give it another few years once RDR has kicked in and its force is felt and you will probably find the other retail banks will follow suit and close thier financial planning arms too, as the cost of the initial and ongoing investment required in such business models to sustain this type of regulation doesnt warrent engaging in the activity. Its just the other banks have failed to realise this yet.

Yet another piece of "Bad" regulation by our "Not fit-for-purpose" regulators. The end result will be that "non fee paying" investment advice will dissapear from the high street, pushing people of less means towards "execution only" investments because they cant afford to pay the financial advisers fees, which will increase massively because of RDR, meaning only the financially well off will be able to afford the services, meaning people will make mistakes, or not plan at all, which will result in the less well off remaning that way. It STINKS.


Back to the main point - The closure of the securitisation markets is what sparked the credit crunch. Brought on by our American friends as previously mentioned who were selling NINJA mortgages, meaning the investors finally clicked and realised that they didnt have an ****** clue what they were investing in with each securitisation.

The money never even existed in some cases, because these lenders just securitised over and over and over, skimmed off thier cut, then took the money and ran. At one point we had over 380 active mortgage lenders in this country, most of which were subsiduaries of large American investment banks. Now you can count on one hand the number of "Active" mortgage lenders, but even they have been stung through these bad securitisation deals, so whilst the UK owned banks may not have been making the bad lending decisions, they still suffered financially because of it.

The American investment banks are firmly to blame for the credit crunch, however I think the global recession would probably have come to some extent without it anyway, but that is another story.
 
I'd like to blame greed. But I think it's just in our nature to always want more. So ultimately, mankind as a whole has itself to blame.

Obviously some will say "but I want for nothing", they however are the minority and there are many who will happily want and take more than enough for four people or so.

I don't think the inherent ambition within us is a bad thing, it's what drives progression. But too many want to take take take whilst giving the bare minimal back. And it's that imbalance which destroys us.
 
US lenders.

Gordon Brown led the way when it came to ensuring the world-wide recession didn't become a world-wide depression. Everyone kinda forgets this.
 
Greed & envy.

Everyone was ZOMG I MUST BUY NEW 60" PLASMA TV, BORROW MONEY TO GET IT without realising "Hang on, a brand new £2K TV is for Mr. Rich. I'm on minimum wage, I'll just make do".

Also some of the mortgages people were getting were just ludicrous (I guess both their fault for taking them, but also the banks for accepting their custom and not telling them to jog on).


Bring back good old fashioned banking IMHO.



britboy4321 said:
Gordon Brown led the way when it came borrowing stupid amounts of money whilst spending recklessly. Also a great talent at selling gold. Everyone kinda forgets this.
Click to expand...
Fixed.
 
Deregulation and shoddy rating agencies giving mortgages ratings that never should have been on the market.

It is funny though, the few people who led this took home hundreds of millions of dollars whilst leaving the world in a recession.

Almost harmonious in its twistedness.
 
LeJosh said:
Deregulation and shoddy rating agencies giving mortgages ratings that never should have been on the market.
Click to expand...
It wasn't so much deregulation, but the incompetence of the regulatory bodies and failure to keep pace.

Or, in the UK's case, Gordon Brown's genius 'tri-party' regulatory system where no one knew whose remit ended and whose began, and we had three bodies trying to look through the same window.
 
britboy4321 said:
US lenders.

Gordon Brown led the way when it came to ensuring the world-wide recession didn't become a world-wide depression. Everyone kinda forgets this.
Click to expand...

Taking the right actions in 1 year when he spent the other 12 taking the wrong ones doesn't mean he gets praise....

Even a broken clock is right twice a day.
 
b) and a bit of a) ... but mainly b).

Government failed to have adequate regulations in place to prevent a financial meltdown.
Coupled with massive government deficit/debt meaning we could not spend our way out of the mess (by investing in infrastructure)
Coupled with the government failing to ensure we have other things in our economy other than financial services
 
What I think is that every single person is responsible. Average joe for not caring for anything, blaming the government for everything yet still refusing to do anything about it himself.

Who owns the banks? We do, we technically have the power to tell the banks what to do but can we really? The system can no longer works effectively at this day and age.

I can't agree with the regulation part banks always find a way bend the rules. More regulation with clutter the system rather then fix the problem. Besides you can not fault the banks for wanting to make money.

What really did it in the end is a system that encourages risk taking. Even if you fail there is some profit.

Also there was the imperfect information of sub-prime mortgages, is that one good or bad? We don't know and we don't care prices on property are rising, default on loan or not we still making money.

Finally you say greed but that's no the case, the employer offers you to pay you 30,000 a year instead of 25,000 will you refuse? Of course not, is it greed? Of course not. Bankers are left with a decison make money or not, since it was vertually risk free to make money why wouldn't they? None knew that if they give out too many loans property prices in US would crash.

So to sum it up, outdated financial system, risk-loving incentives and lack of information.

Just my 2 cents.
 
Nerusy said:
I can't agree with the regulation part banks always find a way bend the rules. More regulation with clutter the system rather then fix the problem. Besides you can not fault the banks for wanting to make money.
Click to expand...

But you can make regulations which increase how much exposure banks have, setup "relief" funds

You can fix how debt is rated ... none of the rating agencies actually know what they are rating, as all the debt is packaged together. If you were to ask them to give you the details for each little bit of the "debt package" they've rated, they wouldn't be able to as they don't know.


Regulation does not have to clutter the system
 
rypt said:
But you can make regulations which increase how much exposure banks have, setup "relief" funds

You can fix how debt is rated ... none of the rating agencies actually know what they are rating, as all the debt is packaged together. If you were to ask them to give you the details for each little bit of the "debt package" they've rated, they wouldn't be able to as they don't know.


Regulation does not have to clutter the system
Click to expand...

Well they have a decent idea of tripple A mortgages, sub-primes are the ones that shady.

I guess it could help but insignificantly. Either let banks do what they do and get massive annual growth or regulate the hell out of them, will prevent instabilities but will bring down the growth back to insignificant levels.
 
britboy4321 said:
Gordon Brown led the way when it came to ensuring the world-wide recession didn't become a world-wide depression. Everyone kinda forgets this.
Click to expand...

HA! If this man had never been made Chancellor and the Labour Government hadn't spent so much during good times (for normal people, they would pay off their debt such as mortgages) then the UK wouldn't be in such a bad situation now!
 
You must log in or register to reply here.
Back
Top Bottom