Who do you blame for the recession

robskinner said:
So many people quote the bankers as the root cause of the recession, personally I think its misplaced and believe the main cause of the recession was the goverment (previous to current obviously). I believe the bankers took advantage of the situation but believe strongly they did not per se cause it.

So who do you think caused the recession :

a) Bankers
b) Government
c) Someone else (who?)
Click to expand...

The greedy public of this nation are to blame. The ones who thought they can have the latest widescreen TV's and phones, and everything else, when they couldnt actually afford it, and have it on credit. Dont blame the bankers, all they did was make it easy for greedy folk to get into a hole. Now they are now moaning as the party is over and the debt collectors are calling.
Blame all they people who though they could become property moguls, and now have to default on thier mortgages.
 
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...

You do realise the situation with the rating agencies happened because of, rather than in spite of, regulation.

By closing down the market and shifting the customer through regulation, all market incentive to give accurate ratings was removed...
 
Dolph said:
You do realise the situation with the rating agencies happened because of, rather than in spite of, regulation.

By closing down the market and shifting the customer through regulation, all market incentive to give accurate ratings was removed...
Click to expand...

And who lobbied for that regulation?
 
Dolph said:
You do realise the situation with the rating agencies happened because of, rather than in spite of, regulation.

By closing down the market and shifting the customer through regulation, all market incentive to give accurate ratings was removed...
Click to expand...

This. There's so much moral hazard in banks paying rating agencies.
 
Dolph said:
You do realise the situation with the rating agencies happened because of, rather than in spite of, regulation.

By closing down the market and shifting the customer through regulation, all market incentive to give accurate ratings was removed...
Click to expand...

Yes I do realise that, but it was due to BAD regulation.
 
hola_adios said:
And who lobbied for that regulation?
Click to expand...

The requirement for all securities to be rated by an approved agency in order to be counted for accountancy purposes came from Basel I which was pushed for by the central banks and governments....
 
Kemik said:
This. There's so much moral hazard in banks paying rating agencies.
Click to expand...

It depends which bank is paying. If it is the selling bank, I agree with you, and that's the situation we have ended up in.

The buying bank should have been the customer, as it was before the use of specific agencies for all securities was mandated...
 
It shouldn't matter who is paying, as it should be a legal requirement for the rating agency to do their job properly and correctly.
 
rypt said:
It shouldn't matter who is paying, as it should be a legal requirement for the rating agency to do their job properly and correctly.
Click to expand...

It does matter who is paying though, as it impacts whether the market pressure is to be optimistic or pessimistic...

Demanding that it should be a 'legal requirement to do their job properly' is so wishy-washy and subjective it's completely meaningless, especially when it comes to statistical assessment...
 
Dolph said:
The requirement for all securities to be rated by an approved agency in order to be counted for accountancy purposes came from Basel I which was pushed for by the central banks and governments....
Click to expand...

Basel I took place in 1988, right in the middle of all the free market craziness, which resulted in the 1999 scandal of Long-Term capital investment, Enron could be also blamed on the ineficiency of the system ... there had been more than enough signs before 2008.

The only reason why nothing was done was because the lobbying of politicians has got out of hand. It is the big financial corporations, which are not socially accountable, the ones who are dictating policy, and not government officials with the best interest of citizens on their minds.
 
Last edited:
There should not be a large range of opinion on whether a debt is good or bad.

It may vary by a few points between optimistic and pessimistic, but it should not rate CCC debt as AAA or w/e
 
hola_adios said:
Basel I took place in 1988, right in the middle of all the free market craziness, which resulted in the 1999 scandal of Long-Term capital investment, Enron could be also blamed on the ineficiency of the system ... there had been more than enough signs before 2008.

T only reason why nothing was done was because the lobbying of politicians has got out of hand. It is the big financial corporations, which are not socially accountable, the ones who are dictating policy, and not government officials with the best interest of citizens on their minds.
Click to expand...

This is a cop-out for government failure...
 
Dolph said:
This is a cop-out for government failure...
Click to expand...

Governments did what all academics and financial gurus had been preaching, it just happens that what they had been preaching did not take into account the most important factor: Markets cannot regulate themselves, because markets are not entities, but the sum of all collective greed.
 
hola_adios said:
Governments did what all academics and financial gurus had been preaching, it just happens that what they had been preaching did not take into account the most important factor: Markets cannot regulate themselves, because markets are not entities, but the sum of all collective greed.
Click to expand...

Markets can regulate themselves precisely because they are the sum of greed, because greed counters greed in a true free market with open information.

Unfortunately, the banking industry has not been a free market for a very, very long time.
 
But we all know that due to various market failures forced the need for regulation. Leave the markets to do their thing and they will destroy long term stability for a short term profit.

Also greed can co-operate with greed, they're greedy not idiots :P
 
Dolph said:
Markets can regulate themselves precisely because they are the sum of greed, because greed counters greed in a true free market with open information.

Unfortunately, the banking industry has not been a free market for a very, very long time.
Click to expand...

I think we have a recession (and possibly a depression) in our hands indicating quite the opposite "human greed trumps logic" I am afraid.

I do agree with you regarding the banking corporations, they should have never allowed them to grow so big for starters.
 
You must log in or register to reply here.
Back
Top Bottom