Top Ten Real Causes Of Banking Crisis
 

http://www.cityam.com/news-and-analy...ses-the-crisis

Most of those are common sense and make perfect sense. Flame on.

Re: Top Ten Real Causes Of Banking Crisis
 

So you mean it wasn't all just people being paid excessive amounts and the people who claim everything can be solved by taxing the bankers are just another word that rhymes with the people they dislike?

Re: Top Ten Real Causes Of Banking Crisis
 

Interesting. Not sure what depositers could have been be expected to do about what the banks were up to however. The FSA didn't seem to have much of a clue...

Re: Top Ten Real Causes Of Banking Crisis
 

All true (IMO), and the signs have been there since before Barings went bust.

The need for control was there as well, and this is something that both the Banks themselves and the Governments have singularly failed to implement.

Re: Top Ten Real Causes Of Banking Crisis
 

As 1) says governments controlled the wrong things. In our case government and BoE ensured the money supply went wrong and the property bubble swelled and swelled and swelled to try and siphon taxes off the bubble to support increased spending.

People tend to blame capitalism totally, but most of the issues have their root within government and regulatory policies, capitalism just grew the seed.

Re: Top Ten Real Causes Of Banking Crisis
 

Personally, I don't. I think the blame lies equally with the Banks and with the various governments..

Both should have been sensible. What seemingly happened though (and why I bought up Barings because they were bankrupted as a result of this) was that both the management of the banks and the governments were happy to sit by and say it was good without actually checking if it was.

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Government policies encouraged borrowing and loose fiscal management, the banks were satisfying a need and to do so behaved irresponsibly.

Re: Top Ten Real Causes Of Banking Crisis
 

Lack of government oversight contributed greatly surely? It was the rampant capitalism and lack of common sense on the part of the banks, who pushed for as much money as possible while apparently being unaware that the value they were creating was non-existant and governments who didn't want to regulate their behaviour?

That's what I thought it was.

Re: Top Ten Real Causes Of Banking Crisis
 

Surely it is also the people who borrowed the money who are at fault too?

I don't recall seeing anyone having a gun pointing at their heads having to sign a loan agreement

Re: Top Ten Real Causes Of Banking Crisis
 

Yes and I dare say many of those who did and got themselves into deep water rather like letting the banks take all the flak.

Re: Top Ten Real Causes Of Banking Crisis
 

No gun was pointed. However, it's worth remembering that in the past, the banks have spent a *lot* of money trying to persuade people to borrow more money.

Re: Top Ten Real Causes Of Banking Crisis
 

The TV media and the Labour Government kept banging on about low-paid people not being able to get on the property ladder in order to make easy money. TV documentaries had people who had only just completed training for a professional qualification(eg Law) or were low-paid complaining that they couldn't take advantage of the situation.

People were pressured by governments and the media to make easy money by buying houses which they couldn't afford. So, when rather than if(or so they were told) the price increased they could sell it for a large profit and therefore cover any debts. The Banks etc lent money on the basis that if any individual borrower got into problems, the price increase could cover the bank's money. They didn't take into account what would happen when too many people got into problems and therefore there were more properties for sale, but less people able to buy them.

Re: Top Ten Real Causes Of Banking Crisis
 

Of course the Goverment didn't actively discourage it; more house sales, more stamp duty

The way I looked at it, especially with housing, that it was just one big pyramid scheme, with the people on the higher levels getting money from the lower levels. Sooner or later it's going to collapse.

Re: Top Ten Real Causes Of Banking Crisis
 

Thats an interesting point of vew. Probably correct.....

Re: Top Ten Real Causes Of Banking Crisis
 

Clearly the political debate is complex, but anyone who thinks the Labour government are to blame for the current financial mess is either exceptionally ignorant or a rabid Tory.

Re: Top Ten Real Causes Of Banking Crisis
 

Anyone who dismisses that they don't have a share of the blame is, by the same token, a rabid Labourite.

Interest rates, FSA / BoE, private pension grab, high public spending and various other policies all exacerbated the issue.

Not to say anyone else would have done it better but failings of governance were 50% of this issue.

Re: Top Ten Real Causes Of Banking Crisis
 

Yes, it's one of the main ways they make their money so hardly surprising. That doesn't, however, absolve those who bought into the myth that ever rising house prices would fund all their dreams, from all responsibility for their actions.

Having said that, I get rather hacked off hearing patronising commentators claiming things like 'well, of course, we were all responsible for the crisis' by borrowing too much. I, and a great many people like me, didn't jump on the bandwagon, didn't remortgage our homes and/or rely on credit cards and other debt to fund cars, holidays etc. We are, however, paying heaviliy for what's happened because, unlike those who've effectively been allowed to walk away from their debts, our prudence is being 'rewarded' by savings that are being heavily eroded by inflation. Funny old game eh?....

Re: Top Ten Real Causes Of Banking Crisis
 

Damn right. It's made a hell of a mess of my retirement planning.

And they still carry on coining it:

http://www.independent.co.uk/news/bu...r-2213850.html

Re: Top Ten Real Causes Of Banking Crisis
 

It's not actually direct cash to the banks that one, it's more because still nothing has been done to ensure that the banks can actually fail if they mess up. The banks screw up again the exact same things happen all over again.

The coalition's policies seem based around political expediency rather than actually resolving the underlying issues in this regard. Most other large businesses can fail, there are processes in place, just not banks once large enough.

Re: Top Ten Real Causes Of Banking Crisis
 

But if the Banks were allowed to go bust or even seem to be in trouble, then it is the savers and investors who would have lost out. Just look at the ones that were allowed to go bust eg the Icelandic ones. It wasn't just the Banks as who were effectively bailed out.

Re: Top Ten Real Causes Of Banking Crisis
 

We keep agreeing. This is getting scary.

Seriously. I do agree. In an ideal world, the banks would act vaguely sensibly, and not act in a way that was likely to cause them bankruptcy in the long term. However, this world is not ideal, so it needs regulation.

The fact is that various governments (both Tory and Labour, and I suspect the Liberals would have done it given half a chance) have not only failed to stop them doing it, but actually encouraged them because it makes the economy look healthier.

Re: Top Ten Real Causes Of Banking Crisis
 

Hence all the gongs and plaudits from Brown to the likes of Fred the Shred. They were funding his crazy spending so he was hardly likely to be asking too many tough questions of them directly or via the FSA.... :mad:

Re: Top Ten Real Causes Of Banking Crisis
 

And hence why they were then bailed out

Re: Top Ten Real Causes Of Banking Crisis
 

Where Labour got it right was the investment in health and education, that is what I pay my taxes for and as a resident of Notts, I saw at first hand this investment in terms of state of the art facilities, a fantastic new hospital and numerous new schools two of which both my children attended (partially as a result of this, Tom, my eldest, achieved an A* in Maths in year 9). In fact, if the truth were known, there is little the Labour government did that I strongly objected to - maybe you could make a case for slightly excessive spending, but in truth the country needed it, we needed improved roads, improved rail, improved schools and improved hospitals - that's what we got. Now we have a Conservative government, I do agree they have inherited a pretty crap situation, but they are going about it completely the wrong way, they are making political decisions on an economic issue, they are cutting too hard too soon in the hope that by the time the next election comes along things will look better.

Re: Top Ten Real Causes Of Banking Crisis
 

This is what is puzzling me..I'm getting so many leaflets from so many differing sources(banks) exhorting me to take out loans or get a credit card and yet all we hear is that the banks are not loaning enough money.

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I imagine it's banks looking for good sources to lend to - just because they are offering doesn't mean they'll say yes

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It all depends what you've got coming in and do the bank see you as a risk. The bank I bank with Barclays are OK when it comes to lending money, if your a good account holder they'll borrow you the money.

I've banked with them since the day I left school, I had my mortgage with them, car loans etc etc. I now have my civilian wages paid into the same account.

Re: Top Ten Real Causes Of Banking Crisis
 

I think that mainly applies to small business loans and mortgage applications.

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Taxes were increased by 25% and it still didn't even come close to covering what they spent, this ignoring that a large part of those new hospitals and schools are both costing too much and have been built on credit in the form of PFI.

It's odd that reducing spending is a political decision while increasing it wasn't in any way political. Labour created the client state and have changed the country for the foreseeable future into a high tax, high spending economy.

Even with these cuts we'll still be taxing and spending 25% than before Labour. They tried funding their spending through total mismanagement of the economy, their main contribution to it being huge expansion of the public sector.

They did some things I'm quite a big fan of, mortgaging the country so that they could say 'Look at how much we're spending' and creating a client state removing many individual responsibilities and moving them into the realms of a bureaucratic state wasn't one of them.

---------- Post added at 13:46 ---------- Previous post was at 13:43 ----------

Look at the interest rate they want for that loan or credit card, compare it to their savings rates.

Re: Top Ten Real Causes Of Banking Crisis
 

Spending money's the easy bit. Ensuring it's put to good use and getting best value for it is quite another and IMHO that's where Labour got it very badly wrong.

Re: Top Ten Real Causes Of Banking Crisis
 

Or were these funded by PFI, which just put the debt off onto future taxpayers?

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The problem is that during a recession, one of the first things the banks did was to stop loaning money to small businesses. Some of whom, as a result, go bankrupt.

Re: Top Ten Real Causes Of Banking Crisis
 

Inadequate regulation was a major factor in what went on leading up to the banking crisis so it was interesting to read this:

http://www.bbc.co.uk/news/business-12495112

Let's hope it's a bit more efficacious than Hector Sants' chocolate teapot.

Re: Top Ten Real Causes Of Banking Crisis
 

Heard the saying "We wil lend you money if you prove you dont need it".