Top Ten Real Causes Of Banking Crisis

[Ignitionnet]

Originally Posted by dazzer89

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.

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.

[Osem]

Originally Posted by Stuart

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.

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?....

[Dai]

Originally Posted by Osem

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?....

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

[Ignitionnet]

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.

[nomadking]

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.

[Stuart]

Originally Posted by Ignitionnet

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.

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.

[Osem]

Originally Posted by Stuart

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.

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....

[chris9991]

Originally Posted by Osem

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....

And hence why they were then bailed out

[dazzer89]

Originally Posted by Ignitionnet

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.

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.

Originally Posted by Stuart

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.

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.

[chris9991]

Originally Posted by Maggy J

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.

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

[dazzer89]

Originally Posted by chris9991

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

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.

[Osem]

Originally Posted by Maggy J

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.

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

[Ignitionnet]

Originally Posted by dazzer89

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.

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 ----------

Originally Posted by Maggy J

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.

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

[Osem]

Originally Posted by dazzer89

Where Labour got it right was the investment in health and education, that is what I pay my taxes for .....

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.