The Credit Crunch - Page 3

Addy · 17th April 2008, 2:03am

Quote:

Originally Posted by MarkMono

So the only people capable of predicting it are those who make money from letting it happen. I've always been interested in economics but the stock market never fails to depress.

I said guess deliberately - that's speculators gambling on how it's going to go, and there's always people who will get lucky betting on something ridiculous, the same with any form of gambling (like the guy who won 25 grand betting a particular football player would score a goal from inside his own half at some point during the season last year). That sort of thing isn't an educated guess, it's a pure shot in the dark. Some people predicted a major market crash in 2001, just randomly - then 9/11 happened and proved them right. Doesn't mean they actually predicted 9/11 though.

MarkMono · 17th April 2008, 2:04am

I know, its just ironic that there are no safety measures from something like this (There should be, and are supposed to be) but certainly no shortage of profiteers. Tell that isn't just a little bit depressing.

Oh, and you didn't say guess deliberately.

Quote:

Originally Posted by Addy

That's because it had nothing directly to do with you. Banks don't make their money on the interest they get from mortgages, they make it by investing it in the markets and profiting on that. Ignore the tabloid hype about charges and the like being where all the profits come from, the reason charges exist is because if you don't repay overdrafts then you're denying them money to invest in the markets. That always has been the case and always will be.

The fact remains that if you know you're probably not going to be able to repay a loan you shouldn't be taking it. Not an easy decision to make, but just because the bank isn't demonstrating common sense by offering you the loan doesn't automatically mean you should pander to it by accepting it.

I'm not claiming for a second that the banks aren't mostly responsibe, just not 100%.

Weirdly enough I hold the customers and the banks pretty much equally accountable for the current situation. Though I prefer to hold onto my money in order to make more money from it. Its all the banks going to do anyway, and there have been enough crises, crashes and recession within my own lifetime that I only use a bank account as a utility i.e for getting paid, for paying bills etc

endless psych · 17th April 2008, 2:05am

Quote:

Originally Posted by Addy

I said guess deliberately - that's speculators gambling on how it's going to go.

You do realise that doesn't make it any better?

Addy · 17th April 2008, 2:09am

Quote:

Originally Posted by endless psych

It is if I wish to take out a loan. I doubt they would tell me then. Or rather it is if I as a theoretical borrower are to be held accountable for the credit crunch.

A bank's investment policy has nothing to do with individual lenders in domestic markets, so I don't know why you think they should be telling you when it changes (although of course changes in operational strategy that could impact on investor attitude will be announced to the stock exchange anyway). And I'm also not trying to hold individual borrowers responsible for the credit crunch so please don't act as if I am.

Quote:

Originally Posted by endless psych

You do realise that doesn't make it any better?

Obviously, in fact it's more depressing than Mark's post implies, as nobody is really capable of predicting the full scale of it. Admittedly though they should have been more prepared for it happening anyway (as that FSA report I linked to says in little less than scathing terms). But several major market crashes have happened without being predicted, including those at the end of the 1980's. Some lucky investors guessed right, but the majority of the market just didn't see it coming.

endless psych · 17th April 2008, 2:09am

Quote:

Originally Posted by Addy

And I'm also not trying to hold individual borrowers responsible for the credit crunch so please don't act as if I am.

So they've been absolved now?

Addy · 17th April 2008, 2:11am

Quote:

Originally Posted by endless psych

So they've been absolved now?

I never said I blame an individual for causing what potentially could turn out to be a global recession, it's ridiculous to suggest for a second that I did

MarkMono · 17th April 2008, 2:11am

Thats exactly as depressing as I think it is, thank you for confirming everything I have posted while endeavouring to disagree with me.

Why do people always want to argue about the things they're passionate about?

Never mind, human nature just depressed me again.

Addy · 17th April 2008, 2:16am

Quote:

Originally Posted by MarkMono

Thats exactly as depressing as I think it is, thank you for confirming everything I have posted while endeavouring to disagree with me.

Why do people always want to argue about the things they're passionate about?

Never mind, human nature just depressed me again.

I'm not endeavouring to disagree with you, just getting rid of any optimism you had regarding the subject at all by suggesting even those with the power to make money out of this could have predicted it - with the assumption being that if anyone can, then eventually someone with good intentions might be able to stop a crisis like this occuring before it starts. Unfortunately, that aint likely to happen.

endless psych · 17th April 2008, 2:17am

Quote:

Originally Posted by Addy

I never said I blame an individual for causing what potentially could turn out to be a global recession, it's ridiculous to suggest for a second that I did

My mistake.

It appears it was the Northen Rock thing you were refering to.

MarkMono · 17th April 2008, 2:24am

Quote:

Originally Posted by Addy

I'm not endeavouring to disagree with you, just getting rid of any optimism you had

You achieved this superbly by opening with a flat lie.

Quote:

Originally Posted by Addy

regarding the subject at all by suggesting even those with the power to make money out of this could have predicted it - with the assumption being that if anyone can, then eventually someone with good intentions might be able to stop a crisis like this occuring before it starts. Unfortunately, that aint likely to happen.

The banks themselves should not have speculated as widely as they did. Thats why they have regulating bodies. A certain amount of responsbility falls on the borrowers, but we tend to have a lot less success when we try and regulate people, and thats saying something.

I worked for a bank for years, you pick things up.

Then, if you're sensible and not too self-destructive you put them back down and find a less soul-consuming career. But, y'know, best of luck all the same.

Addy · 17th April 2008, 2:56am

Quote:

Originally Posted by MarkMono

You achieved this superbly by opening with a flat lie.

The banks themselves should not have speculated as widely as they did. Thats why they have regulating bodies. A certain amount of responsbility falls on the borrowers, but we tend to have a lot less success when we try and regulate people, and thats saying something.

I worked for a bank for years, you pick things up.

Then, if you're sensible and not too self-destructive you put them back down and find a less soul-consuming career. But, y'know, best of luck all the same.

I agree completely, although the regulators have themselves admitted that they failed as well this time. The main financial cause of the credit crunch (you can point to various sociological reasons for the loans defaulting, but I've no personal interest in that side of it) was over aggressive strategies on the part of the banks, and faith in the stability of the subprime mortgage market that now seems somewhat deluded. Prime mortgages, fair enough, but in retrospect (that glorious state of being) this was a disaster waiting to happen. Let's hope that now that jobs have been shed and companies have collapsed the survivors can actually learn from this, because we'll have another financial crisis within a decade or so we can be sure of that.

MarkMono · 17th April 2008, 2:59am

Feh, the recession never ended. Britain is doomed, but not much more doomed than normal.

What a strange thing it is to be born into an empire in decline.

Addy · 17th April 2008, 3:01am

We've had at least 5 major financial crises in the 21 years I've been alive - the one at the end of the 80s, the US savings bank debacle, Japan's total banking meltdown, the Dot Com boom and bust, and now this. And before that there was the oil inflation thing...it just goes on and on really.

Charlicat · 17th April 2008, 3:06am

Its boom town where I am, unemployment went up 100% when I arrived. Its nice to contribute something.

17th April 2008, 7:12am

Quote:

Originally Posted by Addy

Vonnie doesn't blame the Rock, saying it just admitted it had problems due to the American market, but what she fails to realise is that the Rock themselves exposed themselves to that market in order to reap the rewards of the market doing well. Of course, it works both ways and in this case they lost (as did Bear Stearns in America, which wasn't a totally dissimilar case)

Please don't assume what I do and don't realise Addy, I did three years of economics and am fairly confident that I understand the situation. What I said was that I don't blame Northern Rock for what has happened; i.e the credit crunch. They weren't the only institution speculating in this way. I do blame them for bad business practice but to be fair they were probably the only flexible lender providing realistic mortgages for people who otherwise would not be able to get onto the property ladder.

Then again, I blame the government for the housing crisis so we're back to politics.