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Ankhsy
Homosapien
United Kingdom
7861 Posts |
 Posted - 07 October 2009 : 09:59:38 AM
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This was sent to me by a friend. I haven't had the chance to check out its accuracy, but its an interesting read.
Gordon Brown still claims to have saved the world from the financial tsunami of 2007. This is typically hypocritical of Mr Brown since he was the cause, not only of the UK credit crunch, but more seriously, the credit crunch in the United States.
In 1933 the first Roosevelt administration found that 50% of American banks had vanished in the depression. Confidence in the banking system had to be re-established, and this was done by the passing of the Glass-Seagall Act, which separated Main Street banking from investment banking. A depositor in Milwaukee could have confidence that his money would not go for adventures on Wall St. Confidence was gradually restored albeit slowly.
The Glass-Seagall Act remained law until it was repealed by Clinton in 2000. Why was it repealed? Because in 1997 Gordon Brown took UK bank regulation away from the Bank of England and split it between the Treasury, the Bank of England and the FSA. None of them knew exactly what their remit was but, crucially, they didn't know the remit of the others, resulting in Northern Rock and worse. No-one in Whitehall was monitoring Northern Rock lending long - 25 years - and borrowing short - three and six months - on the money markets. Darling admitted that the first he knew of the run on Northern Rock was when he read about it in the Financial Times while on holiday. But no-one in Whitehall noticed and told him!
However, the light-touch, non-existent bank regulation that Brown had made available in the UK was noticed by American banks and so many of them switched their centres of operations to London that Clinton was forced to repeal the Glass-Seagall Act in order to prevent Wall St. becoming a ghost town for banking. Clinton was succeeded by GW Bush, friend of Wall St, the genie was out of the bottle, and the rest is history. Gordon Brown caused the American credit crunch. No wonder Obama didn't want to talk to him.
The blame doesn't entirely rest with Brown. Cameron, allegedly a financial genius on account of his time working for Norman Lamont, did not notice what was going on and said nothing. The Sage of Twickenham [Vincent Cable] is alleged to have forseen the tidal wave coming but did he? Some vague words about excessive lending and house-prices but nothing about the fundamental and fatal error in dividing bank regulation. And didn't Shell have their own difficulties when he was chief economist there? But he is a financial genius so enough said.
There is a conspiracy in Westminster to let Brown off the hook on the credit crunch debacle because they are all complicit in the mire that allowed it to happen, and it takes attention away from the expenses in which, if they were not exactly guilty, they still quietly passed by on the other side of the road without yelling 'Stop Thief!'
None of the LibLabConspiracy will change their spots. It has to be a change of party if life is to get better and it will only be done at Westminster, not in Brussels. So its UKIP for me and mine.
Legum servi sumus ut liberi esse possimus.
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Ankhsy
Homosapien
United Kingdom
7861 Posts |
Posted - 07 October 2009 : 10:04:17 AM
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I hardly think that anyone in UKIP noticed the regulatory failings, so as a reason for voting UKIP, this is a red herring. But the transatlantic cause and effect of the de-reglation on the banking sector is scary.
Legum servi sumus ut liberi esse possimus. |
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Parmenion
Homosapien
United Kingdom
14676 Posts |
Posted - 07 October 2009 : 11:51:50 AM
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Sorry, but the big factor missing here is Ninja loans in the USA the biggest factor in the global crisis.
A US lending regulation loophole that allowed banks to lend to people with No Income No Job (application) NINJA
so when these loan initial periods came to an end what a shock most could not pay, for a while this was ok, repossesion was the name of the game, but eventually the properties became worthless as no one could buy them of afford them as the housing boom had sent proces too high.
so you had US banks with on paper billions in property or loans but no chance of getting a penny back.
and other countries in their wisdom had been convinced that these were great investment ideas so bought massive amounts of this debt when the market was booming (from the yanks) and when it went tits up, lost the lot.
hey presto world banking short fall, no bloody money anywhere!
Centurion Parmenion
LASCIATE OGNE SPERANZA, VOI CH'INTRATE
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John Prigent
Homosapien
United Kingdom
8794 Posts |
Posted - 07 October 2009 : 1:01:21 PM
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My US contacts say that the rules over there were changed to _require_ some mortgage providers to lend to people with no income and no jobs. I have to (reluctantly) say that we can't blame Greedy Gordon for that.
Cheers
John
Sum, ergo cogito |
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Ankhsy
Homosapien
United Kingdom
7861 Posts |
Posted - 07 October 2009 : 1:52:23 PM
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Lend money to people with no incomes and no jobs. D'oh? It's a no-brainer!
Legum servi sumus ut liberi esse possimus. |
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Parmenion
Homosapien
United Kingdom
14676 Posts |
Posted - 07 October 2009 : 3:06:40 PM
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im not blaming gordon for the Ninja loans John, i blame the americans for that.
I do blame the UK banking regulations for allowing the banks to spend money (savers money) on large chunks of these debt bundles thinking they would make a killing. it was short sighted financial suicide where in the short term city brokers made millions.
Centurion Parmenion
LASCIATE OGNE SPERANZA, VOI CH'INTRATE
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Simon Scarrow
Ape
Uruguay
1048 Posts |
Posted - 08 October 2009 : 12:17:08 AM
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| One thing I still haven't got my mind around yet. The Bankers' greed caused the meltdown. The bankers get bailed out by the public. The public has to put up with service cuts, tax rises and pay freezes, while the bankers still get bonuses. Eh? |
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Livia
Single Cell Organism
USA
17 Posts |
Posted - 08 October 2009 : 06:59:59 AM
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It is outrageous. Not one Banker has gone to jail. Extremely frustrating. Parm and John, It is even worse than No Income No Job application. Many of those loans were with no money down and interest only payments due. In fact many of the loans, did not require you to pay all of the interest, so the loans got bigger as more interest was added to the principal. The mortgage originators got paid anywhere from $4000 to $12,000 per loan they set up, then the immeadiately sold the loan to an investor. So they didn't care if it was a "bad" loan. They got there money. I know mortgage brokers who were making $60,000 per month originating only 5 loans each month. Working about 10 hours a week. Then the investor repackaged the loan with hundreds of other loans and sold it as a "security" in the market. It was a completely legal swindle. The bankers were happy, the mortgage brokers were happy, and the US home owner was happy. You could buy a $700,000 home and start off only paying $1000 per month. THis caused home prices to skyrocket, and every other homeowner in amercia felt rich. They took out a home equity loan to buy more products-and sent the stock market flying up! (Sounds alot like 1929).
Unfortunately, The year of our Lord 2010 will see another huge round of foreclosers of US homes. Sending home prices down further. The US consumer has so much credit debt and home debt that we are finally realizing we have to pay it down. So don't plan on the US consumer buying our way out of this recession. This is going to be a long one. The other factor that most people aren't talking about is the demographic aging trend in the United States. The Baby Boomer generation is just past their peak years in consumer spending. That means the US will have significantly less spending for another 10 years until the echo boom generation picks up spending. We should have a 9 month uptick in the economy because of the government stimulus spending. However, come next summer our economies will be going down again. This is going to get ugly.
Poison is Queen |
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Ankhsy
Homosapien
United Kingdom
7861 Posts |
Posted - 08 October 2009 : 10:35:25 AM
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I'm with Livia. this is going to get much much worse before it gets better. Gordon Brown keeps banging on that the UK is coming out of recession. Who in their right mind believes him? He claims the kudos for bringing Britain out of recession but none of the responsibility for taking it into recession.
As for the bankers, the best description of what went wrong is this statement by the boss of Goldman Sach, Lloyd Blankfein.
"For policymakers and regulators, it should be clear that self-regulation has its limits. We rationalised and justified the downward pricing of risk… We did so because our self-interest in preserving and expanding our market share, as competitors, sometimes blinds us – especially when exuberance is at its peak. At the very least, fixing a system-wide problem, elevating standards or driving the industry to a collective response requires effective central regulation and the convening power of regulators."
The word missing here is "greed". Like religion, those addicted to it sacrifice reason for something they value more.
Legum servi sumus ut liberi esse possimus. |
Edited by - Ankhsy on 08 October 2009 10:35:58 AM |
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WarrenH
Homosapien
United Kingdom
2020 Posts |
Posted - 08 October 2009 : 10:50:37 AM
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The Bankers should be held accountable and and be more regulated as to what they can and cannot do. Not only do they swindle us, they also charge us for been swindled! The Gits - the Low down money grabbing theives! LOL
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Mace
Small mammal
United Kingdom
738 Posts |
Posted - 09 October 2009 : 1:54:14 PM
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Who are The Bankers? Everyone seems to thinking of a small klique of men, sitting around piles of money, laughing at the finincial meltdown that they caused. In actual fact, it was people who merley took advantage of the legal bonuses available for meeting the short term requirements of their employers.
All these calls for jail terms or reclaiming money is pointless, and is distracting us from the fact that NOTHING has been done to prevent a repeat performance.
"My Mom says I'm cool"
Millhouse. |
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Simon Scarrow
Ape
Uruguay
1048 Posts |
Posted - 12 October 2009 : 09:14:20 AM
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| True, but a few of them swinging in the wind might just help to discourage others from taking excessive risks while we get the legislation in place. |
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Mace
Small mammal
United Kingdom
738 Posts |
Posted - 12 October 2009 : 11:13:09 AM
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Harsh sentences for thieves and muggers doesn't stop those crimes, and the profits from those are far lower. And what are you going to lock them up for? They didn’t break any laws, and it’s simply wasted effort to try and punish them now. The closest you could get would be like striking off a doctor after being found guilty of malpractice. But you can’t stop someone from making a legal profit, and in this case they followed perfectly legal, if unsafe, procedures.
Stop banging on about punishing the bankers, and ask the politicians and CO’s what they are proposing to do in order to prevent repetition.
"My Mom says I'm cool"
Millhouse. |
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Simon Scarrow
Ape
Uruguay
1048 Posts |
Posted - 12 October 2009 : 1:32:30 PM
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Why should we let the bankers off? It was the bankers who persuaded their governments to relax controls, knowing that there would be a risk of speculation and an explosion in the number of financial instruments placed on the market. The same bankers failed to understand the intricacies of the products they were trading in. Moreover, it was the same bankers who tried to conceal their exposure once the money markets collapsed. I know of one instance where the senior management in one of the major banks colluded in lying to the FSA about their dire situation (and before you ask I won't name any names since I had this direct).
Even if some bankers were not dishonest then they were culpably ignorant and reckless and should be removed from their current positions. Perhaps we should debar all bankers down to a certain level in the banks affected and then add a cap on pay, as perhaps a differential from national average pay, as well as enforcing far stricter controls. Now, before anyone cries that there would be a brain drain, there is in fact very little evidence that brain drains occur above the usual rates of emigration (and immigration). Besides, with talent of the kind they displayed when they brought our economy to its needs, one might argue that we would be better off without them.
Those that can be charged with fraud should be. Those that can be charged with misrepresentation of goods (since they had no idea what they were dealing with yet sold them as if they did) should be charged. You are right, Mace, they are no better than thieves and muggers, and should be treated the same. I would be quite happy to see Brown et al in the dock alongside them. |
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Mace
Small mammal
United Kingdom
738 Posts |
Posted - 12 October 2009 : 2:00:52 PM
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Witholding information to the FSA is, probably, illegal and quit different than someone making a quick penny from fast NINJA’s. But given the piss poor FSA and regulations, we’ll probably find that those that withheld the information were only obliged to provide only as much or as little info as they were prepared to part with.
And as I said, what can you punish them for? As far as I’m aware, you can’t go back and arrest someone for making a porr financial decision. You can be fired, but not imprisoned.
"My Mom says I'm cool"
Millhouse. |
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Ankhsy
Homosapien
United Kingdom
7861 Posts |
Posted - 12 October 2009 : 3:41:12 PM
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but you can pursue them for professional negligence. although that is a civil and not criminal offense, their regulatory bodies are perfectly entitled to discipline and fine them for that.
Legum servi sumus ut liberi esse possimus. |
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John Prigent
Homosapien
United Kingdom
8794 Posts |
Posted - 12 October 2009 : 3:51:52 PM
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One lawsuit has already been started by shareholders who say their directors lied to them. Watch for more to follow.
Cheers
John
Sum, ergo cogito |
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Gordon Brown caused the Global credit crunch
