Top Ten Real Causes Of Banking Crisis

Ignitionnet · 14-02-2011, 11:35

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

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

**Derek** · 14-02-2011, 11:41

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?

Osem · 14-02-2011, 14:45

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...

**Stuart** · 14-02-2011, 18:14

Quote:

Originally Posted by Ignitionnet

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

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

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.

Ignitionnet · 14-02-2011, 18:20

Quote:

Originally Posted by Stuart

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.

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.

**Stuart** · 14-02-2011, 18:42

Quote:

Originally Posted by Ignitionnet

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

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.

Ignitionnet · 14-02-2011, 18:56

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

**Damien** · 14-02-2011, 19:51

Quote:

Originally Posted by Ignitionnet

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

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.

chris9991 · 14-02-2011, 19:56

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

Osem · 14-02-2011, 20:10

Quote:

Originally Posted by chris9991

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

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.

**Stuart** · 14-02-2011, 20:30

Quote:

Originally Posted by chris9991

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

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.

nomadking · 14-02-2011, 20:41

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.

chris9991 · 14-02-2011, 20:50

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.

Ramrod · 14-02-2011, 21:54

Quote:

Originally Posted by chris9991

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.

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

dazzer89 · 15-02-2011, 07:09

Quote:

Originally Posted by nomadking

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.

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.