Excellent article about house bubbles in todays Guardian

BlondeHeadOn

http://www.guardian.co.uk/commentisfree/2008/oct/15/credit-crunch-banking

From Simon Jenkins - thought this was very though-provoking....
(some quotes below)

"The banks have not been "nationalised", just deluged with money. They remain pluralist and competitive institutions, with independent boards. Their workers are not civil servants. Investors retain their shares. The bonus culture will revive. The impresarios of greed have been punished, or at least a few of them. But this is not socialism in our time, just public money hurled at the face of capitalism."

"... repeat the cause of the crash. It was British and American politicians who encouraged people to buy houses they could ill-afford. They duly acquired assets that would, in most cases, be realised not by them but by their children. In the rest of Europe these people would be renting their homes and saving in a safer and more liquid fashion.
The first round of let's-play-banker by Brown and Vadera this week suggests that this housing madness is far from cured. We should therefore expect that its message will again be forgotten and the sickness eventually return.
Though bankers are more fun to blame, it was politicians whose laxity and craving for popularity lay at the root of the present trouble. They should at least be denied any triumph for aiding its cure."

carolt

Absolutely fantastic article.

Definitely deserves to be read in its entirety.

More or less sums up my own feelings on the matter. Bankers were just doing what they were allowed, nay encouraged to do.

Thanks for that, OP.

Sir_Humphrey

Nonsense.

Bankers are responsible for their own actions, just like anyone else. The govt buying shares in a bank is nationalisation and no amount of spin will alter that fact.

carolt

Don't think bankers were any more (or less) guilty than people lying on self-cert mortgages, or brokers encouraging them to do so.

All part of the same sorry package. All were bending the rather loose regulations somewhat. The point is, there should have been proper oversight to prevent them doing it.

Of course, the govt is not going to blame anyone let alone take them to court, except for a few particularly obvious scapegoats, as otherwise they know the finger of blame will be pointed at them.

I mean they've just bought Mandelson back, who got the sack for the self-same act!

StevieJ

OK time to get back to basics again (was that JM who said that). The credit crunch ( i.e. the housing crash) was caused by extreme lax lending in the US not the UK.

Rick62

Lending in the UK was just as bad, probably worse than in the us. Have you not looked at the balance sheets of any of the uk banks?

chucky

you'll probably find that it was the off balance sheet stuff that was the main cause of the current global problem.

the UK house price issue is a seperate issue completely.

carolt

StevieJ wrote: »

OK time to get back to basics again (was that JM who said that). The credit crunch ( i.e. the housing crash) was caused by extreme lax lending in the US not the UK.

For the second time today, Stevie, I have to ask you to post stuff you actually believe.

I can't believe after the implosion of several of our own home-grown banks - all our biggest mortgage lenders, as Peston pointed out yesterday, that anyone can seriously be naive enough to believe that UK mortgage lending was all fine and dandy.

Or are you in fact Gordon Brown posting under an extremely unlikely (but therefore cunning!) pseudonym?

StevieJ

Rick62 wrote: »

Lending in the UK was just as bad, probably worse than in the us. Have you not looked at the balance sheets of any of the uk banks?

When you say lending do you mean that UK mortgage advisors were arranging loans at 1% for two years to people who had no income/assets and then increasing the rate to 10%+. I bow to your better knowledge.
By the way the credit crunch was caused by UK banks buying US property backed CDO's.

StevieJ

carolt wrote: »

For the second time today, Stevie, I have to ask you to post stuff you actually believe.

I can't believe after the implosion of several of our own home-grown banks - all our biggest mortgage lenders, as Peston pointed out yesterday, that anyone can seriously be naive enough to believe that UK mortgage lending was all fine and dandy.

Or are you in fact Gordon Brown posting under an extremely unlikely (but therefore cunning!) pseudonym?

Let us keep it simple, the implosion of several UK banks was caused by their investment in US property backed securities, why can't you understand that?

sdooley

StevieJ wrote: »

Let us keep it simple, the implosion of several UK banks was caused by their investment in US property backed securities, why can't you understand that?

Abbey's secret toxic portfolio sorted out before Santander

Northern Rock - over-reliant on wholesale funding

Bradford & Bingley - poor lending decisions

Alliance & Leicester - borrowed short lent long

HBOS - too big after the merger to manage all divisions - treasury function blew a hole

RBS's acquisition spree & the debt on it being due