Bankruptcy... Is it to easy?

Dooooooooooooooonut

StevieJ wrote: »

Let me get this right, are you saying that the Banks and Credit Card companies have not been making any profits, because UK citizens have been not paying their debts, so now have no money to lend? Or have they been writing off US sub-prime debts that has destroyed their balance sheet.

Why can't it be both?

It's no more than an accounting profit until it's realised

StevieJ

Dooooooooooooooonut wrote: »

Why can't it be both?

It's no more than an accounting profit until it's realised

Why, is it both? and there is me thinking that all those bank write offs last year were related to US debt based CDO's:rolleyes:

dad-of-4

!!!!!!? wrote: »

Nope - the chancers who overstretched (and the chancers who loaned them the money) are the ones who caused this problem. Credit is drying up, jobs are being shed and there's precious little opportunity for most people now with a very uncertain period ahead.

A bubble of unsustainable growth based on credit followed by an horrific recession/depression is not what any society wants.

yes they have caused this, it would certainly seem so, but had they not jumped on board, the oportunities it created would have never existed. yes we dont want recession/depression but as its a case of history repeating its self, and the majority in the country lived thru it last time, why did we even bother jumping back on the gravy train? could it have been because we hoped things might work out better this time? i dont see that it could be anything more than hope, as no one knows what the future holds.

the 600 jobs at Aston might never have existed in the first place, or any other jobs. Its higly improbable that out of all those 600, none of them contributed to their own downfall. and they certainly loved everyone elses contribution, on the up & up.

nobody is inocent in this mess, nobody atall.

whilst the savers were loving their investments, they were being built off the eagerness others willingness to spend on credit.

i didnt hear the savers campaining for a restriction of credit, cos their investments were growing too quickly and they would be diddled out of 10 years hard labour when a plan to retire at 60, suddenly became retire at 50.

nobody is innocent, in the world of fractional reserve finance.


And remember

that its better to have lived and lost than to never have lived atall.:beer:

chucky

dad-of-4 wrote: »

i didnt hear the savers campaining for a restriction of credit, cos their investments were growing too quickly and they would be diddled out of 10 years hard labour when a plan to retire at 60, suddenly became retire at 50.

nobody is innocent, in the world of fractional reserve finance.


And remember

that its better to have lived and lost than to never have lived atall.:beer:

this bit has convniently been missed - very good point.

i'm sure if those 'savers' had benefited from HPI they wouldn't be complaining now

chucky

StevieJ wrote: »

Let me get this right, are you saying that the Banks and Credit Card companies have not been making any profits, because UK citizens have been not paying their debts, so now have no money to lend? Or have they been writing off US sub-prime debts that has destroyed their balance sheet.

US sub-prime debt that they were unable to price or even risk-assess.

UK citizen debt is a fraction to what the US debt is.

chucky

!!!!!!? wrote: »

Nope - the chancers who overstretched (and the chancers who loaned them the money) are the ones who caused this problem. Credit is drying up, jobs are being shed and there's precious little opportunity for most people now with a very uncertain period ahead.

A bubble of unsustainable growth based on credit followed by an horrific recession/depression is not what any society wants.

are you talking in the UK or is this a global issue - the last time I looked it was a global issue.

nickmason

cuddlymarm wrote: »

I'm sure there are people that don't agree with me here but if you have been through bankrupsy and have had to explain this to your family and friends you will agree with me that it isn't an easy option

Cuddles

It's culture again. While the deterrent of the stigma of BR works for some, it doesn't for others. So there are those for whom there is a punishment, and who will not enter into lightly. I think there is a large and growing "group" who think it's a clever way of getting out of trouble, who will wear it as a badge of pride, not shame. To them the deterrent is completely ineffectual, and they see the BR way-out as an extension of "society's duty" to them, alongside benefits etc. they simply don't see it as theft from other people (which, if planned or brought about by completely irresponsible spending, I suggest is equivalent).

Either the system or that culture needs to change. How? Don't know. I think possibly:
1) Allow the OR to punish, not simply seek money. Might be able to ensure that the benefits of the overspend - tv's etc - are taken away. Would be difficult to manage, but seems some more teeth would be good!
2) involve families in the process of funding after bankrupcy. Sounds harsh, but it might make bankrupts realise that they are simply taking from others.
3) wondering aloud, left-field idea - could the OR role be made more local, based in the community, so that they would have a better idea of the real facts of the case. We seem to agree that discretion is required; the difficulty is determining the real facts of the case. In small communities, everything is known, and it is easier to determine the truth - "the village elders". Taken to its extreme, this could even lead to an elected OR! Of course injustices occur in any system. Just a thought.

jayritchie_2

dad-of-4 wrote: »

their is a very strong almost overwhelming ring of truth to what your saying, but as much as its a fair point, does any one want to live in the world of no credit and no material gain?

I'm not sure that the world of credit brings as much gain as you suggest. Of course, not allowing businesses to borrow would restrict innovation and growth. I believe that this has been pretty much accepted on this thread and most have absolute sympathy with someone who's business has failed. The major concern is consumer credit.

With consumer borrowing there may have been short term gains for the economy as every man and his dog fitted new kitchens and overspent for a few years. Many of the pains we are encountering now are the effect of both a mean reversion and an additional hit to spending as people repay for past spending.

it would seem not, this is bourne out by the economic missery were feeling not just at the losses, but the prospect of being caught in the losses, bankrupsy is arguably a small price to pay for a shot at the good life, and equaly a small burden to carry for thoes who will always have the good life through either living a more prudently or taking the gamble and it paying off.

At the moment it seems like a huge burden when lots of people (including those who didn't borrow) are losing their jobs. The labour market has been very tight for a number of years - how many real businesses were unable to expand because their prospective staff chose to work as mortgage advisors or bathroom fitters? How many of our top science and engineering graduates took jobs in finance rather than applying their skills in manufacturing and development (answer from experience - most).

every chancer who overstretched kept the cost of credit down for everyone, kept people in jobs, created jobs, opertunity, and everything else a good capitalist society needs.

No - the chancers didn't keep our cost of credit down - where did you get this idea?

their is probably a goodargument for the possability that the easier and less stigmatising backruptsy has become, the more people have been willing to "have a go" and contrute to our economy

This I can agree with - if having a go means starting a business or developing you skill set. Definitely doesn't work over any time period if people with normal jobs decided to join the ranks of the BTL 'entrepreneurs' or engage in major home renovations because they thought their property would increase in value.

exil

If no individual or business ever borrowed money, then it would be impossible to lend it, and therefore impossible to earn interest on savings as banks could not get a return on the money in accounts. Not only that there would be no stock market, no houses, no factories, no farms, and economic activity would cease. It's important to remember that - without borrowers there could be no savers, no investment and no economy.

Of course people or businesses can get overextended through no fault of their own. Others may borrow too much through lack of financial discipline or through falling for the hard sell. What should happen when it all goes pear shaped and the borrower defaults?

In Victorian times bankrupts were jailed. Do we want to go back to this?

I see the point that if conditions attached to bankruptcy are too lenient (a) there is little disincentive to people who wilfully borrow money without a thought as to how to pay it back and (b) if creditors have to wipe off debts they may get into trouble themselves and cause a chain reaction

Not an easy dilemma to solve

StevieJ

chucky wrote: »

US sub-prime debt that they were unable to price or even risk-assess.

UK citizen debt is a fraction to what the US debt is.

I do not know about the future but as far as I am aware the current problems for banks and lending have not been caused by the UK consumer defaulting.