Reckless lending got us into this and more will get us out?

bubblesmoney

see how reckless lending was multiplied by leveraging the risks and risky investments were 'sanitised' and sold as AAA "CDOs CDS CDS square and what nots" as securities with underlying crap assets based on a formula when common sense should have told them that risks would be higher. but greed blinded and deafened many and now tax payers carry the can.

Recipe for Disaster: The Formula That Killed Wall Street

but the banks forgot Li's own warning about his own model: "The most dangerous part is when people believe everything coming out of it."

itsnever2lateisit?

SGE1 wrote: »

You're making Rochdale's point for him - you say Rover should have developed new models - they chose not to, and went under - but the point is that in order to remain proactive, and for example design new models, you need to invest, and therefore you're likely to need to borrow. And if you don't even have the option to borrow, how can you invest? It's bad enough for businesses who have seasonal cash flows.

Wasn't a question of choice in MG Rover's case. They simply did not have the cash to do it, nor access to lending on the scale required, which is why they spent so much effort courting a partner

itsnever2lateisit?

ad44downey wrote: »

When this mad borrowing binge is over we'll never have had a national debt anywhere near as big in our entire history. And you, me, and everyone else is going to have to try to pay it all back!

Not me Gov, I'm too old:p

SGE1

itsnever2lateisit? wrote: »

Wasn't a question of choice in MG Rover's case. They simply did not have the cash to do it, nor access to lending on the scale required, which is why they spent so much effort courting a partner

No no, I was just recapping what someone else had said (can't remember who now), hence the "you said...". I have no idea what happened to Rover, so I wasn't commenting on that, I was just making the point that companies survive by investing, and so need to borrow.

SGE1

ad9898 wrote: »

I bet you do, the whole argument is oh so basic, you don't fix having too much of something by having more of it, ask a smoker, an alcoholic, a junkie etc, etc.... and the amounts of debt being force fed on the public ( the joke VAT cut that's going to cost £12 billion etc..etc..), will cripple the country for decades, yet upto now as achieved absolutely zero.

That's the thing, is isn't basic. Either you're dumbing down the dilemma to be able to understand it, or you're dumbing it down in order to make a point. I've already explained why the alcohol analogy doesn't apply, the same goes for cigarettes etc. Again, you seem incapable of discerning the nuance.

I'm not discussing this anymore with you, we're not making any progress. I just want you to know what shouting something over and over again doesn't make it right, and however much you insist that the issue is "oh so simple", I think you'll find people will see through this - for one, there isn't the current level of debate for no reason. You don't tend to have far more capable individuals than you or I debate things over and over again if the issue is crystal clear, and the best course of action obvious.

beingjdc

SGE1 wrote: »

When you say medicine to excess is poison, you're right - but then you say we shouldn't pump more poison into the system - right again - but by your own admission, medicine - lending - is only poisonous if taken to excess. Yet what's being argued here is the return of some lending - ie medicine - but not to the extend that it would be excess/poison again. See where I'm getting at?

I see what you're getting at, but you are talking about the amount you swallow every hour, whereas what I think matters for both lending and medicine is the total amount that's in your body.

And as I pointed out earlier, we are more in debt today than we were 12 months ago - so even if we've slowed down the rate at which we're drinking the poison, it is still building up faster than our system can excrete it back out again.