Is economics a science, or just a dinner-party? ....

TruckerT

Thrugelmir wrote: »

Nobody had factored that event into the equations.

Why not?

TruckerT

Thrugelmir

TruckerT wrote: »

Why not?

No one foresaw the collapse of banks globally. Why should they have?

Banks are very highly regulated yet they became so complex as to be able to hide fraud within their operations.

pqrdef

TruckerT wrote: »

You didn't have to be an economist to forecast the collapse of the housing market (which is where it all started) - but why were the economists unable to prevent it?

Economists know that these things go in cycles. They don't see it as their job to prevent that. There would never be an upturn if people just went round saying what's the use, it'll only end in another recession sooner or later.

Predicting the timing is probably impossible - though there will always be those who can point out after the event that they guessed right.

If politicians want to smooth out the cycles, they know what to do. They have to flatten a boom with high interest rates and high taxes. They can't allow the boom to happen and then prevent the bust.

TruckerT

Thrugelmir wrote: »

No one foresaw the collapse of banks globally. Why should they have?

Why? Because worldwide there are thousands and thousands of expensively educated and highly paid professional economists whose job is precisely to predict such events as a global banking collapse!

Incidentally, no bank has yet been convicted of fraud, and my own prediction is that it will never happen

TruckerT

Thrugelmir

TruckerT wrote: »

Incidentally, no bank has yet been convicted of fraud, and my own prediction is that it will never happen

Start with Northern Rock and Lehmans both operated fraudently.

TruckerT

pqrdef wrote: »

Economists know that these things go in cycles. They don't see it as their job to prevent that. There would never be an upturn if people just went round saying what's the use, it'll only end in another recession sooner or later.

Predicting the timing is probably impossible - though there will always be those who can point out after the event that they guessed right.

If politicians want to smooth out the cycles, they know what to do. They have to flatten a boom with high interest rates and high taxes. They can't allow the boom to happen and then prevent the bust.

Recent/current events were/are not part of any known cycle (thank the lord)

TruckerT

TruckerT

Thrugelmir wrote: »

Start with Northern Rock and Lehmans both operated fraudently.

That's a kind of risky thing to say on a public forum...

TruckerT

Thrugelmir

TruckerT wrote: »

That's a kind of risky thing to say on a public forum...

TruckerT

Tis fact.

Bore down into Northern Rock – deep, deep, deep…keep going – and you eventually come to this:

Granite, the immense, £50bn synthetic financial structure upon which the the stricken mortgage bank is perched, is itself balanced on a charity, the Down’s Syndrome Association North East (UK).

That will come as a surprise to many – and it certainly has to the Down’s Syndrome Association North East (UK), a family support group run by about 300 parent volunteers.

As is widely known, Northern Rock has been funding itself through a securitisation vehicle called Granite Finance Holdings, which has issued paper worth up to £50bn. Under a mind-boggingly complex scheme, Granite is not owned by Rock, but by a business services group called the Law Debenture Corporation, acting as trustee.

A charity’s name and status has been used without its consent to create an opaque financial monstrosity. Those doing the structuring presumably banked substantial fees – but not a penny of this has flowed through to the Down’s kids involved.

A taste of what on the face of it was merely a mortgage lender. Hence why it took the Treasury 6 months to investigate, before closing the operation down and declaring it insolvent. As opposed to the initial view that it merely lacked funding.

Thrugelmir

Granite sold its paper through Lehmans.

Lehmans spliced and diced NR's debt along with other issued sub prime debt paper. Selling it as AAA rated grade debt whereas the NR 125% Together mortgages were a much lower grade of debt.

TruckerT

Many moons ago, as a spotty teenager, I worked for Northern Rock in their West End branch in Conduit Street off Regent Street - if my memory serves me correctly, it was a recent merger between The Rock building society and something like 'Northern Counties'

I remember once going to my manager after interviewing a mortgage applicant and saying that I had some doubts about his honesty - my manager was at pains to congratulate me on bringing the matter to his attention, but I never found out the outcome

After that, I went to work in holiday camps. and regularly lifted money from the tills

C'est la Vie - in another scenario, I might have become a banker...

TruckerT