Guest 698- Registered: 28 May 2010
- Posts: 8,664
There's a difference between 'bailing out', in the original sense of standing surety for a person 'on bail', and in its modern connotation of underwriting Greece's debt; and baling out, which is what WWII fighter pilots did after their plane was hit by enemy flak. The PIGS countries are being bailed out- Finland is threatening to bale out, i.e. jump ship.
In particular, while Greece is currently being bailed out, it is on condition of being responsible in the future, i.e. keeping in line.
So Barry and Reg, you are actually broadly in agreement but successfully finding something on which to differ.
I take Reg's point about supporting a family member. But why should Finland consider themselves a member of the same 'family' as Greece? And why should we consider the Eurozone a family? A family is all about blood and cultural ties brought about through kinship and a common ancestry - the Eurozone is a financial grouping of consenting adults.
Even if we fully accept the family analogy, does the family have to keep bailing out an errant member until every other member is penniless? If it does, then there is no moral hazard in being irresponsible.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 653- Registered: 13 Mar 2008
- Posts: 10,540
Good posting Peter.
All this bail-out sounds like the socialist concept of redistribution of wealth and we all know that doesn't work.
Roger
Guest 698- Registered: 28 May 2010
- Posts: 8,664
It works at the micro level Roger, it's how the world got by before we had politicians. But if you try to operate it at international level it will lead eventually to war.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
Certainly, as it began so it is set to continue.
100%+ Mortgages were pushed upon an hitherto untapped market, all emphasis on immediate remuneration for the salesman at the point of sale.
The whole buoyed-up with a market in packaged and repackaged (non-viable) debt that drew in cash from further and further afield and higher and higher up the financial fig-tree (from which the final few leaves are being lost).
As these mortgagees are cast out in the street and the vastly over-valued assets are on the market to realize in cents what were hoped would be Dollars, so to the 'sucker' economies - all too new to the position of trading using a 'worthwhile' Currency - are being hung-out to dry.
The bullies of the playground are entitled to lunch money of all.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
Nobody was forced to borrow money Tom, the irresponsible borrowers are as much o blame
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
Where to begin David?
"Nobody was forced..." Let us not confuse arm-twisting with sweet words from a figure 'in the know' and the gentle urging of peers and an innate quality that we each possess to progress in life. Advertising does not work, you imply; it is for amusement only? The spider casts it's web at random, without any notion of insect-traffic? The poacher's snare is likewise laid? Is the insect or the rabbit then culpable?
"...to borrow money"... Might 20:20 vision only be available to hindsight? Is it not ever the way of the 'agent' to point-up the benefits? Who but the professional knows how simple a matter it is to profit all the way up the property ladder, who does not see "the home", but only the means to a greater end? [A house in the eyes of the seller is not made of brick but profit.] Since the seventies the property market has not been one of borrowing money, but making money. There would never be the 'bust' if there were not first the 'bubble'.
"irresponsible borrowers"...Who would buy a pair of boots that had no intention of going places? Who would undertake a mortgage of 100%+ if they were not sure of a no-lose situation?
Let us imagine that all are now older and more wise. Where is the person on average or low wage to rent when there are yet so many on the cusp of disaster with their own past borrowings, (i.e. The buy to let brigade.)? Then there is the property rich, who on listening to the sage/weasel words of those that predict an influx of the wealthy of other nations soon to enter into/onto the UK property market, should they falter now or stick it out for more profit?
Fewer houses being built to rent, council housing for sale (discounted), rents ever on the rise, house prices 'set' to rise (is that not always the rhetoric?)...fewer jobs, fewer well paid jobs, less stable employment.
No David the borrowers are not to blame...any more than the flower is to be 'condemned' for following the course of the Sun.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
This letter from today's Guardian may assist in clarifying my insistence on the non culpability of the borrower in our present and ongoing financial 'mess'...
"... the real cause of the financial crisis was the decision to discard a prudent accounting system in the mid-2000s. Until then, accounting in this country was based on the UK GAAP (Generally Accepted Accounting Practice), where profits could only be taken when they were earned. UK GAAP was replaced by IFRS (International Financial Reporting Standards), where assets are not valued at cost, but at "fair value", which is a theoretical valuation assuming favourable market conditions. This would not be so bad were it not for increases in theoretical asset valuations being taken as profit in the income statement. Thus unrealised profits are taken into the income statement from which bonuses are paid, although no cash has been generated to support them. Imprudent accounting is the real problem.
Malcolm Howard
Banstead, Surrey"
From...
http://www.guardian.co.uk/business/2012/jul/09/acceptable-face-bankingIgnorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
Tom, of course the borrowers are partly to blame, its called individual responsibility.
If you ask me to lend you a fiver it is your responsibility to pay me back.
Answer this please, what would happen if every mortgage or loan holder in the UK refused to repay it, saying they're not responsible?
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
David is absolutely right about personal responsibility of course. But, we also have to remember the cause of the housing and debt bubble, it was the simple fact that interest rates were held down too low for too long because any consideration of the level of debt was excluded from the inflation brief given to the Bank of England in 1997 by Gordon Brown. This encouraged borrowing and discouraged saving (brown also discouraged saving with a significant reduction in the levels of tax-free savings allowed).
Yes, this does not excuse people from borrowing irresponsibly or lenders from poor lending practices either.
As for Tom #27. I agree about the change in accounting practices, it was wrong and may have been a contributing factor to the overall problem but it was only a contributing factor.
None of this also excuses the British (and,to be fair other governments) from being irresponsible borrowers either. It is not only private individuals who are to blame. Increasing the government's deficit spending while the economy was growing instead of allowing growth to close the deficit gap and 'balance the books' was a major and very basic error and is the reason for having to have pubic spending cuts now.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
The loan of your fiver is not a very good point to begin, it is not a good example to give. Not in terms of the overall situation that has us where we are now.
[this is nothing personal...]
What a fool you are. You lend a fiver and wish to get the fiver back. But, inflation will get in the way. What I am able to purchase for that fiver you will not be able to purchase with it when I give it you back...over one year it may be worth only £4.20, and then again while I have your fiver you have it not.
What further confuses the issue, and what the simplification of terms does not address, is value over worth. (as is partially explained in the letter above)
I think, though, that we can only talk around ourselves and get nowhere...let's try this.
Let me state:the sub-prime borrower is 1% culpable and 110% down on the deal.
The defaulting borrower loses their home, the 'bank' retains the asset. [While I, on handing you back your fiver, by way of a thank you I buy you a pint. I would hope that we would remain friends throughout. ]
All those on the lending side, set their own rules, set their own profit margins and receive their wages and bonuses and by default retain the asset. The gap then consists of the inflated value over worth and the bonuses paid out in expectation of, but not realisation of, profit.
Everybody, the householder and the homeless, pay and pay again to the 'bank' and the borrower yet bears the burden of their original debt.
When it is conceded that a mortgage rate is an entirely fictional and notional amount at the mercy of each and every whim of the lender for whatever purpose and at whatever rate suits the 'suits' then perhaps we can address a general default.
P.S.
What percentage of culpability should these borrowers bear?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#29
"only a contributing factor"
For all and sundry to pay themselves/each other, in real money, on the basis of utterly unreal money is at the very heart of the matter.
Where would we be if we did not have the buyer, in a seller's market, to bear the responsibility?
I am reluctant to hold the borrower at fault for the top-down greed for all in the financial sector over the last thirty years.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
You may be reluctant but its a fact. In every transaction there are two voluntary parties, both must take their share of responsibility.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
David, I at least put a figure on it. What say you?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
Tom if I'm honest I dont understand your post, real money, unreal money, top-down greed, hypothetical scenarios.
To me its clear, a person applies for a loan of his own free will, he knows very well that at some stage he'll have to pay it back and the problems that arise if he doesn't.
To me its your attitude of absolving people of their responsibilities that creates the problem; as I said earlier, if we all threw our arms up in the air where would we be?
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Well said David
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
I know that there is a great deal of;"What business does he have watching Sky TV when he does not work nearly as hard as I do." about.
Dear David. My "attitude of absolving people of their responsibilities", if that is what I am doing, I don't that it is quite that though, has created none of the problems.
Certainly, Never a lender or a borrower be, is a fine maxim, but it simply is not the Capitalist way, is it?
If one is set to pay £X for rent and £X for a mortgage, why settle on paying rent? Either way, not coming up with the readies will result in homelessness.
Where the promise of a booming Capitalist Society has gone wrong is in it's development, over recent years, into a Company-Store. The attitude the financial sector has adopted over that time is one of superiority over the Nation-State.
History shows that a policy of "Company-Store" ensures the enslavement of the populace/workforce. Where 'generous' wage settlements occur all that that money can buy increases in cost so as to make the wage rise less than worthwhile.
While some individuals may be able to shop further afield it ill behoves them to denigrate the plight of those left in the lurch.
Who but the borrower and the by-stander has suffered?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
I dont understand a word of that
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
nearly spilt my coffee there david, full marks for honesty.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
A little 'light' relief...
http://www.guardian.co.uk/business/farepak
No laws broken...phew!
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 683- Registered: 11 Feb 2009
- Posts: 1,052
Personal responsibility has a place but when 'experts' are assuring you that you can afford their rates of interest and why not make those improvements to your home that you want/need the balance of responsibility does shift.
Even today you can see adverts on the TV for loans aimed at those in need but at interest rates above 1700%!!!!!!!