Almost £4b more in cuts coming in the budget.

[Eric Arthur 10]

http://www.bbc.co.uk/news/uk-politics-35848687

 

Where is Eric when you need him (your party needs you):help:

 

France, and it's not my party.

[sutty27 10]

Fuelled by debt for sure, and yes housing was a part of that, but the trigger was the collapse of sub-prime in the USA and the subsequent issues at the banks. Our crash was not triggered alone by our housing bubble.

 

But, if you think it was then surely you should have issues with Osborne who has pumped the bubble back up. But you continue to hero worship him.

 

No the trigger was the indisputable fact it was a mismanaged economy fuelled by debt and a housing bubble which was always going to come crashing down at some point,or do you think we could have continued indefinitely fuelling the economy with debt and asset bubbles.

 

I do have issues with Osborne and this governments policies, unfortunately they are the best of the two choices we are always lumbered with.

[JFKvsNixon 11]

Fuelled by debt for sure, and yes housing was a part of that, but the trigger was the collapse of sub-prime in the USA and the subsequent issues at the banks. Our crash was not triggered alone by our housing bubble.

 

But, if you think it was then surely you should have issues with Osborne who has pumped the bubble back up. But you continue to hero worship him.

 

Actually the underlying cause of the crash was the deregulation arms race between between the City and Wall Street's regulators in the battle for financial supremacy. Make no mistake about it, it was the trade in sub-prime mortgages by the financial institutions that pushed the sub-prime market, and the lack of regulation in the trading of subprime mortgages that allowed our economies to come so close to disaster.

 

The City and how is was regulated was a part of the credit crunch, and this cannot be ignored.

[Eric Arthur 10]

The City and how is was regulated was a part of the credit crunch, and this cannot be ignored.

 

Neither can we ignore Osborne's banking reform.

[I1L2T3 10]

Actually the underlying cause of the crash was the deregulation arms race between between the City and Wall Street's regulators in the battle for financial supremacy. Make no mistake about it, it was the trade in sub-prime mortgages by the financial institutions that pushed the sub-prime market, and the lack of regulation in the trading of subprime mortgages that allowed our economies to come so close to disaster.

 

The City and how is was regulated was a part of the credit crunch, and this cannot be ignored.

 

Suicide sub-prime loans in the USA and the financial instruments based on them were a main factor for sure. But there was other speculation in all kinds of markets. The banks had gone feral and yes a big part of what allowed that to happen was poor regulation. In fact poor regulation on both sides of the Atlantic. The other part of that story is that governments didn't and still don't know how to regulate the shadow banking sector which even the big institutions are major participants in.

 

Anyway, back to the UK housing market. If we compare it to what happened in the USA where borrowers could simply walk away from a loan it's a very different story. The housing market was and still is propped up heavily, prices were not allowed to fall too far and homeowners in trouble since have been benefiting from extraordinary levels of support and forbearance.

 

If the sub-prime bubble had not burst so spectacularly in the USA we would have carried on with our own housing bubble and sooner or later we would have faced our own collapse. In fact I think we are still to face that moment of truth.

 

---------- Post added 19-03-2016 at 10:56 ----------

 

Neither can we ignore Osborne's banking reform.

 

There are some improvents, e.g. around capital requirements, but the banks are still up to their old tricks. Read nearly any issue of Private Eye and you will understand.

 

Latest stunt by Osborne was the removal of the chief regulator at the behest of Osborne's friends in the banks. It seems the chief regulator was starting to get quite good at his job. That wouldn't do would it.

Edited March 19, 2016 by I1L2T3

[sutty27 10]

Actually the underlying cause of the crash was the deregulation arms race between between the City and Wall Street's regulators in the battle for financial supremacy. Make no mistake about it, it was the trade in sub-prime mortgages by the financial institutions that pushed the sub-prime market, and the lack of regulation in the trading of subprime mortgages that allowed our economies to come so close to disaster.

The City and how is was regulated was a part of the credit crunch, and this cannot be ignored.

 

If the banks hadn't been deregulated and hadn't leant money to anyone with a pulse there wouldn't have been a growing economy in the first place so there wouldn't have been a crash. Forcing an economy to grow will inevitably lead to a crash.

[JFKvsNixon 11]

If the banks hadn't been deregulated and hadn't leant money to anyone with a pulse there wouldn't have been a growing economy in the first place so there wouldn't have been a crash. Forcing an economy to grow will inevitably lead to a crash.

 

I think that you've completely missed the point. It had nothing to do with anyone forcing an economy to grow. It had everything to do with the investment banks forcing their profits to grow.

[sutty27 10]

I think that you've completely missed the point. It had nothing to do with anyone forcing an economy to grow. It had everything to do with the investment banks forcing their profits to grow.

 

No the point is governments and business wanted growing economies, so they put policies in place that would make the economies grow, part of that was very low interest rates and banking deregulation so that they could lend to anyone with a pulse, this encouraged an asset bubble which in turn fuelled the growth in the economy, it was always destined to crash and nothing could have prevented it.

 

So the policies that caused the crash were the very policies that caused the growth, the only way the crash could have been avoided is not having the growth that preceded it.

Edited March 19, 2016 by sutty27

[I1L2T3 10]

If the banks hadn't been deregulated and hadn't leant money to anyone with a pulse there wouldn't have been a growing economy in the first place so there wouldn't have been a crash. Forcing an economy to grow will inevitably lead to a crash.

 

Economic growth is not a bad thing in itself but our addiction to debt feeds unsustainable growth, and our capitalist system as it is now is based on an ever growing expansion of the money supply and debt in order to grow.

 

Capitalism is generally good for us as a basic system and I can't see what we would replace it with, but it needs to be controlled and restrained and any growth should be sustainable.

[JFKvsNixon 11]

No the point is governments and business wanted growing economies, so they put policies in place that would make the economies grow, part of that was very low interest rates and banking deregulation so that they could lend to anyone with a pulse, this encouraged an asset bubble which in turn fuelled the growth in the economy, it was always destined to crash and nothing could have prevented it.

 

What fuelled the subprime crisis was that it was an extremely profitable business to trade subprime mortgages, this led to a far greater demand from the financial institutions for more subprime mortgages to trade.

 

The mortgages given to the subprime market were so intentionally complicated that very often it was next to impossible for the layman to understand the terms of the mortgage that was on offer.

 

So the actual interest rate of the mortgage after the initial teaser rate, which usually lasted around 5 years ended, the payments sky rocketed making it impossible to pay back. All this was of course hidden way in the small print, in a language as I said that was often impossible for the layman to understand.

 

It was no coincidence that the credit crunch stated to happen about 5 years after the the financial industry found out the money that they could make from the sub prime market.

 

The big question is obviously why were mortgage companies offering mortgages that they knew that people wouldn't have a hope of paying back. The mortgage companies did it because they'd sell the mortgages on to other financial institutions for a tidy profit. So they didn't care who they swindled into taking out a mortgage, to the point they even offered mortgages without proof on an income.

 

It was this lack of moral hazard that was one of the underpinning elements of the credit crunch.

__________________

Edited March 19, 2016 by JFKvsNixon

[I1L2T3 10]

I think that you've completely missed the point. It had nothing to do with anyone forcing an economy to grow. It had everything to do with the investment banks forcing their profits to grow.

 

Indeed. Basically the banks were able to create money in an uncontrolled way. This happened at mainstream banks, but more worryingly the shadow banking sector was creating money too, or at least creating instruments that were considered to be exchangeable for money.

 

The shadow banking sector is still up to its old tricks. Internationalised, global, uncontainable. Blunt truth is nobody has any clue how to regulate it.

[sutty27 10]

What fuelled the subprime crisis was that it was an extremely profit business to trade subprime mortgages, this led to a far greater demand from the financial institutions for more subprime mortgages to trade.

 

The mortgages given to the subprime market were so intentionally complicated that very often it was next to impossible for the layman to understand the terms of the mortgage that was on offer.

 

So the actual interest rate of the mortgage after the initial teaser rate, which usually lasted around 5 years ended, the payments sky rocketed making it impossible to pay back. All this was of course hidden way in the small print, in a language as I said that was often impossible for the layman to understand.

 

It was no coincidence that the credit crunch stated to happen about 5 years after the the financial industry found out the money that they could make from the sub prime market.

 

The big question is obviously why were mortgage companies offering mortgages that they knew that people wouldn't have a hope of paying back. The mortgage companies did it because they'd sell the mortgages on to other financial institutions for a tidy profit. So they didn't care who they swindled into taking out a mortgage, to the point they even offered mortgages without proof on an income.

 

It was this lack of moral hazard that was one of the underpinning elements of the credit crunch.

__________________

 

The big question is why didn't central banks and government stop it, answer, because they orchestrated it, they knew the only way to get economic growth was to encourage people to take out huge debts and create another asset bubble.