€100,000,000,000

Chubster said:
On the part of the "sellers" perhaps.....
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No, on both sides. Plenty of people bought property they couldn't really afford or remortgaged their home on the strength of what they perceived as a no-lose situation. No-one held a gun to the heads of these people and forced them to buy a new house, or remortgage to fund a fancy extension, new car or holiday.
 
A lot of people trust banks to the extent that if they are prepared to lend them X amount of money they believe it is affordable and will remain so. They consider banks to be the financial experts so if some spotty faced youth says we can give you this gazillion pound mortgage over 30 years they assume it is ok and there won't be unexpected problems.

What banks also did in the US and to some extent here was to lend money to people with affordable introductory rates and didn't make it clear that when that rate ended the mortgage would be completely unaffordable. I can't think why anyone would knowingly choose a mortgage that doubled after two years to a level they could never dream of affording unless they weren't told or the bank reassured them that there would be another solution eg remortgage to another preferential rate or assurances of increase in earnings. Not everyone is immune to the weasel tricks banks pull.

There was an article in the paper recently about lloyds lending £18k to an old woman with alzheimers. They've also been on various consumer programmes having leant to people with learning difficulties and mental problems that genuinely cannot be responsible for themselves. I don't think the others are much better.
 
srichards said:
A lot of people trust banks to the extent that if they are prepared to lend them X amount of money they believe it is affordable and will remain so. They consider banks to be the financial experts so if some spotty faced youth says we can give you this gazillion pound mortgage over 30 years they assume it is ok and there won't be unexpected problems.

What banks also did in the US and to some extent here was to lend money to people with affordable introductory rates and didn't make it clear that when that rate ended the mortgage would be completely unaffordable. I can't think why anyone would knowingly choose a mortgage that doubled after two years to a level they could never dream of affording unless they weren't told or the bank reassured them that there would be another solution eg remortgage to another preferential rate or assurances of increase in earnings. Not everyone is immune to the weasel tricks banks pull.

There was an article in the paper recently about lloyds lending £18k to an old woman with alzheimers. They've also been on various consumer programmes having leant to people with learning difficulties and mental problems that genuinely cannot be responsible for themselves. I don't think the others are much better.
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What the banks did in the US was to
lend to people on welfare, and others with incomes that couldn't cover the repayments, safe in the knowledge they could repossess the property later, sell it on and still make a profit.

The same "scams" were in operation here too, although to a lesser extent. There was a company that used to advertise on the radio here offering mortgages to council tenants on benefits.
 
Brainwashed in a lose sense, as in we only assume we have a choice, like when we vote, we think we're choosing a candidate, but in fact we're simply choosing from someone else's selection

So ask yourself what happened to that profit? Who caused the lack of profit? Is it, the same financial system that forced home prices so high and unaffordable that they had to offer 100% mortgages in the first place?

Why did they do this then? Did the lenders have an uncontrollable monster system ticking over spitting out cash dividends that needed constant feeding to stay afloat? Constructed over decades with many additional layers of dodgy financial products making profits off the back of debt (money that didn't yet exist), some big ones where trading of the back of the mortgage debt market values. The very same values that needed feeding 100$ mortgages to stay afloat. In real effect this drove an wedge of profit into people mortgages that was unaffecting (?wrong word) as it grew in size and made money, but only for as long as it remained hidden and the monster was kept fed .. Unfortunately, they knew one day it would need accounting for.

That's not come out very clearly...hmmm you he my gist i hope.

This debt ripple, and inflation across the world is a direct result of bad accounting on behalf of the banks greed. Not the peoples desperation to live somewhere in an expensive 'system' world fast outpacing there dreams.

I have to go to work...
 
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But everything has changed

Take my parents. A woman married to a wireman (works in a factory) in Caversham in the late sixties

My father could "just" afford a 2.5 times mortgage, and provide for a family on his salary alone.

Nowadays, could a young factory worker afford a mortgage alone on a 3 bed semi in Caversham - nope. 2 professionals in their late twenties would be stretched to hell to do it. In addition to this, our expectations to have "stuff" have rocketed. Back then, if you wanted a fridge or a TV, it was a big deal, you saved bloody hard for a long time for it. Back then a phone call, was something that is measured.. Yet today we see phone, mobiles, internet as "human rights"

Our expectations from schools, hospitals, transport systems have all changed...

We cant have everything, and hide from the real cost of it. In addition, the basics - housing costs, have proportionality sky-rocketed.
 
Forbiddenbiker said:
This debt ripple, and inflation across the world is a direct result of bad accounting on behalf of the banks greed. Not the peoples desperation to live somewhere in an expensive 'system' world fast outpacing there dreams.
.
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I see what you are saying , but it still doesn't excuse the people stupid/greedy enough to lie about their income in order to secure a mortgage that they can't pay as soon as the interests rates rise.

they do have other alternatives including renting somewhere to live, living with parents, house sharing etc

Also a lot of the borrowing wasn't done by people who couldn't get a mortgage any other way, a substantial amount was greedy halfwitts who already had mortages and a lot of equity , extending them to 100% and spending the cash on cars, holidays, and lifestyle - these people are now screwed because house prices have dropped so they have negative equity and in a lot of cases they've been made redundant or had incomes cut by the austerity measures. However I have very little sympathy for them, if you borrow cash you can't afford and spend it on fripperies you don't need then you've got to take the consequences
 
Forbiddenbiker said:
Brainwashed in a lose sense, as in we only assume we have a choice, like when we vote, we think we're choosing a candidate, but in fact we're simply choosing from someone else's selection

So ask yourself what happened to that profit? Who caused the lack of profit? Is it, the same financial system that forced home prices so high and unaffordable that they had to offer 100% mortgages in the first place?

Why did they do this then? Did the lenders have an uncontrollable monster system ticking over spitting out cash dividends that needed constant feeding to stay afloat? Constructed over decades with many additional layers of dodgy financial products making profits off the back of debt (money that didn't yet exist), some big ones where trading of the back of the mortgage debt market values. The very same values that needed feeding 100$ mortgages to stay afloat. In real effect this drove an wedge of profit into people mortgages that was unaffecting (?wrong word) as it grew in size and made money, but only for as long as it remained hidden and the monster was kept fed .. Unfortunately, they knew one day it would need accounting for.

That's not come out very clearly...hmmm you he my gist i hope.

This debt ripple, and inflation across the world is a direct result of bad accounting on behalf of the banks greed. Not the peoples desperation to live somewhere in an expensive 'system' world fast outpacing there dreams.

I have to go to work...
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My sentiments exactly Adam. Summed it all up nicely
 
Not forgetting that the banks failed to identify the Ghost Town effect, in particular in America. Sure, they could repossess the houses but when the whole street has become empty and run down, nobody wants to live there so the banks are stuck with worthless assets - and our banks were heavily invested in the American sub-prime market.

Although the public should take responsibility for themselves, the banks were still the ones in control. Nobody forced them to lend, even the Government can't seem to force them to lend. Simple checks can be done to make sure people are telling the truth, in particular their salary. Credit files reveal how much official debt people have so it's pretty straight forward to see if people can afford to borrow with the only real problem being with losing your job.

But what about the regulators and what were they doing whilst all this was happening?
 
Strictly speaking though the american banks were forced to lend to subprime lenders - the carter and later clinton administrations pretty much made it a condition of the renewal of their banking licences .. it was the american version of the 'right to buy'

I'm not saying the banks are blameless, but nor are they the bogeyman that everyone else can blame in order to absolve themselves of any guilt
 
Sorry, I was meaning the British Government - in particular when they were told to lend to small businesses but kept falling short of the target. Crazy considering the government involvement,
 
big soft moose said:
Strictly speaking though the american banks were forced to lend to subprime lenders - the carter and later clinton administrations pretty much made it a condition of the renewal of their banking licences .. it was the american version of the 'right to buy'

I'm not saying the banks are blameless, but nor are they the bogeyman that everyone else can blame in order to absolve themselves of any guilt
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I don't buy that. Banks found a way of 'de-risking' sub-prime mortgages by bundling them to together and selling off slices that would absorb losses in a manner of seniority. So regardless of what the underlying credit quality was, it was still a one way bet i.e. the whole economy/debt bubble/personal finance won't tank in a collective manner. Banks changed from making money through net interest income (difference between interest paid to depositors and other funding sources and the interest received from lending). Instead they become transactional businesses i.e. originate loans, repackage and sell them on, this generated far more commission for all divisions in the bank. They even bought other sub-prime lenders to help speed up the origination process and internalise the whole thing.
 
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Richard King said:
But everything has changed...
...
...We cant have everything, and hide from the real cost of it. In addition, the basics - housing costs, have proportionality sky-rocketed.
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No I agree, we cant have everything, but what is the real cost? ...we're talking about the real cost as if we actually know what it is, we think most stuff its defined by cost of labour and materials, but in reality almost everything we buy is inherently defined, selling price wise, by the demands of the market place. And that modern market place is about repeated turnover of goods, the regular turnover of money, all in conjunction to feeding the monster with the credit and debt flows of the purchasing public ...anything other, than the lifetime or quality of the goods right!?

We should ask ourselves why we have built this throw away market structure, how did we get to this rapid turnover point? Where have the influences come from, and how did those influences change the choice we all face everyday?

Are we in-fact feeding an antiquated monster financial system more than actually getting true value for money?

big soft moose said:
I see what you are saying , but it still doesn't excuse the people stupid/greedy enough to lie about their income in order to secure a mortgage that they can't pay as soon as the interests rates rise....
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It shouldn't have mattered. The banks should have had the collateral backing to lend in the first place. This is the point of a bank.

They weren't covered because they had accumulated too much weight of debt on products sold for profit that didn't actually exist until the loans came in, which of course is daft for loans that are inherently outstanding ...instead the decades long, multi originating, growing waves of debt couldn't be hidden any more, rolled and crashed.

The people don't need to apologise, the're already without homes in a market place designed by a system that's just rejected them, the loans should have been covered by real collateral as a true loan should always be, if they had have been, we wouldn't have had a problem...and we all wouldn't still be discussing it several years later.

big soft moose said:
...

I'm not saying the banks are blameless, but nor are they the bogeyman that everyone else can blame in order to absolve themselves of any guilt
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I think we can, many have now at least acknowledge they allowed the monster to grow to unsustainable heights, but rather than just wanting scape goats for the sake of some justice we should focus on some long term solutions....At the moment we are still but sheep to the choices available, and all those choices are dictated by the market place, and that market place is just a mirror of the choices we assume we have. ..ok, thats a bit dark, but hey, that's brain washing for you. ;)
 
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