# Banking Industry



## Grinding One (2 Oct 2008)

Well here in the States they have done it ....voted the Tax for the banks in the Senate.Now back to the House for a revote.Hold your pants on its not a done deal yet.
I have seen the World Panic in the Banking industry because of this...these people are way to close to our problem.I do not know how it happened but If I were them I would surely get my money back into my own bank.
Well thats why everything went down hill in the basket...it was a foreign investment problem,the revenue stopped coming in when the companys laid off the workers,then without jobs they could not pay their house payments.All of the bundle securities that were good (Home Loans)started to fail,and investors wanted their money back.Understandable.What I do not understand is who goes to jail for making a mess out of this....and why do I have to pay for it....just wrong.


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## virtu (2 Oct 2008)

Self regulation of markets does not work, if banks are not let to go broke. Bankers can't but win, if they would loose, taxpayers cover the loss. What sort of reckless behaviour that fuels.

Something I can't comprehend.


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## lurker (2 Oct 2008)

That mega-rich American woman ( a few years ago) spoke volumes when she said only little people pay taxes.

Guess who will come out of all this "quids in" ???


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## christoph clark (2 Oct 2008)

> Hold your pants on


We say trousers :lol: :lol: :lol: 

but hold your pants does sound good in this situation :lol: :lol: :lol:


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## Grinding One (2 Oct 2008)

Guess I could have said Jeans since most people over here wear them.


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## Tusses (2 Oct 2008)

what I dont get ... the banks get bailed out if they have borrowed too much or made bad business decisions , but 'we' dont :? 

I owe an awfull lot, and have for years (property) - I have used the system, but it has now came and bit my pineapple ! I am now getting well and truely screwed by increasing interest rates ! :shock: I knew what I was doing was risky all along. I cant see (or expect) Gordon sending me a cheque to tide me over :lol: 

oh well - easy come , easy go :? 

I wont be any worse off if I go bust than I was before I started


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## Jake (2 Oct 2008)

It's become a systemic problem, such that even the good banks won't lend money to each other or to anyone. Without credit and bank lending, modern capitalism falls over and we're all in trouble - the global economy goes down the pan, badly. As in depression, not recession.

You going bust is unpleasant for you, but even if there are millions of you, it isn't a big a threat to the functioning of the economy as the banking system ceasing to exist in a meaningful way for any substantial period.

The US bail-out is something like a a quarter of the cost of the Iraq war - and that's the immediate cost, ignoring the fact that most of the stuff that is taken off the banks' books will eventually be sold or mature and is likely to repay a substantial portion of the bail-out, if not turn a profit for the tax-payer.


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## Grinding One (3 Oct 2008)

But in the mean time Iraq is holding onto their money while we pay for their war torn country...train their people build their country...oh well the American way.Take out the guy killing off of his people bomb him and his Army then replace what we blew up at our cost.We got to get out of the habit of saving other people.


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## RogerS (3 Oct 2008)

Jake":22eo4d8x said:


> It's become a systemic problem, such that even the good banks won't lend money to each other or to anyone. Without credit and bank lending, modern capitalism falls over and we're all in trouble - the global economy goes down the pan, badly. As in depression, not recession.
> 
> You going bust is unpleasant for you, but even if there are millions of you, it isn't a big a threat to the functioning of the economy as the banking system ceasing to exist in a meaningful way for any substantial period.
> 
> The US bail-out is something like a a quarter of the cost of the Iraq war - and that's the immediate cost, ignoring the fact that most of the stuff that is taken off the banks' books will eventually be sold or mature and is likely to repay a substantial portion of the bail-out, if not turn a profit for the tax-payer.



As ever, Jake, you have hit the nail on the head. Most people (including politicians) just don't get it. Even with the central banks giving out loads of money to try and increase liquidity in the inter-banking loan system, there has been little effect and there won't be until banks restore confidence in each other. 

Bleating about 'fat-cats' and 'you and me paying' are all very well but about as pointless as a rounded-bevel on a chisel. Those politicians in the US who are blocking the bail-out are, like politicians the world over, only interested in saving their own a**es at the impending elections. For once, and I never thought that I'd ever say this, George W is right :?


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## big soft moose (3 Oct 2008)

Grinding One":398gfpgr said:


> We got to get out of the habit of saving other people.



particularly when they havent asked you to "save them" - while it is true that the iraqi people werent having that great a time under sadam most of them didnt want to be occupied by nato either.

the liberation of kuwait in 1991 was about saving people - gulf war 2 is a war of conquest centred largely on the desire for cheap oil.

Still i think the discussion of politics is verbotten on here so i wont go further into that.


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## Grinding One (3 Oct 2008)

OK they passed the bill lets all go get loans to buy more tools


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## Tusses (4 Oct 2008)

Grinding One":33og6n98 said:


> OK they passed the bill lets all go get loans to buy more tools



yeah .... lets hope it rubs over here too !


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## Rich (4 Oct 2008)

I am still adamant that one should not live beyond ones means, that applies to me and should also apply to the government, at the end of the day we are one big household and should budget accordingly, once again we return to the Mr Macawber situation.

Regards,

Rich.


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## Tusses (4 Oct 2008)

Rich":1dtxzuxe said:


> I am still adamant that one should not live beyond ones means, that applies to me and should also apply to the government, at the end of the day we are one big household and should budget accordingly, once again we return to the Mr Macawber situation.
> 
> Regards,
> 
> Rich.



ther is that - and I might 'now' agree  but also, there is the 'go with the flow' attitude that is (to me) acceptable too.

if the whole world is saying 'borrow loads and take risks' then why not? - as long as you realise you might fall flat on your face


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## Rich (4 Oct 2008)

That's fair enough tusses, but WHO bails you out when you fall flat on your face? yes mate, ME.

Rich.


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## Losos (4 Oct 2008)

Rich":1kcp4j39 said:


> I am still adamant that one should not live beyond ones means, that applies to me and should also apply to the government, at the end of the day we are one big household and should budget accordingly, once again we return to the Mr Macawber situation.
> 
> Regards,
> 
> Rich.



Here, here, Rich - I do get very annoyed at seeing how these top investment bankers *have messed up *and will be even more annoyed if it transpires that they are still going to pick up their imoraly high bonuses.

The only difference I can discern between the 1929 WallStr. crash and now is that back in 1929 it was the government who made all the wrong decisions, whereas now it is those wallys on Wall Str. 

As Tony said, for once Bush and co. are trying to sort it, but *why did they let it get to this situation in the first place* :?: (You'd have thought people would have learned something in the 69 years since the great depression.)

I still remember my father telling me about *life in Cardiff in the early 30's it was not nice*, he often went days with no food *and people did actually starve*. People can't believe that now, but we've come very very close to a repeat these last few weeks. 

Let us hope these wan......er sorry bankers will be better controlled in future and some *stability and micawberism will return to our financial systems.*


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## Rich (4 Oct 2008)

Good evening Losos, at the risk of being labelled a "little Englander" I would go further, in my house, if there is something we want and we can't afford it, we save up for it and pay with cash when we can afford it, we don't want any medals for that, it's common sense and practical.
What I would advocate, is, this government should stop spending money on things that we DO NOT need, ie, olympics, EU, charitable donations to countries that do not alter their ways, keep the building of ships, aircraft and automobiles in THIS country.
This obviously sounds like protectionism, IT IS! does anyone think that the rest of the world is'nt doing the same, of course they are, we are the only country to play by the rules, and look where it has got us  
we now depend on the rest of the world for engineering, technology, fuel,
etc etc, this makes us beholden to other countries in a political manner and that is NOT good.

Rich.


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## Digit (4 Oct 2008)

As an adjunct to that apparently we donate £30,000,000 annually to the People's Republic of China as aid!
What was it they spent on their Olympics?

Roy.


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## Grinding One (5 Oct 2008)

Digit":28cbacwo said:


> As an adjunct to that apparently we donate £30,000,000 annually to the People's Republic of China as aid!
> What was it they spent on their Olympics?
> 
> Roy.



Hey there if nobody gives, somebody a hand up..then we all take a hit...How are they going to pull themselves up??The banker makes his money loaning out your money you gave him to make you some more money...whew...now here comes the rub,the government slacked off of the regulations and let the economy float the loans they knew they wouldn`t be realalistic..Those are the guys that need to go to Jail....Wait a moment I have to house them and feed them while they are in jail....ahhh heck with it...throw them out of the country,anybody want some shady banker types??


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## StevieB (5 Oct 2008)

What is it like up there on the moral high ground Rich? Got a good view? Unless you also saved for an awfully long time I suspect you also have a mortgage? What about your car? Always have enough put buy in case of breakdown or write off in an accident? While it is nice to think we are all fiscally prudent and save for the things we want in todays world credit is a fact of life, for both individuals, business and governments. Borrowing against future earnings is and always has been performed. Its when borowing exceeds capacity to pay back on future earnings that a problem arises. Naturally the scale is different for individuals and governments and rules for the two are not the same, but as we are seeing with the current crisis, its the drying up of lending facilities that is causing the problem rather than the fact that lending facilities exist!

Steve


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## Digit (5 Oct 2008)

IF that's the moral high ground Steve in my case I'd say the view was great. I owe nobody nowt, I paid cash for house, car, TV, woodworking machines etc etc.
I don't consider a certain amount of indebtedness a problem personally, it's when you can't afford to pay it back that the trouble begins.
And that applies throughout, but of late the fact that someday re-payments will have to be made seems to have escaped some people's attention.
Equally, if things have got tight in your household I would guess that some things have been put on hold, that you do without etc.
That is attempting to balance your out goings with your income.
That is what Rich is on about and I suggest is what most of us are having to do.
That being the case perhaps the government of the day should show the same, dare I use the word, Prudence?

Roy.


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## Losos (5 Oct 2008)

Digit":dwxa0cnf said:


> That being the case perhaps the government of the day should show the same, dare I use the word, Prudence?
> Roy.



Yes Roy, not so long ago that word was being bandied around as a good thing, *but it didn't last long did it *:?: 

As G1 has said we put our money in the bank in the expectation that they will *use it wisely *and thank us by paying a small fee to us.

We do not expect (At least I don't expect) that they will lend it out to all and sundry (What are now known as NOJAPS = No Job, Assets, or Prospects)

I also *owe nobody nowt now*, but I did once have a mortgage, when I applied I was told it would take *six weeks to approve *(So they could get documentary evidence that I did have a *Job, Assets, & Prospects*) and further more the maximum loan would be *75%* of the *lowest* valuation on the property.

I remember I *moaned a bit *at the time but the fact is that is *what I expect people who have my money now to do*, and they ain't done it have they :?:


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## Digit (5 Oct 2008)

That which is easily had tends to have little value I fear Losos.

Roy.


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## Losos (5 Oct 2008)

Digit":asi8syrf said:


> As an adjunct to that apparently we donate £30,000,000 annually to the People's Republic of China as aid!
> What was it they spent on their Olympics?
> 
> Roy.



Never mind the Olympics Roy, they are a country which approves and supports their cruel and immoral fur farm industry. Dogs (Including the beautiful and noble Newfoundland) are breed and killed in the most horrible way. This is not me just mouthing off, several EU quasi government bodies have confirmed it, and had people out there observing and photographing it. (I can post links of their reports.)

Now you tell me we give them 30 million a year :evil: :evil: :twisted: 

Hope you are wrong, or you made a typo, but however many naughts there are at the end it is still wrong and makes my blood boil.


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## Digit (5 Oct 2008)

I am aware of those reports Losos and agree with you, and no, my figures are correct, as reported in the press.
They are also not a one off case, the EU recently suspended aid to the Palestinian Authority 'cos they were spending it on directly or indirectly on funding terrorism rather than aiding their people.
The list is quite long I'm afraid.

Roy.


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## Grinding One (5 Oct 2008)

When I got out of the Army they said I had the GI Bill to help in buying a house ,not! They said only if I lived in a town of 2000 or less people do I qualify...To far to walk to work tho.Had to wait till I had saved up enough as the bank put it,to get the loan.Now they give them to people who do not want to work or even help themselves to get to the free food the churches give out.They want it delieverd :twisted:


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## Evergreen (5 Oct 2008)

Very few people on this side of the Altantic realise that subprime mortgages arose as the result of socially well intentioned legislation by President Carter in 1977 which was then stoked up even more by Clinton in the mid 1990s. The intention was to make credit for home purchase available to just about everybody. Banks were obliged to lend money to people who were very high risk in order to improve their ratings with the government.

How those risky mortgages then became linked to the massive internationalisation of debt is very well explained here

http://www.thislife.org/Radio_Episode.aspx?episode=355

Just click on the link to "The Giant Pool of Money" and prepare to be gobsmacked...


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## Digit (5 Oct 2008)

I got my house the hard way as well.
My first was incomplete as the the builder had gone bust in one of the usual slumps.
We looked at in the morning, borrowed the deposit from dad and all was signed and sealed by 4 o'clock that same afternoon!
Before we could move in I had to find a job in that area!
By the time we had paid the mortgage etc we sometimes didn't eat till I was paid!
Having finished the house and garden we sold at a profit and bought another run down place.
This we continued to do throughout the following twenty years till we moved here, where as I said, we paid cash!
We had no heating, no lighting, no plumbing, and no drainage.
But we made it into what we wanted.

Roy.


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## Rich (5 Oct 2008)

StevieB":t0o4v6y2 said:


> What is it like up there on the moral high ground Rich? Got a good view? Unless you also saved for an awfully long time I suspect you also have a mortgage? What about your car? Always have enough put buy in case of breakdown or write off in an accident? While it is nice to think we are all fiscally prudent and save for the things we want in todays world credit is a fact of life, for both individuals, business and governments. Borrowing against future earnings is and always has been performed. Its when borowing exceeds capacity to pay back on future earnings that a problem arises. Naturally the scale is different for individuals and governments and rules for the two are not the same, but as we are seeing with the current crisis, its the drying up of lending facilities that is causing the problem rather than the fact that lending facilities exist!
> 
> Steve



WHO mentioned moral high ground steve? not me, I was merely pointing out common sense, if that is what YOU call moral high ground, then let's have more of it.

Rich.


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## Losos (5 Oct 2008)

Evergreen":ku575uvm said:


> Banks were obliged to lend money to people who were very high risk in order to improve their ratings with the government.



Well I guess this is somewhat simplistic but if I was the CEO of a bank and taking money in and then lending it out to others why would I give a dam about the government :?: 

The bank doesn't need anything from the government (OK the CEO might be hoping for a gong or summit) as Rich was trying to say it's money in = money out, and the difference in 'interest' between the two is what pays the wages and the depositors. Simple init :?: :lol:


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## Evergreen (5 Oct 2008)

Losos":johfewt8 said:


> Evergreen":johfewt8 said:
> 
> 
> > Banks were obliged to lend money to people who were very high risk in order to improve their ratings with the government.
> ...



American banks were required by the Community Reinvestment Act to demonstrate they were providing loans for _all _sectors of their communities – which gave rise to the so-called “CRA rating”. It's part of their regulatory framework. Think of it as a sort of star rating system for hotels, only this time it’s for banks and imposed by the US government. 

But the really horrifying part comes with the selling on of mortgages to an international market that was eager to invest billions of dollars. And the quickest way to understand that is to read the "Giant Pool of Money" article. 

Pour yourself a big glass of Fullers 1845 and have a fascinating read - it's worth the effort.


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## Rich (5 Oct 2008)

I can't quite grasp this chaps,  if I was a bank, why on earth would I want to take on loans taken out by people who were unlikely to pay them back, perhaps I'm naive, but I just can't see the sense in it????

Rich.


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## Grinding One (6 Oct 2008)

Evergreen":1gqp7u8g said:


> Losos":1gqp7u8g said:
> 
> 
> > Evergreen":1gqp7u8g said:
> ...



But not all banks did this ,thats why some are still solvent...it was the big guys trying to steal as much as they could before" We need a Bailout" now they want the same people who couldn`t afford a house to give them their tax money and me to as they wreck their credit on top of it too.
Bunch of Snake Bankers....


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## StevieB (6 Oct 2008)

Rich, you seemed to be pointing out that lending money is a bad thing, and that if something was wanted it needed to be saved for. I was pointing out that thats an admirable sentiment (my reference to the moral highground) but not entirely practical in any society and never has been. Apologies if I caused offence.

Your comment as to why banks lend to people who are unlikely to repay - its because the banks do not hold on to the loan until it matures or defaults. Lets say you want to borrow a tenner from me, and I say sure, but you can pay me back £1.10 a month over 10 months to make £11 paid back in total. Now in two months time, when you have paid me back £2.20 I say to someone else - Rich is a good person, he is paying me back as agreed. But I really need some cash myself - I will sell you Rich's loan, which is worth £8-80 over 8 months for £8.00. Everyones a winner. You get your tenner, I get £10.20, the debt is off my books and the new banker gets your remaining £8-80. to me its attractive as I get a slightly smaller return but I get it much faster, and if you default then hey, not my problem. 

This whole cycle is repeated and repeated as credit loan swaps are made and it only collapses if the man at the bottom cannot pay. By the time its gone through several cycles, and been bundled up with millions of other loans nobody knows exactly how many of the loans are bad (since you mix in some good ones) and what exposure you have to people defaulting. Banks are now sitting on huge numbers of these, nobody knows what they are worth, since nobody knows how likely the people at the bottom are to default.

I can also insure my credit swap against defaulting, but as they were viewed as good security I get a good insurance rate. The insurance company (such as AIG) viewed it as a good investment since it came from a bank to bank transfer, not a debtor to bank transfer. As a consequence when these swaps default AIG cannot afford to pay out. 

Now imagine that we are not talking £10 but hundreds of millions. Billions even. The sums involved are largely 'on paper only' figures but they are the grease that oils the wheels of commerce. The Bank of England is also involved, the government is certainly involved - where do you think it gets its billions necessary for NHS upgrades and PPI deals. It borrows from the money markets. If the markerts collapse then the govenrnment is in real trouble. Thats why people say 'this or that bank is too big to fail'. Because of who it will affect as a knock on, not because of the need to save jobs in the bank itself. Additional layers of complexity to the whole system include buying US credit swaps, currency fluctuations, investments in global institutions, investment in commodities whose prices fluctuate - oil, gold, etc. and a myriad of other factors.

At the end of the day Banks exist to make money. They do this by taking deposits and lending those out again at a higher rate of interest than they pay the depositors. Much as we might wish they did, they do not keep our deposits in an underground vault with a big metal door. At any one time no bank has enough in its reserves to pay all its depositors if they suddenly want their money back. If that happens you get a run on a bank, most recently evidenced by queues of people outside Northern Rock. It couldn't meet demand and was nationalised as a consequence.

You can argue that its fat cat bankers that have caused the problem, or greedy lending. Indeed greedy borrowing could also be blamed. The cause is not simple, and nor is the cure. Sensible fiscal policy by both borrowers and lenders will help, but not borrowing or lending at all will not.

Steve.


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## ByronBlack (6 Oct 2008)

The crux of it as I see it is that these banks have deliberatly sold bad credit to other banks knowing full well that the person that they lent to had no possible way of repaying, to me this is Fraud, and I'm pleased that the FBI are investigating a number of these banks, but I'm not naive to think that the real culprits will be held accountable, instead muggins here and the rest of the populace will have to bail these greedy bankers out.

I'm with Rich, we have too much borrowing in our society, more so than almost any other nation in the world, it's rediculous and not needed. So what if you can't buy a BMW, you'll have to settle for a Fiesta instead, and so it goes for all the rubbish that people waste their money/credit on (big screen TV's, Sofa's, biggers houses, flash cars etc..)

Ultimately, it's greed that created this situation, and it'll take prudence and frugality to get out of it. I for one have plans in place to remove all debt (apart from the mortgage unless I win the lottery) and downsize that I don't have to rely on the state or the banks to finance my lifestyle.


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## Grinding One (6 Oct 2008)

ByronBlack":e3i2ssyr said:


> The crux of it as I see it is that these banks have deliberatly sold bad credit to other banks knowing full well that the person that they lent to had no possible way of repaying, to me this is Fraud, and I'm pleased that the FBI are investigating a number of these banks, but I'm not naive to think that the real culprits will be held accountable, instead muggins here and the rest of the populace will have to bail these greedy bankers out.
> 
> I'm with Rich, we have too much borrowing in our society, more so than almost any other nation in the world, it's rediculous and not needed. So what if you can't buy a BMW, you'll have to settle for a Fiesta instead, and so it goes for all the rubbish that people waste their money/credit on (big screen TV's, Sofa's, biggers houses, flash cars etc..)
> 
> Ultimately, it's greed that created this situation, and it'll take prudence and frugality to get out of it. I for one have plans in place to remove all debt (apart from the mortgage unless I win the lottery) and downsize that I don't have to rely on the state or the banks to finance my lifestyle.



On a side note to this I have a few Certificates of deposits and in 6 months I got 20 cents interest on a 1000.00 CD Wow at this rate I`ll be able to retire again in a million years.


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## RogerS (6 Oct 2008)

ByronBlack":3jeonfrm said:


> ......
> 
> I'm with Rich, we have too much borrowing in our society, more so than almost any other nation in the world, it's rediculous and not needed. So what if you can't buy a BMW, you'll have to settle for a Fiesta instead, and so it goes for all the rubbish that people waste their money/credit on (big screen TV's, Sofa's, biggers houses, flash cars etc..)
> .......



So you've not borrowed any money for anything then, Byron?

No mortgage?

Sounds to me as if you're making a value judgement here. What gives you the right to make it?


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## Digit (6 Oct 2008)

> What gives you the right to make it?



Perhaps your line applies Rog. "Common sense is not so common" :lol: 

Roy.


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## ByronBlack (6 Oct 2008)

I'm making that judgement based on the massive screw-up that over-borrowing has lead us to, and it's a greed society that feeds that borrowing/lending

I have borrowed, and I say that in my post, but by the end of the year I would have got rid of any outstanding debt, barr the mortgage, but then I was sensible when I got my mortgage and saved for the best part of 5 years to afford a decent enough deposit so that I wouldn't be in the poop if rates went up.

The problem we have with unnessacary borrowing is the 'want it now' attitude, if we all just had a little patience, or some enterprise we could afford the things we wanted without having to laden ourselves with unnecessary debt.

A frugal/sensible lifestyle that isn't driven by status or greed, in my humble opinion is the way to avoid massive financial melt-downs like we are seeing.

Roy - really no need for that comment just because you don't agree.


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## RogerS (6 Oct 2008)

ByronBlack":y1psym89 said:


> I'm making that judgement based on the massive screw-up that over-borrowing has lead us to, and it's a greed society that feeds that borrowing/lending
> 
> I have borrowed, and I say that in my post, but by the end of the year I would have got rid of any outstanding debt, barr the mortgage, but then I was sensible when I got my mortgage and saved for the best part of 5 years to afford a decent enough deposit so that I wouldn't be in the poop if rates went up.
> 
> ...



So what is the difference between borrowing the money to buy a house and borrowing the money to buy a car? There isn't any.


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## Travis (6 Oct 2008)

I have heard all this talk of money or the shortage thereof.
I am ready to do my part.
Just tell me when enough is enough.  









Travis


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## Rich (6 Oct 2008)

Without wishing to be critical, one cannot "live" in a car, A place of residence is a MUST for any family, but a car is not a necessity for everyone, understandably, self employed and the like need wheels, if push came to shove, I could walk to work and get the shopping at the weekend using the local buses, this would be a nuisance but is do-able.

I must say, that is a splendid dissertation by Stevieb, the way he put it in laymans terms make it easy for ME to understand, thanks for that steve, and no offence taken anyway mate, I don't think you are the type to offend.

Different folk lead different lifestyles and have different priorities, I was referring to my own circumstances earlier and think we lead a prudent lifestyle in this household, we don't want medals, but then again we don't have worrying letters on the doormat.

Regards,

Rich.


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## Losos (6 Oct 2008)

Thought i would just pop back and would especially like our American cousins to respond to this:-

Dick FULD the ex CEO of Lehman Brothers has been hauled up before a finance committee to explain how he allowed his firm to go bust. The chairman of the committee put up a slide which showed that since the year 2000 he has pocketed .......................wait for it....................................


almost *half a billion dollars* the American billion of course :!: 


yes, that's no typo, not million but billion :shock: 

I believe the exact figure was 480 million but whose worried about the odd 120 million :lol: 

That is more than some very small third world countries and certainly more than anyone on here *would likely earn in a lifetime*


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## Losos (6 Oct 2008)

Rich":3966c9em said:


> I must say, that is a *splendid dissertation by Stevieb*, the way he put it in laymans terms make it easy for ME to understand, thanks for that steve, and no offence taken anyway mate, I don't think you are the type to offend.



Yes, thanks for taking the time to write that Steve.

The only thing I would add is that each time the *'debt is sold on' *(and it can happen many times as Steve said) the recovery tactics *tend to get heavier*. So people who have no idea about lending find that the loan from their friendly high street bank (Where they always had a nice customer service lady to speak to) becomes, after a few years, (and maybe some missed payments) that they have a couple of heavies in black suits and sunglasses to deal with on the doorstep


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## BradNaylor (6 Oct 2008)

Interesting piece in today's Independant by Andreas Whittam-Smith.

http://www.independent.co.uk/opinion/co ... 52488.html

Basically makes the very good point that our current financial woes are the fault of the directors of the major banks and that they should all go to jail.

There's not much I can add.

Dan


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## RogerS (6 Oct 2008)

Losos":3ur87asx said:


> Thought i would just pop back and would especially like our American cousins to respond to this:-
> 
> Dick FULD the ex CEO of Lehman Brothers has been hauled up before a finance committee to explain how he allowed his firm to go bust. The chairman of the committee put up a slide which showed that since the year 2000 he has pocketed .......................wait for it....................................
> 
> ...



No it wasn't that much. Not even close. A lot of money..yes...was it excessive...most likely but suggest maybe a lot of us could stop reading the Daily Mail?


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## Digit (6 Oct 2008)

I think that when you deal on a daily basis with large sums of somebody else's money it just loses its meaning.
I'm not a great lover of regulation and control but it looks as though that is way things will have to be.
They should certainly be made to explain their actives, and if needs be, justify them.

Roy.


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## RogerS (6 Oct 2008)

Dan Tovey":dsjvb6zn said:


> Interesting piece in today's Independant by Andreas Whittam-Smith.
> 
> http://www.independent.co.uk/opinion/co ... 52488.html
> 
> ...



Accurate reporting maybe?

Shouldn't it read "Basically makes the very good point that our current financial woes are the fault of the directors of the major banks (Independent) and that they should all go to jail (Dan Tovey)". At least that was my read of the article.

It's all well and good slagging off the bank directors but we also should point the finger at ourselves (OK OK I know that some of you never ever borrow, built your own house, never had a credit card, whatever but for the 99.999999% remaining part of the population it applies) as we've all fed from the trough.


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## Rich (6 Oct 2008)

As a matter of interest, what papers do the forum members read? myself? I read the Express and the Times.

Rich.


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## Digit (6 Oct 2008)

Express, and dare I say it The Sun! (I like the clueless crossword and like to see how Hagar is getting on with Eddie)
Weekends Sunday Telegraph and Sunday Express plus some local papers as well.

Roy.


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## BradNaylor (6 Oct 2008)

Sorry Roger, 

The article was titled 'Time to put some bankers in the dock' 

So I think my interpretation is just as accurate as yours. 

I think you've missed the point entirely. Of course we need a banking system that allows credit to oil the wheels of commerce and for people to make major purchases such as houses and cars. No-one to my knowledge is seriously suggesting that the banking system should either be scrapped or nationalised. 

What many of us are suggesting however, is that the banks have been behaving in an irresponsible, greedy, and fraudulent manner.

If some of the directors of banks who have brought the world to the brink of financial collapse were hauled before the courts and held to account then there would be less chance of it happening again.

Dan


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## BradNaylor (6 Oct 2008)

Rich":fatbhtab said:


> As a matter of interest, what papers do the forum members read?



It depends what is in the rack at the coffee shop when I pop in for my morning Americana and pain-au-chocolat.


Dan


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## ByronBlack (6 Oct 2008)

RogerS":1nxayckh said:


> ByronBlack":1nxayckh said:
> 
> 
> > I'm making that judgement based on the massive screw-up that over-borrowing has lead us to, and it's a greed society that feeds that borrowing/lending
> ...



There isn't any difference in itself, but where it goes wrong is when people start to borrow for the sake of it and run up massive debts which they are unable to payback due to negligence on the lenders part, or through ill-fortune by losing a job, going bankrupt etc.. if we as a society can reduce our reliance on running up massive debts for consumer items (and a house doesn't come under this category) the better we'll all be.

I can understand where you are coming from, and I'm not preaching a backwards cave-like existence, but there has to be some restraint when it comes to borrowing and lending consumer debt for the lastest gadget/car/lifestyle accessory.

Also, the less borrowing for said items will result in people have more money coming in which can be used to afford a bigger deposit on a mortgage (if they wish to buy a house) and be more secure against interest rates.


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## Digit (7 Oct 2008)

> Roy - really no need for that comment just because you don't agree.



What am I supposed to have done _this_ time?

Roy.


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## ByronBlack (7 Oct 2008)

Digit":1ggnky93 said:


> > Roy - really no need for that comment just because you don't agree.
> 
> 
> 
> ...



The little snipe at me using your 'common sense' comment, but hey, lets stick to the subject at hand?


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## Digit (7 Oct 2008)

Wrong end of stick I'm afraid BB, I was saying that common sense should have been applied by those who seemed to think that they could borrow, borrow, borrow and keep on borrowing.
No offence was intended against _anyone!_

Roy.


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## Grinding One (7 Oct 2008)

RogerS":6x7jh039 said:


> Losos":6x7jh039 said:
> 
> 
> > Thought i would just pop back and would especially like our American cousins to respond to this:-
> ...



This poor guy says he got no pension from his bussiness or parashute...but he does have a few houses in Florida and New York worth millions...Poor Guy.I got a cell he can live in...Oh Poop I`d have to feed him and house him :roll: lets just sell his houses an pay some of the debt back.


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## RogerS (7 Oct 2008)

Grinding One":2y4r6fk3 said:


> RogerS":2y4r6fk3 said:
> 
> 
> > Losos":2y4r6fk3 said:
> ...



Right on, dude. He's been paid way too much money..just like movie stars, TV chat show hosts, UK footballers, US footballers, pop stars. Hell, that bloke across the road has got a better car than me. That's not fair.

Certainly one can argue that they get paid whether they make money or lose it but why single them out for opprobium? What about the regulators? How about the politicians and their inability to implement Basle 2, let alone Basle 1. And as I've said before, unless you've been a saint and not used a credit card, have a mortgage, no loans then take a look in the mirror as you (that's the generic You and not aimed at anyone specifically) didn't complain when you got that loan at 5% or whatever.

For a more reasoned and less emotive 'hang 'em high' argument then search google for "Basel II capital adequacy provisions". Here's a good one to start with


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## RogerS (7 Oct 2008)

ByronBlack":35qatajg said:


> RogerS":35qatajg said:
> 
> 
> > ByronBlack":35qatajg said:
> ...



I don't have any disagreement with the basic tenet of what you are saying but I don't agree with your statement 

_So what if you can't buy a BMW, you'll have to settle for a Fiesta instead, and so it goes for all the rubbish that people waste their money/credit on (big screen TV's, Sofa's, biggers houses, flash cars etc..) _

That implies a value judgement which is not on. One mans' sofa is another mans' Lie-Nielsen plane.


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## ByronBlack (7 Oct 2008)

Digit":1mb8radg said:


> Wrong end of stick I'm afraid BB, I was saying that common sense should have been applied by those who seemed to think that they could borrow, borrow, borrow and keep on borrowing.
> No offence was intended against _anyone!_
> 
> Roy.



I do apologise Roy, the way I read it, with you quoting Rogers reply to me, it looked like it was aimed in my direction, I suppose this is a problem with forums, it's sometimes difficult to read correctly the intentions of the poster. Sorry!


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## ByronBlack (7 Oct 2008)

RogerS":2ddb1t63 said:


> ByronBlack":2ddb1t63 said:
> 
> 
> > RogerS":2ddb1t63 said:
> ...



But what I was getting at with that statement, is that people (and even some of my friends) who can't physically afford the BMW (used here as an example) will buy it anyway because of the lack of regulations regarding lending, they'll borrow up to their eyebrows just to afford that new shiny thing that bestows upon them status, this could be applied to the latest big screen tv or whatever it might be. It's not a problem if the person buying it can afford it wether buying in cash or borrowing, the problem is that the lending has got so out of hand, and fraudulent, that many credit agencies will gladly lend this money to all and sundry not caring whether they can afford to pay it back or not due to the lack of regulations.

But, who can blame them? The lenders made their money, their safe accounts are full of money, and they are being baled out by the mug public, hardly being a taught a lesson of prudence.

What happens in 10-15 years when/if we get over this one, it's hardly a deterrent to stop their current behaviour in speculation and un-regulated borrowing.

I've had very little sleep, so apologies if thats a mess of a ramble


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## Digit (7 Oct 2008)

I agree with that as well BB, it is difficult sometimes. But I'm glad you spoke up, makes it possible for me to explain and prevent anyone feeling insulted.
Clears the air mate!

Roy.


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## mpooley (7 Oct 2008)

I remember just after i got married in 1971.

Building societies started to lend much larger multiples of incomes followed inevitably by a boom in house prices and a few years later a crash.

At the time i remember very clearly how they were all saying that they had learnt from their mistakes and this would never be allowed to happen again.

Yeah right! :shock:


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## Grinding One (7 Oct 2008)

Those old cogers all died off,its the new guys now we have to instruct.


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## mpooley (7 Oct 2008)

Grinding One":2pt1sntp said:


> Those old cogers all died off,its the new guys now we have to instruct.



Yes thats what books are for - pity it was not required reading for bank officials :?


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## Losos (7 Oct 2008)

RogerS":2fyb17a9 said:


> but why single them out for opprobium? What about the regulators? How about the politicians



Why :?: *Because his business has gone bust that's why*.

It's got nothing to do with regulators or politicians or Basle 2, 3, or whatever.

It's ever so simple really, instead of paying all those huge bonuses to themselves *they could have bought bars of gold and stacked them up in the basement* and now there would be a que of regulators, politicians, and likely a few Swiss gnomes queing outside Lehmans HQ.

My comment had nothing to do with envy, I don't care how much the guy across the road earns, *so long as he is good at what he does*. LUND was clearly no good at his job yet he's rich. 

Can you tell me why someone who is *unsuccessful* should end up better off than the boss of *Lloyds or Barclays*. For most of us, (you too I'm sure), if we mess up we get bollacked, and maybe loose our job which causes extreme hardship whereas he couldn't give a damm whether he has a job or not *he ain't ever going to worry about paying the mortgage.*

And please don't bring in the 'short sellers' who wouldn't have been able to operate with a basement full of gold would they :?: 

BTW I didn't get that 480 million from a newspaper, the chairman of the committee put it on slide and asked Lund if it was correct, which he reluctantly *admitted it was.* (Check it on Bloomberg)


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## Lee Brubaker (8 Oct 2008)

Can a child of the dirty thirties add a cent or two to an interesting thread ? Firstly you don't throw the greedy bankers in jail. Instead you strip them of everything near & dear to their hearts. Namely ALL of their assets right down to their underwear & throw em out on the streets in the middle of winter to start over with NOTHING. They cant go to their pals for help because the same thing would be happening to them. 
Credit ? My wife & I married in 1954 & saved & bought our first house in 1958. We both worked hence was able to qualify for a mortgage. We became mortgage free in 1972, & thereafter when I got paid all of the money was MINE. My wife stopped working in 1974. We have two credit cards. One has a $500 CDN limit. The other has a $9500 limit. The first low limit card is for purchases of convenience & paid in full monthly. As a frequently used card the low limit is a hedge against fraud. It is easier & quicker to get the bank to cover the fraud for a few hundred dollars than it is for thousands. The higher end card is in case of emergencies & it is used only enough to keep it current rather than have the bank close it out due to non-use.
We have had NO DEBT since retiring the mortgage in 1972.
We do not participate in the stock market or bank mutual funds & despite the low interest rates only in bank guaranteed investment certificates & covered by the Canadian Depositor Insurance Corp(Government).Hence with the turmoil today & sharply falling markets, my retirement is not threatened because my savings is comprised of REAL MONEY that I put into the certificates plus the REAL MONEY paid as interest by the banks that we patronize.
No damned stockmarket is going to tell me what my worth in retirement is. Nor am I going to jump out of the window of a tall building, like many did during the crash of 1929.
However, there really is no safe haven. Suppose the Gov't's of the world discover that they cannot back up depositor savings the amount of which globally is too huge. What to do. Simply issue a new currency nullifying the old & there simply is no protection. Buy gold....can't eat gold.

It's scary as to the implications unless somehow a handle is gotten on the thing & soon before it mushrooms into the impossible to deal with.

Lee


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## RogerS (8 Oct 2008)

Losos ..I've lost the point that you were trying to make now. Are you saying that if a business fails that the owner has to somehow pay all the losses back? 

Lee.. I wish I were ten years older. Then I'd like as not be in a similar position to you. But I'm not and in that intervening ten years has seen (at least in the UK) various financial rip-offs such as the Endowment Scandal, Equitable Life, various failed pension schemes plus the rape of our pension schemes by Gordon Brown while Chancellor of the Exchequer. So looking forward the future is bleak.

For younger folks just starting out, it's even harder. By the time a kid leaves university he has a debt of around £30,000. Used to be free (well, almost) but the Labour Government have been intent on sending everyone to university (whether they have the ability or not) so they can't afford to pay for them all, rebadging what we used to call polytechnics as University of Blogsville or wherever which suddenly overnight makes them the academic equivalent of Oxford University (or so they would have us believe), dumbing down and generally fudging the basic school exams so that now many companies will only take at face value a degree from one of the few original red brick universities - the academic qualification system being now so debased (NB NB NB That's not to decry the ability and effort and hard work etc etc etc of many of our excellent young students in achieving whatever qualification they get before I get hammered....metaphorically and not alcoholically or literally).

But for most of us, borrowing money is what we have to do for whatever reason. And, as I've said before although it seems to fall on many deaf ears, it's all well and good people ranting about 'string 'em up' but it isn't that simple. IMO The Fed made a big mistake in not bailing out Lehman and that other bank, who's name escapes me, as it sent out the wrong message to the rest of the banks around the world that no bank is safe and so maybe they better not lend any money to any of them and so the whole economic system is slowly grinding to a huge halt. 

Also not helped by the US pundit on prime time TV (I'm guessing here) telling everyone to sell their shares. That's really mature reporting.


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## mpooley (8 Oct 2008)

Lee I am not quite as ancient as you but probably more decrepid  

but I aggree totally with you!

In all my life we have only ever borrowed for a mortgage. Thats it! nothing else! even when money was very tight.

I was born without any spoons silver or otherwise in my mouth and was brought up in a very poor part of London after the war. We were taught that you lived within your means even when that meant having an old banger when all your neighbours where driving around in new cars etc.

when you borrow money because you MUST have whatever piece of consumer junk they tell you that you've got to have then all you are doing is making the rich richer and yourself poorer :shock:

I dont hold with the idea that its inevitable that we must borrow in this modern world, no way!

Just build up a small pool of savings and then "Borrow" from yourself ! at no interest you soon will have that pool of money back in your savings account.
I can honestly say i have never had to go without anything i truly needed and have now got a terrific standard of living - retired early -and all without any borrowing or investing in risky shares.
I am not saying you shouldn't invest but only if you understand its not guaranteed!

My advice to younger members is never trust anyone trying to sell you something. Dont borrow unless you have to, and dont get greedy.

Mike


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## Digit (8 Oct 2008)

_Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

William Shakespeare, "Hamlet", Act 1 scene 3_


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## Losos (8 Oct 2008)

RogerS":2t182xmk said:


> Losos ..I've lost the point that you were trying to make now. Are you saying that if a business fails that the owner has to somehow *pay all the losses back*?
> ................................IMO The Fed made a big mistake in *not* bailing out Lehman and that other bank,



Point 1 - No I'm not saying a failed business should pay all loses back.

Point 2 - Yes the FEd. could well have bailed Lehman, but in doing so could also have insisted Lund & his co-directors leave with no compensation, bonus, or stock options, just clear his desk and go :!: 

My point (As Rich and others have said) is that banking is not rocket science, it is basically a simple business, you take money in and you lend that same money out, when you lend you do so in the knowledge that you know everything that is necessary to know about your borrower. It is now apparent that many banks *just didn't have the slightest idea who their 'end borrower' was*, that is totally irresponsible and reminiscent of the Barings management who didn't have a clue what Nick Leeson was doing.

BTW I agree wholeheartedly with you about the current unniversity set up and the conversion of many technical colleges etc. to unniversity status. I went to a technical college, no way was either the staff or students or facilities up to unniversity standard of the time yet it is now a unniversity :lol: Nothing has changed so the general standard has to be lower doesn't it :?: But that's another subject so let's not divert.


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## RogerS (8 Oct 2008)

Losos":20u0n0ni said:


> RogerS":20u0n0ni said:
> 
> 
> > ...
> ...



Much as wishful thinking it might be, I'm not sure that the fed could do that anymore than our dear beloved Govt can mandate that the billions they are pumping in will not go to feathering nests.

I would like to take this opportunity of announcing that the Bank of Roger is now open for business. Please give me all your money and I will invest it wisely for you and give you a massive rate of interest. Just PM me with your bank details or open wallet with the phrase 'Help Yourself'. :shock:


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## CWatters (8 Oct 2008)

Losos":3madaoex said:


> RogerS":3madaoex said:
> 
> 
> > .. banking is not rocket science, it is basically a simple business, you take money in and you lend that same money out



If only it were that simple. Average UK debt is £33,000 per person so the books don't balance. There aren't enough savers to meet the demands of borrowers. Debt has become money...

http://video.google.com/videoplay?docid ... 2583451279

This is rather long but a very interesting vid on how the financial system works.


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## Grinding One (8 Oct 2008)

CWatters":10tohtt0 said:


> Losos":10tohtt0 said:
> 
> 
> > RogerS":10tohtt0 said:
> ...



If only it were that simple. Average UK debt is £33,000 per person so the books don't balance. There aren't enough savers to meet the demands of borrowers. Debt has become money...
It is that simple,but when you hire simpletons to operate your bank,well this is the end result.
My Brother went to Colledge and Gratuated in top of class was A ,CPA ,Certified Public Accountant...after being in that business awhile he and a few friends went into business for themselves (Banking Business) they had all to provide seed money and each one of them handled a different job at this bank.Got it going good and sold it for a profit,that was after all what they intended to do.So you see it can work if you use your own money,problem is when handling others money you tend not to care as much.
On the other note,the people of this new generation only care about today...can not see what can happen tomorrow,debt means nothing to them because our generation took good care they got everything we didn`t when we were kids.So now they expect to have everything handed to them,or free.Good luck to that I`dea


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## Losos (9 Oct 2008)

RogerS":1sr424ds said:


> I would like to take this opportunity of announcing that the *Bank of Roger *is now open for business. Please give me all your money and I will invest it wisely for you *and give you a massive rate of interest. *Just PM me with your bank details or open wallet with the phrase 'Help Yourself'. :shock:



:lol: :lol: :lol: I have always worked on the principle of "If it sounds too good to be true.........................it probably is"

Your rate of interest is too good to be true therefore I'll keep my money where it is thanks.  

I'm sure you'll get plenty of business 'tho from all those people who are just now making millions from all that money locked up in Nigeria and just waiting for them to provide bank account numbers so they can get their hands on it. :lol: :lol: :lol:


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## Losos (9 Oct 2008)

Grinding One":s0gw62f4 said:


> So you see it can work if you use your own money,problem is when handling others money you tend not to care as much.



Sadly that is so true, not just in banking, I've observed that many small builders live in magnificent homes (Not talking money but finish, paintwork, driveway etc.)

When they come to do a job for you it always ends up not quite what you expected and definately not perfect like their house is :x


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## RogerS (14 Oct 2008)

If anyone gets the chance, listen again to File on Four (Radio 4 that is - broadcast this evening) about this whole business. Superbly researched and very scary. 

Confirmed my opinion of the FSA who should really be renamed the SFA as in Sweet F... All. 

And the fact that they are all to blame...bankers, ratings agencies, regulators and government.


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