Banking Industry

[ByronBlack]

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.

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.

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.

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 crap 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.

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

 

[Digit]

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.

 

[mpooley]

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:

 

[Grinding One]

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

 

[mpooley]

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 :?

 

[Losos]

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)

 

[Lee Brubaker]

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

 

[RogerS]

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 **** 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.

 

[mpooley]

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

 

[Digit]

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

 

[Losos]

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.

 

[RogerS]

...

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 :!:

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:

 

[CWatters]

.. 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.

 

[Grinding One]

.. 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...
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

 

[Losos]

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:

 

[Losos]

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

 

[RogerS]

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.