Thursday, October 09, 2008

Apportioning Blame for the Crisis

Occasionally a time happens- and this is probably one of them- when you feel a watershed in being passed. The global financial system has ben found wanting and no-one quite knows what will happen; it seems nothing will be quite the same again. So I thought I'd try to identify the reasons why things have gone so irrevocably pear-shaped over the past year or so. I have written a longer briefing on this topic elsewhere but here I'll confine myself to pointing fingers at a few culprits, some well known, others less so.

Ideology
The 1970s were a turbulent and unhappy time for the left: high inflation, unemployment, union power excessive and living standards in decline. Thatcher and Reagan came into power determined to allow market forces to 'work their magic'. Over here this meant crushing the unions, privatisation, slashing taxes and deregulating financial dealings via the Big Bang. These steps helped to launch trading in shares and securities to phenomenal heights and racked up levels of debt in the way investment banks operated. These changes also introduced the City bonus culture and the arrival of the 'super-rich'.

Subprime Loans
Faced with a glut of investment during the 1990s US banks hired it out to initiate a boom in home buying. Urged by government to help the low paid, just about anyone qualified. Some loans were given on the basis of 'no income, no job, no assets' or 'ninja' loans. Often they came with 'teaser' discounts of 4% or below, set to double after a couple of years. It followed that irresponsible lending like this caused an avalanche of foreclosures, rising from a quarter of a million in early 2007 to three quarters of a million in mid 2008.

Securitization
The secondary mortgage market has long existed. This entails mortgages being sold on, like IOUs, to investors abroad who hope the income stream of payees will realise a profit for them. In the past this has worked perfectly well. However these subprime loans loans were dodgy so financiers wrapped them up with good loans in Collateralised Debt Obligations which were so complex few could separate the good from the bad. By now, the 'build my bonus' culture was such that few bothered to look too closely and these toxic CDOs flooded the world's financial system. As debtors in the US began to cease paying, however, the extent of the problem slowly became obvious.

Underwriting High Risk Mortgages
Underwriters are the people who assess the degree of risk attached to loans regarding the borrower's ability to repay. Assessments used to take a week but a near automatic electronic system was introduced in the USA which completed the job in 30 seconds. These guys carry a heavy burden of responsibility in the wake of the crisis.

Credit Agencies
These bodies assess the credit worthiness of issuers of securities plus the securities themselves. Their incompetence was fully demonstrated by the case of Enron but in the euphoria of constant growth and huge bonuses they alolowed their eyes to be taken way off the ball and the CDOs were often given triple A ratings. These agencies also carry a heavy responsibility.

The Bonus Culture
Finally, as we all are now aware, bankers became transfixed by the ridiculous sums they could make if they acquired sufficient business for their firms. Close scrutiny and caution- the once hallmarks of bankers- gave way to a desperate desire to acquire that parking space beneath the skyscraper HQ in Wall St or Canary Wharf, for the new Ferrari. The super-rich thought nothing about spending a £100mn on new yachts or even private submarines to swank their way around the world's pleasure spots during vacations or a hugely early retirement, funded by all those bonuses, companies bought and sold.

Simon Jenkins suggested a week or so ago that a tribunal into the crisis was required. Well, he could fill up his dock from the above three categories with no trouble and if public executions were still allowed many would gather at Tyburn to watch those responsible breath their last. However, there is a problemette here. There is another group of people responsible and this is a huge one: all those people who exploited cheap money by loading up with chronic debt, which they now find they cannot sustain by further borrowing. We are all complicit, to a degree in what has happened and, I'd guess, will have to return to a much more sober and cautious way of spending from hereon. If you need a mortgage, you might even have to spend an awkward hour or so in the bank manager's office, as my generation had to back in the 1960s and 70s.

15 Comments:

Blogger oakleyses said...

michael kors, nike roshe, michael kors pas cher, nike free pas cher, polo ralph lauren, nike blazer, sac burberry, air jordan, hollister, longchamp, nike trainers, nike roshe run, vanessa bruno, vans pas cher, north face, timberland, louis vuitton, longchamp, sac longchamp, oakley pas cher, ray ban sunglasses, hollister, michael kors, ray ban pas cher, polo lacoste, nike huarache, barbour, new balance pas cher, sac louis vuitton, sac hermes, nike roshe run, vans shoes, sac guess, mulberry, nike free, mac cosmetics, abercrombie and fitch, lululemon, louboutin, air max, air force, louis vuitton uk, hogan outlet, converse pas cher, north face, nike tn, ralph lauren, hollister, sac louis vuitton, nike air max

1:40 AM  
Blogger oakleyses said...

hollister clothing store, north face outlet, valentino shoes, air max, soccer jerseys, lululemon outlet, abercrombie and fitch, uggs outlet, moncler, moncler, nfl jerseys, jimmy choo outlet, new balance shoes, celine handbags, giuseppe zanotti, rolex watches, chi flat iron, ugg pas cher, mont blanc, herve leger, canada goose jackets, wedding dresses, canada goose, canada goose, moncler, bottega veneta, canada goose uk, babyliss pro, mcm handbags, baseball bats, ghd, ferragamo shoes, ugg australia, soccer shoes, canada goose, p90x, birkin bag, canada goose outlet, ugg boots, instyler, ugg, beats by dre, ugg boots, asics running shoes, north face jackets, iphone 6 cases, moncler outlet, reebok outlet, marc jacobs, insanity workout

1:41 AM  
Blogger oakleyses said...

tiffany and co, polo ralph lauren outlet, louboutin shoes, louis vuitton outlet, louboutin outlet, kate spade handbags, air max, michael kors outlet, polo ralph lauren outlet, louis vuitton outlet stores, nike shoes, louboutin, michael kors outlet, oakley sunglasses cheap, longchamp handbags, chanel handbags, kate spade outlet, michael kors outlet, true religion jeans, oakley sunglasses, louis vuitton, coach factory outlet, michael kors outlet, nike free, christian louboutin shoes, prada outlet, michael kors outlet, burberry outlet, tiffany and co, coach purses, burberry outlet, true religion jeans, ray ban sunglasses, prada handbags, michael kors outlet, coach outlet store online, louis vuitton handbags, tory burch outlet, air max, gucci outlet, jordan shoes, longchamp outlet, louis vuitton outlet, coach outlet, ray ban sunglasses, oakley sunglasses, longchamp handbags

1:42 AM  
Blogger Meinv Chen said...

20150409chenlili
kate spade handbags
true religion
coach outlet
oakley sunglass
ray ban glasses
cheap jordans
jordan 11
ray ban outlet
ralph lauren sale
jordan 13
michael kors outlet
gucci shoes
christian louboutin outlet
jordan concords
michael kors
oakley sunglass
burberry outlet
coach outlet
hollister clothing
coach factorty outlet
rolex watches outlet
oakley sunglasses
true religion jeans
retro jordans
christian louboutin outlet
insanity workout


2:45 AM  
Blogger zhengjunxia said...

2015-6-1 zhengjx
oakley sunglasses
coach outlet online
chanel bags
tory burch outlet online
michael kors
oakley sunglasses wholesale
michael kors handbags
ralph lauren uk
burberry sale
kate spade handbags
oakley sunglass
soccer jerseys
michael kors outlet
ray ban outlet
chanel online shop
cheap jordans
coach factory outlet
hollister clothing store
abercrombie
fitflops sale clearance
ralph lauren
oakley sunglasses outlet
coach outlet
replica watches
burberry outlet online
pandora jewelry
hollister clothing
pandora outlet
oakley sunglasses
tory burch shoes
pandora charms
mont blanc pens
fitflops outlet
oakley sunglasses sale
coach factory outlet
kate spade uk
christian louboutin outlet
coach outlet online
burberry scarf
gucci uk

8:59 AM  
Blogger zhengjunxia said...

2015-6-1 zhengjx
oakley sunglasses
coach outlet online
chanel bags
tory burch outlet online
michael kors
oakley sunglasses wholesale
michael kors handbags
ralph lauren uk
burberry sale
kate spade handbags
oakley sunglass
soccer jerseys
michael kors outlet
ray ban outlet
chanel online shop
cheap jordans
coach factory outlet
hollister clothing store
abercrombie
fitflops sale clearance
ralph lauren
oakley sunglasses outlet
coach outlet
replica watches
burberry outlet online
pandora jewelry
hollister clothing
pandora outlet
oakley sunglasses
tory burch shoes
pandora charms
mont blanc pens
fitflops outlet
oakley sunglasses sale
coach factory outlet
kate spade uk
christian louboutin outlet
coach outlet online
burberry scarf
gucci uk

9:00 AM  
Blogger Super Balst said...

in the white side effect and the way that I think to understand this the I'm going to take a bit of time explaining this cut this is important for understanding why these advanced therapies unnecessary so we can I mentioned before that these terminals in under normal circumstances are a little bit like a storage device and the tech going into the storage containing here we can think of these is the basic ales in the North Terminal containing .

http://binaryoptionpay.com/
http://findbinaryoption.com/
http://findbestbinaryoption.com/
http://findtopbinaryoption.com/
http://binaryoptiontopbroker.com/
http://binaryoptionwork.com/
http://binaryoptionworkhelp.com/
http://binaryoptionworksupport.com/
http://listedbinaryoption.com/
http://reliablebinaryoption.com/

12:05 PM  
Blogger Super Balst said...

all the tightening and there is a steady writers synthesis it you don't mean which is going into the storage capacity these are the basic old and then they guy I mean is being released tap into a pole that's a viable in the sign up equipped to do the signaling and that's the right size Paul it's not too big and it's not too small and it produces a pretty constant level I inside the bright but then when there is a diminution terminals tenet .

http://binaryoptionpay.com/
http://findbinaryoption.com/
http://findbestbinaryoption.com/
http://findtopbinaryoption.com/
http://binaryoptiontopbroker.com/
http://binaryoptionwork.com/
http://binaryoptionworkhelp.com/
http://binaryoptionworksupport.com/
http://listedbinaryoption.com/
http://reliablebinaryoption.com/

12:05 PM  
Blogger Xiaozhengm 520 said...

2015-12-23 xiaozhengm
toms outlet
canada goose uk
nike blazer
fitflops clearance
jordan 3 infrared
gucci outlet
canada goose jackets
michael kors handbags
jordan 3
nike shoes
mont blanc pens
nike air jordan
michael kors outlet
michael kors outlet online
nike air max shoes
north face outlet
tommy hilfiger outlet
michael kors outlet
tiffany and co
canada gooses
jordan retro 3
sac longchamp
louis vuitton
nike tn
gucci outlet
air jordans
instyler max
michael kors handbags
michael kors outlet
true religion jeans
louis vuitton outlet
christian louboutin
michael kors outlet
ugg boots
coach factory outlet
louis vuitton pas cher
air jordan 13
michael kors outlet
michael kors outlet online
cheap uggs boots

1:09 AM  
Blogger oakleyses said...

oakley sunglasses, kate spade outlet, jordan shoes, prada handbags, oakley sunglasses, longchamp outlet, christian louboutin shoes, longchamp outlet, gucci handbags, michael kors outlet, replica watches, louis vuitton outlet, michael kors outlet online, louis vuitton, tiffany jewelry, burberry handbags, christian louboutin outlet, nike air max, uggs outlet, oakley sunglasses wholesale, polo ralph lauren outlet online, nike air max, michael kors outlet, nike outlet, uggs on sale, longchamp outlet, ugg boots, louis vuitton outlet, oakley sunglasses, prada outlet, tiffany and co, ray ban sunglasses, nike free, louis vuitton, ugg boots, michael kors outlet online, michael kors outlet online, cheap oakley sunglasses, uggs outlet, chanel handbags, michael kors outlet online, ray ban sunglasses, christian louboutin, ray ban sunglasses, louis vuitton outlet, burberry outlet, polo outlet

3:05 AM  
Blogger oakleyses said...

ray ban pas cher, sac vanessa bruno, coach outlet store online, ralph lauren uk, michael kors, coach purses, hollister pas cher, converse pas cher, nike air max, nike roshe run uk, kate spade, hogan outlet, nike free run, true religion outlet, ray ban uk, north face, replica handbags, burberry pas cher, coach outlet, new balance, true religion outlet, nike air max uk, hollister uk, polo lacoste, nike air max uk, nike free uk, oakley pas cher, air max, true religion outlet, michael kors pas cher, nike air force, michael kors outlet, nike roshe, jordan pas cher, michael kors, vans pas cher, lululemon canada, nike tn, timberland pas cher, polo ralph lauren, nike blazer pas cher, abercrombie and fitch uk, louboutin pas cher, longchamp pas cher, north face uk, sac longchamp pas cher, sac hermes, guess pas cher, mulberry uk, true religion jeans

3:07 AM  
Blogger oakleyses said...

herve leger, hollister clothing, mac cosmetics, instyler, nike trainers uk, lululemon, iphone cases, timberland boots, beats by dre, s6 case, wedding dresses, bottega veneta, p90x workout, reebok outlet, asics running shoes, ferragamo shoes, iphone 6s plus cases, hermes belt, ipad cases, vans outlet, north face outlet, iphone 6 plus cases, mcm handbags, iphone 6 cases, jimmy choo outlet, nike air max, ralph lauren, north face outlet, soccer jerseys, giuseppe zanotti outlet, new balance shoes, mont blanc pens, celine handbags, iphone 6s cases, oakley, insanity workout, abercrombie and fitch, louboutin, longchamp uk, nike huaraches, valentino shoes, babyliss, iphone 5s cases, hollister, ghd hair, chi flat iron, nfl jerseys, baseball bats, nike roshe run, soccer shoes

3:09 AM  
Blogger oakleyses said...

converse, canada goose, louis vuitton, converse outlet, vans, moncler outlet, moncler, pandora jewelry, toms shoes, replica watches, lancel, hollister, montre pas cher, juicy couture outlet, swarovski, karen millen uk, moncler, ugg,ugg australia,ugg italia, moncler, links of london, pandora jewelry, canada goose jackets, louis vuitton, ugg pas cher, ugg,uggs,uggs canada, supra shoes, coach outlet, ugg, moncler outlet, hollister, pandora charms, canada goose, ugg uk, nike air max, louis vuitton, swarovski crystal, ray ban, wedding dresses, barbour uk, canada goose outlet, pandora uk, canada goose outlet, canada goose, barbour, marc jacobs, doudoune moncler, moncler, gucci, thomas sabo, juicy couture outlet, canada goose uk, moncler uk, canada goose outlet

3:11 AM  
Blogger Nike Free said...

Kobe Shoes
Kobe 9 Elite
christian louboutin 2016
louboutin outlet
jordans 2016
jordans shoes
Air Jordan 4 Alternate 89
jordan releases
coach outlet online
coach outlet online coach factory outlet
michael kors bags
Michael Kors Cheap
michael kors outlet
Michael Kors Discount
michael kors tote
michael kors wallets
michael kors outlets
michael kors purses
Discount Michael Kors
michael kors factory outlet
jordans for sale
retro jordans
kd shoes
kobe shoes
cheap nike air max
nike air max 2014
nike free run 2015
nike free 5.0
christian louboutin uk
louboutin outlet
Buy mbt shoes online
discount mbt Shoes
fitflops shoes

6:49 AM  
Blogger nora nor said...

Your site is very helpful
http://www.prokr.net/2016/09/furniture-store-companies-7.html
http://www.prokr.net/2016/09/furniture-store-companies-9.html
http://www.prokr.net/2016/09/furniture-store-companies-10.html
http://www.prokr.net/2016/09/furniture-store-companies-11.html
http://www.prokr.net/2016/09/furniture-store-companies-13.html

11:51 AM  

Post a Comment

Links to this post:

Create a Link

<< Home