The coming worldwide credit crunch

Don't read it then and get off the thread, do you actually mean boring or are you unable to understand.... thats nearer the mark I think.

I find it very interesting and at the same time it should worry all of us !

 For those interested in a little more detail and i think that should be every decent human being, here is a great short movie into exactly who and what caused the housing crisis.

http://www.zerohedge.com/news/meltdown-part-1-men-who-crashed-world

However i think its wrong to assume that the sub prime crisis was the sole cause, in reality it just speeded the inevitable bust. All booms based on credit expansion turn to bust, as history shows this happened in exactly the same way long before sub prime was invented. Of note is Brown's light touch regualtion that was key to the UK's role in this.

I have to symapthise with haydnj's view that it was all greed, the blame between greedy lenders and greedy borrowers is morally difficult to share. However banks and governments are now running up huge debts to paper over this crisis and save their euro disaster without any consent from the public. Debt is now being piled onto debt with no vote of confidence from the public as we in the UK gradually lose power to Brussels. 

 found this suprising!

http://www.pagetutor.com/trillion/index.html

Agreed, proactivity is all to address the things you can do something about (and believe me there's one hell of a lot of going on behind the scenes in that regard!) , but equally imperative is to stand outside the box and appreciate the wider picture that TJ has adequately exposed within this thread.

In some people's eyes that willingness to learn may well be percieved as "consuming your lives". But it's all part of the same equation and commitment to regaining empowerment. Each to their own of course. But agreed it's important to strike a balance in life, when striving to expand your circle of influence as a means to effect change! Positive distraction is just as important in life, but we don't talk of private lives, so the perspective on forums such as this is often hidden.

Now back to  some proactivity, please take a look at this:

http://www.avaaz.org/en/europe_people_vs_banks_1/?cl=1295163793&v=10491

I love Stephen Covey´s stuff!

 Break Out of the Box

It's only a matter of moments before our time on earth is over. Ask "What is my Work?" Pay attention fiercely, compassionately, and playfully to the deeper patterns of your life. Benefit from my 25+ years of coaching experience: coach@breakoutofthebox.com or 352-374-6916.  

Circle of Concern - Circle of Influence

Of all the good suggestions in The 7 Habits of Highly Effective People, "Habit 1: Be Proactive" is particularly useful when you feel powerless against life's forces. Covey recommends examining what you can do instead of focusing on worries over which you have no control. First notice all your concerns. Then, among those concerns, determine where you can take action:

You two are like a pair of girls you have absolutely no influence of the crisis and yet it consumes your lives it seems

I suggest you read Stephen Coveys book on Circle of Concern Circle of Influence stop moaning

It changed my life took me from a sad person ,moaning and worrying all the time to a happy succesful person

 Big and strong leaders, politicians and legislators come!!

It's greed that has caused all this debt. At one time you bought a house to live in but now they buy three and hope to sell two to pay for the one they live in. When all goes tits up they cry and cry. The banks never forced them to take on large debt but they did encourage it . Who is to blame for mans greed? Credit cards and 110% morgage, they have lived on debt for far too long let them now live in the mire they have caused. It's the old who lived through world wars and lived on rationing that are the people that deserve sympathy not the greedy so and sos who are in all the debt

But laws need to be enforced and adhered to Maria, so sadly it's not so simple!

Thank you for the article. I look forward to TJ's analysis on this!

 There is this article by this Belgium Proffessor of Economics who clearly described, in 1998, before the Euro came into force, what the consequences would be for countries such as, for instance, Spain:

http://www.econ.kuleuven.be/ew/academic/intecon/Degrauwe/PDG-papers/FT_articles/FT%201998%2002.htm

I think that roles of Banks and companies in society need to be reassessed with its corresponding translation in reform of Laws. That simple.

I couldn't agree more with your statements TJ,

"The plain facts are that most people know diddle squat about the economy and whats more they are not bothered to learn. ",

"With a population like this, what is to stop corruption in all forms of power from running amock? "

" This cycle will continue until the general public wake up and start to realise that this is what you get when you leave bankers and politicians in charge when the people are asleep or prefer to watch telly."

Please to goodness people will wake up and recognise that they can't afford to stay asleep, to remain unwilling to learn, to ignore the realities without suffering the consequences. I think many feel it's impossible to effect change however.

 This thread is just over 4 years old (Aug 07) and i wrote it to try and warn people about what was coming with property, banks and unemployment and depression. Sadly i suspect very few people took seriously what i was saying and many i fear went ahead and bought property anyway. In those days estate agents were a plenty on here and many told me how i was plain flat wrong - with quotes like "property always recovers/ goes up etc etc."

I even went onto threads like " I want to buy a property in xyz region etc" and tried to disuade them.

I mention this because this is part of the answer to the last question you raise. The plain facts are that most people know diddle squat about the economy and whats more they are not bothered to learn. Whilst everything was "good" and the economy was booming on credit and debt based consumption, precious few knew or were even bothered that "free" money does not exist and that it was all going to go horribly wrong.

With a population like this, what is to stop corruption in all forms of power from running amock?

The banks made money hand over fist with the boom knowing full well that when the music stopped and it all went bad, that they would be bailed out by the CBs and the taxpayer and their bonuses would remain intact or increased. What was there to stop them? The people in the UK voted Labour in again and again to do even more damage, despite the fact that they were running the economy into the buffers along with the banks. Are you seriously going to tell me that Brown didn't know that running an economy on debt based consumption backed by ever increasing house prices with the real productive economy and jobs having been shipped overseas, was not going to go badly wrong?

But while house prices were going up and people could watch telly and buy cheap goods from overseas, what did they care for economics and politicians and banks. It was all a bit boring compared to X factor!

Some would say that the people got the politicians they deserved.

Its not even that this is a new phenomena.

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin 

Fast forward to 2011 and  now you have tent cities in the US and people are homeless.

So we have had the inflation, now we get the deflation and the poverty. This cycle will continue until the general public wake up and start to realise that this is what you get when you leave bankers and politicians in charge when the people are asleep or prefer to watch telly. In Roman times it was called bread and circus to keep the masses distracted. In those days it was Gladiators, now its WFC on ipads and the bread is food stamps.

So what do you think is the answer to your question?

And now the crunch question TJ......... why aren't they implementing this (worldwide) if it's so simple? Is it because as you mentioned the Banks have bought  all the support they require?

How do you see this panning out? Is there no effective way of ensuring that this solution is enacted before we are all further exposed to yet more unacceptable levels of risk? Why should we all have to wait for a further major deterioration that could affect a generation, before anything effective is done?

Why are we all sitting by and letting this happen? It's crazy!

REGULATION FAILURE

The FSA need to be made accountable for the failings they are the reguators of Financial Institutions in the UK and are supposed to be protecting the CONSUMER interests etc

SOVERIGN DEBT

Greek bonds have been written down by 50% since earlier this year so the ECB is living in cloud CUCKOO land over its further PLANS for GREECE

MONEY WHAT TO DO

Spend it by an ASTON with HYPERINFLATION in 5 years you will be able to sell it for more than you paid.

 ads

No amount of "independent" regulation would ever work, because there are currently "independent" organisations such as the rating agencies and they just get bought. Moodys and S&P had subprime rated as AAA the day before it collapsed.

The answer is very much more simple than that - its to remove the central banks as lender of last resort. This is the biggest moral hazard in financial history. The banks need to know that if they gamble and fail, they must be allowed to go bust. Depsitors funds should be protected, but everyone else loses full stop. Faced with this firm message, the banks would not be reckless. This and the seperation of retail banking and casino banking. Retail banking should be a public service like a utility - water electric etc dull and reliable. If someone wants to do casino banking, they can do it with their own and reckless shareholders money.

The above and a regulation preventing debt growth in excess of GDP and the free markets setting the price of money would solve most of the problems. 

TJ,

Thanks so much for the educative response.

It appears that we are all being compromised by a significant conflict of interests. A conflict that goes way beyond the acceptable boundaries of democracy.

 IMHO the general public should be demanding an independent Worldwide organisation be established, to monitor and control the powers of the Banks and make them far more accountable.

 I'd be interested to know your solution however.

 Its a great question ads and one that is and should be asked. Not only were reckless banks largely responsible for the crisis, but last time they got bailed out, the directors in real terms were rewarded by granting themselves a continuation of bonuses that make the general public weep. I really doubt whether anything will be different this time either, the situation reeks of moral hazard. If you got rewarded for failure would you change?

The problem is that as most people now understand, the banks are the ones that call the shots, wether it be politicians or agencies set up to police them. The banks have "bought" all the support they require, much in the same way that the Mafia bought the police and judicial system in various countries in the past. In the US there is a "revolving door" between the major investment banks and the key decision makers in all the organisations that matter. Goldman Sachs has a man on virtually every Central bank that matters including the UK and Tony Blair for instance walked into a 1million "job" with JP Morgan, the minute he left power.

The SEC in the US is the organisation set up to police all aspects of financial markets, but they mysteriously have done nothing to upset the status quo.

Thanks largely to the internet however, the general public is not nearly so naieve as it once was and there is a growing wave of anger against the banks and politicians and those deemed in charge. How much longer the situation can go on is largely up to voters i feel, and how much longer they want to sit still and pick up the bill.

In this situation most of the money will go not to Greece, but to bail out the banks that made bad decisions by lending to Greece and to buy bonds of Spain and Italy to try and contain the contagion.

Of course it won't work and the end result will just be a much much larger mess, with the general public picking up the final bill in taxes and inflation and poverty. The real problem remains the one size fits all monetary policy of the EU and and the madness of trying to tie together countries as unmatched as Greece and Germany. That will remain until the Euro is allowed to collapse or Germany pulls out of the top. The fact that in Germany Merkel has been losing votes and hence power every time the people get a chance to go to the ballot box is indicating that despite the banks grip on politicians, they cannot stop the public if they get wise and get motivated to do something. Merkel is now caught between a rock and a hardplace and she tries the impossible balance of obeying her real masters and the voters that keep her in power.

The banks however are masters of offering the public new "choices" in politicians that turn out to be the left and right hand of the same body. Before he was elected Cameron promised the UK public a vote on Europe, now he is safely in power its a different matter. Obama promised hope and change, the change turned out to be much more of the same failed policies and the hope has turned to dismay.

Even that is unlikely to be enough once the bankers have taken their bonuses and the EU political leaders their brown envelopes!  Many people have tried to bring change without success and will go on doing so, but don't expect change anytime within our lifetimes.

M.