Explain to me why borrowers are responsible for the current mess?

Boggle

asdasd wrote:

I agree with that but we could reform the laws.

As I said, we like to be home owners historically. As such we tended to buy as soon we 'settled down', while on the continent people rent until much, much later in life, and often never actually buy. As a result, regulation (and enforcement) of the rental market is far more mature in counties such as Italy, Germany or France than in Ireland, where quality-related regulations, for example, have been introduced only fairly recently - which is why, apartments built in the first half of the nineties tend to be made of cardboard.

I accept wholly what you have both said but I would say that, both presently and historically, these laws are what they are and people know that and because of that they know that if they want a stable home they have to purchase.

By all means reform the laws but don't blame people for lack of political will.

The Corinthian

SkepticOne wrote: »

I don't believe I'm confusing the two. I believe there's a distinction to be made between poor business practice (the banks) and uwise borrowing (some borrower). If I borrow money then I'm responsible for paying it back, nothing more. I'm not responsible for the overall banking mess.

By the same logic neither are any of the individual banks responsible for the overall banking mess. No single bank created this mess, after all.

Collectively they are responsible however. By that same logic, the borrowers collectively share responsibility.

There is responsibility on both sides but the responsibility is for different things.

Of course it is for different things, but overall the mess was not created by the banks on their own, different groups acted irresponsibly like greedy lemmings and together created it. That's why I said borrowers share responsibility - I'm not even suggesting the bulk of it.

Otherwise you are suggesting that borrowers were duped by the banks who knowingly deceived them and created the mess. That didn't happen.

We all, banks and consumers, deceived ourselves.

SkepticOne

bonkey wrote: »

If I understood ***** correctly, his point was that there is a degree of personal responsibility from the consumer.

There is but my point is that it is a very specific responsibility, namely to pay back that loan.

If go back to the opening post and the thread that this one branched off, the 'mess' we're talking about is these bailouts and nationalisations of banks, not the individual difficulties of borrowers.

If I am in the lending business it is my responsibility to lend in such a way that my business is sustained. If I overlend and my business fails I can't blame my customers.

I think you may not have fully taken on board the point about separate responsibilities.

The Corinthian

SkepticOne wrote: »

There is but my point is that it is a very specific responsibility, namely to pay back that loan.

Then the banks only have a responsibility for their own bank's problems, not for the credit crisis.

SkepticOne

The Corinthian wrote: »

By the same logic neither are any of the individual banks responsible for the overall banking mess. No single bank created this mess, after all.

Collectively they are responsible however. By that same logic, the borrowers collectively share responsibility.

If the "mess" under discussion was the fact that there's a lot of people who owe a lot to the banks and some of whom are having difficulty then I would agree with you.

But the mess we're talking about is different. This mess involves the tax-payer bailing out failed banking businesses.

In Britain in the early 90's you had the situation where there were a lot of people who could not pay their mortgages and faced repossession, but the banks for the most part did not require bailouts or nationalisation. The banks had not failed as businesses and if they had, then they could not blame the borrowers for the simple reason that borrowers.

SkepticOne

The Corinthian wrote: »

Then the banks only have a responsibility for their own bank's problems, not for the credit crisis.

That is true, but Irish banks due to their business practices are facing much greater problems than, say, those in France.

bonkey

SkepticOne wrote: »

There is but my point is that it is a very specific responsibility, namely to pay back that loan.

So you don't think, for example, that the property developers are at all to blame for this mess, other than that individually they each failed to pay back the loans they had from the banks?

Similarly, you don't think that the (collective) pattern of (individual) borrowing had anything to do with the house prices...that they rose of their own accord, or were driven there by the banks?

"The current mess" is a collection of issues.

Collectively, the banks, the property developers and the property-purchasers all contributed to a situation developing. If the borrowers hadn't loaned as they did, we wouldn't be there...that's true. If the property developers hadn't developed as they did, however, we also wouldn't be there. Similarly, if house-buyers didn't borrow as they did, we still wouldn't be there.

One could go further, and say that if the world financial market hadn't behaved the way it did, then there are good chances that the "lender of last resort" wouldn't have been needed at all, and we wouldn't be there either.

The point is that there is no single player who could have caused this mess without the collusion of the other players. They all were necessary to produce the end-result.

Its a bit like people getting all mad about our elected government. Individually no-one put the government in power. Collectively, the people made that bed.

The Corinthian

SkepticOne wrote: »

If the "mess" under discussion was the fact that there's a lot of people who owe a lot to the banks and some of whom are having difficulty then I would agree with you.

But the mess we're talking about is different. This mess involves the tax-payer bailing out failed banking businesses.

All of which came about because of stupid borrowing and stupid lending. This 'mess' could not have happened without consumers borrowing cretinous amounts of money, any more than it could have happened without irresponsible lending strategies by the banks.

SkepticOne wrote: »

That is true, but Irish banks due to their business practices are facing much greater problems than, say, those in France.

Please see above.

SkepticOne

bonkey wrote: »

So you don't think, for example, that the property developers are at all to blame for this mess, other than that individually they each failed to pay back the loans they had from the banks?

They are the wino under the bridge in my earlier analogy. The banks should have known that they were lending into an unsustainable situation yet they continued and not only that but accelerated their lending and lobbied against regulation. The developers should not have borrowed money towards the end of the boom and should now be obliged to pay it back. But they did not cause the banks failure. They had no power to force the banks to lend them money. If the banks felt (as they should have) that it was unwise to lend to Irish property developers then it was fully in their power to refuse.

Similarly, you don't think that the (collective) pattern of (individual) borrowing had anything to do with the house prices...that they rose of their own accord, or were driven there by the banks?

Again, if I borrowed money to buy an overpriced house at the top of the market, I can't blame the bank and am fully responsible for my debt. But similarly the bank can't blame me for its business failure. Two separate responsibilities.

I think what you are talking about in your post are impersonal causes or factors contributing to the current situation whereas I (and I think it is what the thread is about) am talking about responsibilities.

SkepticOne

The Corinthian wrote: »

All of which came about because of stupid borrowing and stupid lending. This 'mess' could not have happened without consumers borrowing cretinous amounts of money, any more than it could have happened without irresponsible lending strategies by the banks.

Please see above.

I think this also is down to the distinction between impersonal causes and responsibilities.

djpbarry

bonkey wrote: »

In my experience, its mostly because there's a completely different set of legislation.

There is, but the different sets of legislation result from the different attitudes.

Boggle wrote: »

By all means reform the laws but don't blame people for lack of political will.

So who should we blame? If the electorate does not hold it's government accountable, then who does?

The Corinthian

SkepticOne wrote: »

I think this also is down to the distinction between impersonal causes and responsibilities.

It's all impersonal when aggregated. That's the collective nature of macroeconomics, which all this is based upon.

The Corinthian

djpbarry wrote: »

So who should we blame?

The Jews?





Not really, but it's been a while since we did.

SkepticOne

The Corinthian wrote: »

It's all impersonal when aggregated. That's the collective nature of macroeconomics, which all this is based upon.

It is certainly possible to take the view that we're all just acting under impersonal social forces and as such can't be held accountable for anything. I think this is one of the problems in Ireland.

Dannyboy83

djpbarry wrote: »

So who should we blame? If the electorate does not hold it's government accountable, then who does?

I think you have to remember tho, as he already outlined above, there is a small proportion of long term residential renters as opposed to homeowners (although growing).
As a percentage of the electorate, their voice is even smaller.

Those in power are not really terribly interested in such a minor issue.
Commercial leasing would be higher in the political agenda anyway.

Given the history and mentality, as already outlined, why would homeowners be interested in the plight of renters when there issues which affect the majority such as crime or healthcare or pensions?

The plight of those unable to afford the stability of owner their own house was never really an issue until early 2000 onward.
Correct me if I'm wrong, but I don't think the government even had an 'affordable housing' scheme prior to that (There was a council house scheme but thats a different animal).

As regards the recent government initiative to free up lending and bypass the credit crunch, I believe there were 4 applications from the entire population.

Boggle

So who should we blame? If the electorate does not hold it's government accountable, then who does?

Agree but... what can you do? Explaining to some people whats wrong with Fine Fail was like trying to convince people that the world was flat.
The blame for the instability in the rental market lies with the government but the failures of the govt lie at the feet of the electorate.

The Corinthian

SkepticOne wrote: »

It is certainly possible to take the view that we're all just acting under impersonal social forces and as such can't be held accountable for anything. I think this is one of the problems in Ireland.

Not what I meant.

An economic crisis is not the product of any individual, but the product of aggregate groups interacting. The point I have been making since my first post on this subject is that in this regard, the borrowers, just like the banks, share some of the collective responsibility for where we are.

What the OP and others have suggested is that the borrowers have no responsibility for the mess we're in. Individually this is correct, just as no individual bank or bank official is to blame. However, collectively we share the responsibility because it could not have happened without our collective and irresponsible borrowing to fuel an unstable a property bubble.

It is easy to point at others and say, if it wasn't for the banks this wouldn't have happened, but ultimately if it wasn't for us it wouldn't have happened either. And it's not as if we were just looking to own our own homes, as much of the property bubble was fuelled by normal people speculating.

That's the bottom line. The banks may have the lions share of the blame, but that does not make us blameless, and we should stop trying to kid ourselves that we are.

GuanYin

Guys - this is the politics board. If you want to discuss legal advice and renting please use the appropriate forum.

Sean Templar

Dannyboy83 wrote: »

Two questions:
1. What is IndyMedia?

2. How are homeowners to blame for the current drama sweeping through our banking sector?

BTW, I'm not a homeowner so I'm not inclined to get offended, but I genuinely don't understand how people are deflecting blame from Bank managers onto home owners?

My understanding:
There was a monopoly, lack of supply, burst in demand
There was an unregulated market
There was a boom on property price increases


The only way that homeowners could be to blame in my understanding is if:
A) There was an alternative supply of houses at a significantly lower price which people dis-regarded for some bizzare reason?
and
There were alternative financial institutions offering significantly more competitive rates than the main six, which people dis-regarded for some bizzare reason?


Strictly speaking, the only homeowners who benefitted long term from the boom, were those who bought the property prior to the start of the boom.
There are many, many people who did not benefit at all and are in negative equity.

Can someone point out to me what I'm missing?

Borrowers are not to blame,they only took what the banks gave them.The banks are Totally to blame for the whole mess,
giving 100%+ loans.The construction (builders) industry borrowed from the Banks to build the houses,and the banks lent to the house buyers,so they could pay the builders.Then the builders gave the money the householder paid them ,back to the banks to pay their loans.The common thread through the whole thing is BANKS!.

Macha

Sean Templar wrote: »

Borrowers are not to blame,they only took what the banks gave them.The banks are Totally to blame for the whole mess,
giving 100%+ loans.

I don't seem to recall any stories in the news about bank managers holding guns to potential customers' heads... People had perfectly functioning brains in their heads but they chose to tune out the dissenting voices, listen to the property market spin and focus on the €€€. Greed, pure and simple.

It's like saying McDonalds offered you their food and therefore it's their fault you decided to eat too much and get fat.

Sean Templar

taconnol wrote: »

I don't seem to recall any stories in the news about bank managers holding guns to potential customers' heads... People had perfectly functioning brains in their heads but they chose to tune out the dissenting voices, listen to the property market spin and focus on the €€€. Greed, pure and simple.

It's like saying McDonalds offered you their food and therefore it's their fault you decided to eat too much and get fat.

Yes i agree with you "greed pure and simple" by the banks.The Banks are responsible for the money they control,and who they lend to.The onus is on them to ensure they lend the appropriate amount of money to suitable lenders.Just last week on RTE it was highlighted that AIB and BOI lent unacceptable amounts of money to commercial property borrowers without the proper checks and restrictions
(just like the sub prime in america) .It was pure greed.......by the Banks.

Macha

Sean Templar wrote: »

Yes i agree with you "greed pure and simple" by the banks.The Banks are responsible for the money they control,and who they lend to.The onus is on them to ensure they lend the appropriate amount of money to suitable lenders.Just last week on RTE it was highlighted that AIB and BOI lent unacceptable amounts of money to commercial property borrowers without the proper checks and restrictions
(just like the sub prime in america) .It was pure greed.......by the Banks.

I'm not denying that banks lent recklessly. But in order to lend recklessly, there have to be people who are willing to borrow recklessly.

To put all the responsibility on the banks is just pathetic. Did any of these people have any intelligence or understanding of how mortages and the property market work? They were all so happy to keep the ball rolling as long as they were making money but now that the market is crashing, it's all somebody else's fault. It's like listening to children.

djpbarry

Sean Templar wrote: »

The Banks are responsible for the money they control,and who they lend to.The onus is on them to ensure they lend the appropriate amount of money to suitable lenders.

Likewise, the onus is on the individual to ensure that they only borrow what they are capable of repaying.

xOxSinéadxOx

The borrowers are definitely to blame as well. People acting as if they done nothing wrong at all and it was the evil bankers fault that they took out a big mortgage for their ridiculously over priced house and a big car loan and now they don't have a job. seriously though the banks didn't force anybody to take out a loan even if they were a bit in your face about it. And your average joe soap speculating and buying about 4 houses and selling them at a higher price to another joe. I'm not saying it's just the borrowers' faults but people need to stop acting like it isn't at all

K-9

taconnol wrote: »

I don't seem to recall any stories in the news about bank managers holding guns to potential customers' heads... People had perfectly functioning brains in their heads but they chose to tune out the dissenting voices, listen to the property market spin and focus on the €€€. Greed, pure and simple.

Look, Irish Nationwide had the heavies in when I signed.

They were a bit dearer but everybody knew they were going to demutualise and I'd get free shares.

I'm going to sue.

Of course If I I got the €20,000 in free shares you wouldn't hear me moaning on here. I'd be on Investments asking were to invest.

I've no sympathy. People used equity as income to re mortgage or trade up.

The Corinthian

Sean Templar wrote: »

Borrowers are not to blame,they only took what the banks gave them.The banks are Totally to blame for the whole mess,
giving 100%+ loans.The construction (builders) industry borrowed from the Banks to build the houses,and the banks lent to the house buyers,so they could pay the builders.Then the builders gave the money the householder paid them ,back to the banks to pay their loans.The common thread through the whole thing is BANKS!.

I don't think you actually read the thread.