Are the Bankers & Government the only ones to blame?

FamousSeamus

FamousSeamus wrote: »

True, everyone was so caught up in the hype they just saw profit and not the risks!!

The single most impressive achievement of our modern 'ruling classes' is the fact that they've destroyed the international economy, wandered off into the sunset with their pockets loaded with cash (or in some cases, actually got even richer on the back of the crisis), lumped their debts on the taxpayer, and we're blaming ourselves.

Incredible really.

af_thefragile

Zebra3 wrote: »

Nobody was forced into anything. :rolleyes:

Of course they were forced to believe a lie by the media, politicians and the Bankers.

Anyone who said the economy was going to collapse in a few years was deemed ill informed or a looney conspiracy theorist and all the "intelligent" people who knew where the economy was heading towards were saying everything is going great. If this isn't forcing a population to believe a lie, then I don't know what is.

I doubt you're gonna say now everyone needs to start studying economics to make up their own mind regarding what's good or bad for them. People will only believe what they're told to believe. Unless you're an economics major you wouldn't have seen the economic collapse. Even then the economic collapse came as a shock for most economists as well!


Its easy to shove the blame around and feel good about ourselves for not doing anything. The Bankers are to blame? Lets get angry over the bankers and carry on with our lives. The People are to blame? Lets express how stupidly we believe people behaved and feel better we didn't fall into the same trap and carry on with our lives. The system is to blame? Don't be a stupid conspiracy theorist! The system is created to serve us! No one can change the system, its fine, lets carry on with our lives!

Sergeant

I blame absolutely everyone else except myself.

Solair

1 : The Government - politicians, civil service decision makers and regulatory bodies.
Their job is to run the country, and to prevent such crazy bubbles from ever developing. Instead, they seem to have at best ignored what was going on and at worst actually fanned the flames of the celtic tigre and kept feeding it large doses of bluster to keep it going.

2 : The Banks - They really only have one important job - to lend prudently and assess risk. They made a complete dogs dinner of this and ended up basically destroying themselves then turning to the Government for money to save them and then continued to pay their senior management ridiculous money and bonuses and not even see anything wrong with that....

3: A large chunk of the Irish media, with the notable exception of RTE (this is the only reason I still feel OK about paying a TV licence) went 'la la la - I can't hear anything' and ignored anyone who was saying anything negative about the bubble.

The print media basically en mass ignored the impending bubble bursting and kept buying into the Government line. I assume this was down their fear of loss of advertising revenue from their huge property supplements.

RTE Prime Time and particularly George Lee actually need to be credited with calling this collapse several years before it happened. Most people ignored him (some of us didn't) and now we're all screwed. Yeah, he made a bit of an odd jump into politics, but that's life! I wouldn't hold it against him. I'd rather have him as a reporter than a backbencher TD anyway.

4 : The part of the electorate who kept voting for the above Government, although I can accept that a large % of them bought into the hype and probably didn't know any better but still it's up to people to look a little bit beyond the smoke and mirrors and to stop voting for TDs because they filled your local pothole or got your granny the pension she'd have gotten anyway if she'd just bothered to send in the right form!

Pothole related questions need to be referred to COUNCILLORS
TDs need to be constantly harranged about why the economy has collapsed and asked WTF they're going to do about it and other questions of national importance.

Please remember this when they call to the door.

af_thefragile

Deleted User wrote: »

The single most impressive achievement of our modern 'ruling classes' is the fact that they've destroyed the international economy, wandered off into the sunset with their pockets loaded with cash (or in some cases, actually got even richer on the back of the crisis), lumped their debts on the taxpayer, and we're blaming ourselves.

Incredible really.

The modern economic system is created to do just this. Bankers are going to end up getting richer on the back of economic crisis while the burden of the economic collapse is put onto the taxpayer.

During boom Banks sell high risk loans making people purchase loans bigger than they will be able to pay off. During the bust, the Banks have made huge profits when people can't pay off their debts and end up having to take more high interest loan to pay off their mortgage include all the property they now own as the owners can't pay off their mortgages.

And government bailouts keep the banks from going bust themselves. Its the perfect business to be in as its a win win situation. Sell a product to people at a high price when the market is strong on loan. Then when the market collapses, the product is no longer worth as much as the people payed for it and hence they can't simply sell it off and move on. They still need to pay off the full price they bought the product for or you either repossess the product forcing the purchasing to lose all his payment on it or you force the purchaser to take another high interest loan to pay off the debt and when the people can't pay off their debts, the government will pay it off for them to keep your business from collapsing!

zonEEE

af_thefragile

af_thefragile wrote: »

The modern economic system is created to do just this. !

No, it isn't. The govt stepping in and socialising private losses is not the modern system, it's a bunch of eejits trying to be cool
People deciding to put themselves in debt buying houses was their own decision

af_thefragile

bluewolf wrote: »

No, it isn't. The govt stepping in and socialising private losses is not the modern system, it's a bunch of eejits trying to be cool
People deciding to put themselves in debt buying houses was their own decision

It was their own decision under the strong influence of what was told to them by the media and the banks.

If the media told the people don't be stupid and buy that house which is likely to lose its value in the next few years and the banks told the people to beware this mortgage you're about to buy is actually more than your income can actually support and that house won't even be worth this much in the next few years so you'll be better off living in your rented house for the next few years or so until the property prices come down, then yeah, if people still went ahead and bought houses, it was a stupid thing to do.

But that's not the case. People bought houses because the Bankers made them believe they could afford to buy the house. The price of houses increased and the economy was experiencing a boom because Bankers were giving out easy high risk mortgages to people which was increasing demand and in turn driving up the property prices. It was this increase in demand that cause the housing sector to expand creating plenty of jobs and driving the economy.

So going back. The boom happened because Bankers gave out high risk mortgages to people increasing the demand for property. This increase in demand increased property prices and the housing sector which in turn created plenty of jobs to drive the economy. This with a general sense that things were going great, caused more people to jump onto the property bandwagon to "buy it while you can because property prices will only go up over time and thus property is always a safe investment". This created the cycle which caused more and more people to take out mortgages to buy houses, driving the prices of houses up and in turn making the mortgages even higher risk until eventually the bubble burst when supply exceeded the demand and property prices began to fall. Banks stop giving out easy loans. Now no one wanted to buy a house anymore because what they believed would never happen was happening. The property prices were falling fast. This stagnated the economy as no one wanted to buy houses anymore. The housing sector went bust. Thousands of people lost their jobs, the economy was put under enormous strain. Taxes were increased, businesses went bust, more people lost their jobs and now everyone realise they'ld been lied to by the banks and they were stuck with a mortgage they paid too much for and now are going to struggle to pay off.


I'm repeating my self here but saying simply "the collapse happened because too many eejits bought houses they couldn't afford" is extremely simplistic and shows lack of understanding of the economic process of boom and bust cycles.

These cycles are created by banks. The boom begins when the Banks start giving out low interest but high risk loans. The boom ends when the Banks stop giving out these loans and the markets collapse taking with them people's investments.


And government socialising private loses is modern as in its been going on since the late 19th Century when governments switched to a fiat currency from a gold backed standard.

Three Seasons

af_thefragile wrote: »

Again, people only spend what they can afford to spend. If I have €10 in my pocket I can afford to spend on anything and feel like treating myself to an expensive sandwich, I will do so. As long as people have disposable income to spend, they will continue to spend it on whatever they feel like spending it on. After all we all dream of a better life.

We all live our lives based on certain assumptions. I bought a mortgage because I have a stable job with a good pay. I bought a mortgage I can afford at the time. Nothing more, nothing less. Or should I say, I bought a mortgage that the banks made me believe I can afford at the time.

I am not an economist to see the economy we are living in goes through boom bust cycles and these good times won't last for long. How was I to know that? I'm just your average Joe living out my life. I watch the news, listen to the analysts and the politicians and they all assured me things are great and will only get better. No one believed the one guy who kept trying to say that everyone's got it wrong and in a couple of years time there will be a big collapse.

So now we have a whole society which has been made to believe things are great and will only get better. There are plenty of jobs, good stable income, plenty of disposable income, everyone wants to live the good life with a nice mortgage, nice car, nice holidays etc.

Then 2008 happens. Turns out the one guy who kept saying the economy is going to collapse was right and everyone else was wrong! Who'ld have thought that?! Suddenly businesses have gone bust and people are losing jobs or facing pay cuts. Now there is mass panic. How are we going to pay the mortgage?! People stop buying houses, the housing industry collapses making thousands of people unemployed. Now no one can pay their mortgages, Banks go bust. People lose thousands on their property which thought they bought as investments. Now they're forced to take out more loans and another mortgage to pay off their debts at high interest rates. Everything goes to ****.

Now whom do you blame here? You average Joe for whom everything was going great and was made to believe by the media, politicians and the Banks that he can afford to live "the good life". Or is it the media who only chase ratings and tell people what they want to hear?
Or is it the politicians who lie to the people telling them everything will be great so that they can get votes? Or is it the Bankers who gave out high risk loans to people making them believe they can afford them and not letting them understand the risks of taking such big loans because after all they need to sell the loans to make a profit and who'ld buy such high risk loans if they knew the risks associated with purchasing them?!

And finally is it the fault of the whole economic and banking system that so many economists have been criticising for years but people keep putting them off calling them looney conspiracy theorists??

If you sign a contract to pay back the loan then you must be prepared to face the consequences in the event of default. I don't care if you are an "ordinary Joe". You must adhere to the legal documents you sign. If you don't like the terms and conditions then don't sign the contract.

af_thefragile

Three Seasons wrote: »

If you sign a contract to pay back the loan then you must be prepared to face the consequences in the event of default. I don't care if you are an "ordinary Joe". You must adhere to the legal documents you sign. If you don't like the terms and conditions then don't sign the contract.

What if you were lied to by the Banks and were assured you'll be able to pay off the loan no problem? And everyone you'ld trust in this matter from media analysts to economists told you buying a house would be a safe bet as far as investment goes?

That's exactly what the Bankers want you to believe now "The people knew what they were getting themselves into and thus its totally their fault this all has happened!". What they won't tell you is how they and the whole society lied to them regarding how they would be able to pay off the mortgage easily over the years or/and will end up with a great investment.

If people played as safe and cautiously as you expect them to play, then no one would ever take a loan for anything unless it was an absolute necessity. No one would ever buy a house, no one would ever start a business, no one would buy a new car and economy will simply stagnate.

Again if you simply say "this happened because people bought more than they could afford" then it only shows your lack of knowledge and understanding of the subject.

People are consumers not economists and the consumer can be exploited. Banks are a business not a service. When a business sells a fraudulent deal, its the business, not the consumer that is deemed guilty and persecuted.

The Banks sold a fraudulent deal to the people. Then the Banks got away with it "to protect the consumer" and the consumer is now being blamed for not being careful and knowledgeable enough to recognise a fraudulent deal. Nice.

Fighting Irish

the government gave us what we wanted so they could stay in power
the banks didn't care all that much because they're banks
most of ireland got greedy and want to blame everyone else now

Three Seasons

af_thefragile wrote: »

What if you were lied to by the Banks and were assured you'll be able to pay off the loan no problem? And everyone you'ld trust in this matter from media analysts to economists told you buying a house would be a safe bet as far as investment goes?

That's exactly what the Bankers want you to believe now "The people knew what they were getting themselves into and thus its totally their fault this all has happened!". What they won't tell you is how they and the whole society lied to them regarding how they would be able to pay off the mortgage easily over the years or/and will end up with a great investment.

If people played as safe and cautiously as you expect them to play, then no one would ever take a loan for anything unless it was an absolute necessity. No one would ever buy a house, no one would ever start a business, no one would buy a new car and economy will simply stagnate.

Again if you simply say "this happened because people bought more than they could afford" then it only shows your lack of knowledge and understanding of the subject.

People are consumers not economists and the consumer can be exploited. Banks are a business not a service. When a business sells a fraudulent deal, its the business, not the consumer that is deemed guilty and persecuted.

The Banks sold a fraudulent deal to the people. Then the Banks got away with it "to protect the consumer" and the consumer is now being blamed for not being careful and knowledgeable enough to recognise a fraudulent deal. Nice.

No one knows what will happen in the future.

How can an economy survive when people don't have to adhere to a contract, all they have to do is say someone lied to them. If we want to live in a functioning society and economy people need to take responsibility for their own actions.

So what if people were wrong about the economy, it is each individuals responsibility to make the best decision for themselves. Anyone who blindly commits to pay half a million back to a lender based on what other people said without looking into the logic of the decision through their own eyes is a fukcing moron.

We can't live in a prosperous society by treating people like children.

Three Seasons

Fighting Irish wrote: »

the government gave us what we wanted so they could stay in power
the banks didn't care all that much because they're banks
most of ireland got greedy and want to blame everyone else now

How were the banks greedy exactly?

It is a business' goal to maximise profit, that's what they are supposed to do.

What the banks did was make bad decisions which eroded profits. I don't see the relevance of greed.

Banks don't exist to with the primary goal of serving customers interests, their primary goal is to maximise profits.

Noreen1

problemchimp wrote: »

Why do the media not question the auditors who gave the banks a clean bill of health when really they were fuucked. I'm talking about the big five, KPMG, PWC,Delloitte.... etc.
Then KPMG get to run NAMA, win win for them.

+1000

Deleted User wrote: »

The single most impressive achievement of our modern 'ruling classes' is the fact that they've destroyed the international economy, wandered off into the sunset with their pockets loaded with cash (or in some cases, actually got even richer on the back of the crisis), lumped their debts on the taxpayer, and we're blaming ourselves.

Incredible really.

Amen to that!

I'm heartily sick of people blaming those who took out overpriced mortgages - while ignoring the fact that the majority of mortgages so far are performing.

The truth is, the economic mess to date has been caused by non-existent banking regulation, a deliberately inflated property bubble, and some very greedy golden circle members.

Zebra3

af_thefragile wrote: »

Of course they were forced to believe a lie by the media, politicians and the Bankers.

Nobody was forced to believe anything.

There was a lot of propaganda out there promoting eternal growth, but to say people were forced to believe anything is a downright lie.

Some people made mistakes in taking out big mortgages because they could afford them at the time and thought the good times would last forever. Their mistake and they are stuck with those consequences.

For some reason the people at the top seem to have walked away scot free.

Zebra3

Three Seasons wrote: »

How were the banks greedy exactly?

It is a business' goal to maximise profit, that's what they are supposed to do.

What the banks did was make bad decisions which eroded profits. I don't see the relevance of greed.

Banks don't exist to with the primary goal of serving customers interests, their primary goal is to maximise profits.

The banks were greedy by lending to people who couldn't afford to repay their loans.

100% mortgages should never have been allowed. Small dip in house prices means the mortgage holder goes straight into negative equity.

Dr Turk Turkelton

CJC999 wrote: »

More importantly...What filling was in the €10 sandwich???

I would like it noted that I have never bought a cup of coffee ever nor have I ever paid €10 for a sandwich so I cannot be blamed for any of this.

I got a plain roast beef sandwich in a petrol station in Finglas once and when i went to the counter to pay i was asked for €11!
Needless to say i left it there!

Derpington95

UR MA!

(had to be done)

Celly Smunt

I wish i was 23 in 2001 and capable of borrowing Millions.Wouldn't have to pay back a penny now.

But i wasn't 23 and i didn't borrow anything (other than a small credit union loan for a car which is now paid off) and don't have to pay back anything now.


I'll just stroll back to my rented apartment in smugsville now.

IM0

af_thefragile wrote: »

Short answer yes.

Long answer is also yes but its the way the whole modern Banking system works rather than just a few "greedy bankers". The "greedy bankers" are only a byproduct of a system that depends on the exploitation of the public to build in wealth and power. People like to think its a conspiracy theory because frankly its much simpler to believe everything is ok and go about living your life as you do. Blame the bankers and the government for the problem and life carries on. And thus nothing changes. Banks and governments continue to function in the same way and the people will remain angry and dissatisfied with everything in the same way. But the bottom line is life goes on and that's the plan after all. As long as people get enough to get by, no matter how much noise they make, life will go on and everything can remain the same.

Many economists for the past decades have been warning us regarding the instability of the modern banking system and how it will go through boom and bust cycles while through all of this the ultimate losers will be the governments and the general public while the only winners will be the banks. But as long as people can get by and there are enough people facing the same problem, there's distribution of responsibility and life will go on.


To give a more specific answer, people will spend what they can afford to spend and vendors will charge as much as the people are willing to spend.
Spending is always healthy for the market. It keeps wealth in circulation allowing businesses and infrastructure to grow and in turn there are more and better services for the people. If people stop spending the market will stagnate, businesses will go bust, people will lose jobs, more people will be forced to resort to social welfare that will put more strain on the government expenditures which will force the government to increase taxes and ultimately it'll be the people who lose out!

If people want to buy a €10 sandwich, let them buy. If people want to buy two houses, let them have it. As long as people can afford such things businesses are supported and can grow, people will have jobs, wealth can be distributed and everyone wins.

When a wealthy person buys a €200K Ferrari, you need to thank him for it. Because his purchase supports the person running the dealership. The dealership supports the people working in the dealership. Without his purchase, the dealership will run out of business and the people working there will lose their job. His €200K also support all the thousands of people working in the Ferrari factory building the car. It supports the companies who ship the cars from the factory to the dealership and it supports the truck driver who drivers the trucks for the company. So this one wealthy person's indulgence is supporting the lives of thousands of people. This is why people like capitalism.

Spending is always a good thing as long as the right price is payed for the product. The problem occurs when the right price is not payed for the product. When you buy a €10 t-shirt, you have ripped off the store where you bought the shirt, you've ripped off the employees at the store who get paid minimum wage to work long hours in the store. You've ripped off the poor Indonesian family who get paid next to nothing and work as slave labour making the shirts. You've ripped off the shipping company which exploits its employees that distributes the shirts from the factory to the stores. Basically because you've decided to save money, you're in turn supporting a whole industry of exploitation of labour. This is why people dislike capitalism!

af_thefragile wrote: »

Its not a bad idea if there is enough market to support the industry. If people can afford to buy a house (which they could back in 2006) then nothing wrong with building houses for people to buy. The construction sector was one of the biggest employment sector in the country supporting thousands of people.

Now who is to blame for giving out risky mortgages like candy pops so that the banks can horde capital and grow bigger??

Again its not the fault of the people. People will buy what they can afford. Most people who bought a house back in the boom years did so because they could afford to buy a house back them. They had stable jobs with stable incomes.

Things went wrong because modern economies are designed to collapse.
During boom banks give out risky loans and investments allowing people to afford to purchase things they wouldn't otherwise be able to purchase. Then when the economy collapses, suddenly people lose their jobs or undergo pay cuts, they can no longer afford to pay their mortgage and lose their "investments". In the end the Banks own all the property, governments are forced to inject money into the banks to keep the system from completely collapsing and people still having enough to go by. Ultimately the Banks gain wealth as the people lose their mortgages or the value of their "investments". After a few years things equalise, people adjust to the market. People with no jobs emigrate, people who have jobs learn to live by on the lower wages and higher taxes. After its all equalised, the banks once again start giving out easy loans allowing people to afford things they wouldn't otherwise be able to afford stimulating markets and thus starting a new boom cycle!

this man gets it, have a read of all his posts after this one, Im not quite sure if he said it, but regulation is to blame, goverment control regulation or should, so in essence the goverment of the day fina failure are to blame, without what they did to de regulate the housing market like was done in US under regan in the 1980's, NONE of the rest could have happened to such a destructive level. financial regulation IS THE FIRST DOMINO!!!! once this domino falls, the rest will follow....as they did!

also the government Fina Failure took DIRECT steps to try to keep the bubble inflating by lowering [and even abolishing it completely?] stamp duty which is a tax on buying a house around €10 000~ or so and so making houses cheaper, so more even dumber people can just about 'afford' a house

Norwesterner

Zebra3 wrote: »

The banks were greedy by lending to people who couldn't afford to repay their loans.

100% mortgages should never have been allowed. Small dip in house prices means the mortgage holder goes straight into negative equity.

You do know there were people phoning Whineline and posting on forums complaining when banks refused them mortgages.
Little did they know at the time how lucky they were.

Push Pop

kingsenny wrote: »

Someone made an interesting point in saying that population as a whole was as much to blame for the current state of the country as the bankers and government are.

He cited vast overspending but households (double mortagages), where some had only one earner in a non-professional job.


He cites paying €4 cups of coffees, €10 sandwiches as ludicrous.

I'm not sure exactly how I feel about these sentiments.

How does everyone else feel?

It's pretty simple really. People borrowed too much and now they are pissed off that they have to pay it back.
Banks were reckless for sure but surely grown adults should take responsibility for their debts.

keeponhurling

In the same way that a normal trader won't sell me something for 100 if it costs him 200, (he'll go out of busines pretty quickly if he was doing that), the banks were effectively guilty of mismanagement and the ultimate punishment should be going out of business.

Lending loads when there was a strong risk attached to it, huge concentration to the property sector etc., such as Anglo in particular.

Why not just guarantee the deposits, up to a certain limit such as 100,000, and let them go bust.
Remember Anglo had the highest deposit interest rate as well, so hence people should be accepting higher risk.

It's a natural thing that efficiently run businesses survive and can thrive in any environment, poorly managed outfits go bust all the time in many industries.

People need banks, so there'll always be money to be made in banking in Ireland. If Anglo & co. collapse let more efficiently run banks come in and fill the void.

I know in my job that if I make the biggest error I could possibly make, worst case scenario is the company goes bust, not the entire country goes bust. Nor should it.

Esel

af_thefragile wrote: »

Back in 2006 things were very much different. Everyone was forced to believe such a collapse would never happen. People were forced to believe the value of a house can only go up over time..

How exactly were people 'forced' to believe these things?

KyussBishop

Prettyblack wrote: »

Why scum? Why greedy? Is the shopkeeper, who suddenly notices that everybody wants to buy bananas (whatever the reason), finds a way to sell even more bananas, as that's what people want, any different?

Why are the men and women who work for these institutions called "scum"? Because they are out to make money? Are you not?

Are you just jealous that you cannot earn the kind of money they do? So its just easy to call them "greedy scum"?

This kind of apologist nonsense is reprehensible, these banks are the primary drivers of the property bubble, and deliberately inflating financial bubbles for profit, in a way that causes enormous damage to the economy, is an incredibly sociopathic thing to do.

I mean really, people go on that others 'should have known' when they were taking out a mortgage, that the property boom was unsustainable, yet the private banks were just innocent bystanders who apparently had no idea they were stoking a massive bubble. What nonsense.


The people who knowingly pumped the property bubble are scum of the highest order, and I would say sociopaths to boot; they are the kind of people that will happily exploit and engage in rent-seeking on the rest of society, and have the gall to try and openly justify it (yet never the gall to admit the full extent of their actions, or acknowledge the societal damage caused).

It's these same fúckers who will have the financial clout, to lobby government into providing a favourable regulatory situation, that allows them to continue on with the same blowing up of bubbles and rent-seeking on the rest of society.


If people earn ridiculous amounts of money through genuine hard work, then I applaud that, but these types who would deliberately cause significant damage to the real economy and to society, to reap their own personal profits, are some of the worst sociopaths alive, and are wholly ethically/morally/intellectually corrupt in a revolting way.

Three Seasons

Zebra3 wrote: »

The banks were greedy by lending to people who couldn't afford to repay their loans.

100% mortgages should never have been allowed. Small dip in house prices means the mortgage holder goes straight into negative equity.

I don't see the relevance if greed, they are obliged by the owners to be greedy and maximise profits for them. They simply made bad decisions which resulted in losses rather than profits.

Three Seasons

KyussBishop wrote: »

This kind of apologist nonsense is reprehensible, these banks are the primary drivers of the property bubble, and deliberately inflating financial bubbles for profit, in a way that causes enormous damage to the economy, is an incredibly sociopathic thing to do.

I mean really, people go on that others 'should have known' when they were taking out a mortgage, that the property boom was unsustainable, yet the private banks were just innocent bystanders who apparently had no idea they were stoking a massive bubble. What nonsense.


The people who knowingly pumped the property bubble are scum of the highest order, and I would say sociopaths to boot; they are the kind of people that will happily exploit and engage in rent-seeking on the rest of society, and have the gall to try and openly justify it (yet never the gall to admit the full extent of their actions, or acknowledge the societal damage caused).

It's these same fúckers who will have the financial clout, to lobby government into providing a favourable regulatory situation, that allows them to continue on with the same blowing up of bubbles and rent-seeking on the rest of society.


If people earn ridiculous amounts of money through genuine hard work, then I applaud that, but these types who would deliberately cause significant damage to the real economy and to society, to reap their own personal profits, are some of the worst sociopaths alive, and are wholly ethically/morally/intellectually corrupt in a revolting way.

Absolute nonsense, do you think running a bank isn't hard work?

You are saying that banks knowingly pumped up the bubble, if they were so knowledgeable of the future economic circumstances why did they not prevent their own demise.

They simply made bad decisions, they weren't out to do evil, they were out to maximise profits as that is what they are required to do by their owners (the shareholders).

KyussBishop

Three Seasons wrote: »

Absolute nonsense, do you think running a bank isn't hard work?

You are saying that banks knowingly pumped up the bubble, if they were so knowledgeable of the future economic circumstances why did they not prevent their own demise.

They simply made bad decisions, they weren't out to do evil, they were out to maximise profits as that is what they are required to do by their owners (the shareholders).

Bank managers don't give a toss about the bank, they care about their salary, their bonuses and their pension; fraud today is about looting companies (which includes banks), which is done by the CEO/director/managerial class within those companies (and from within a bank, they can loot a significant portion of the entire economy).
The banks didn't meet any demise either; they have been bailed out.

To you, banks pumping the property bubble is just 'maximizing profits' and is therefore totally ok and justifiable; bollocks. Knowingly pumping a property bubble, that they know will lead to a massive economic crash and societal damage, is nothing less than pure sociopathic greed, and 'scum' as a description of people who were fully conscious of what they were doing, is a very mild criticism; these people should be rooted out, prosecuted, and financially/reputationally destroyed.

A lot of people should be in jail for perpetuating this bubble, and apologist arguments defending that are reprehensible (and is typical that they, by and large, come primarily from those working in or moving to work in, the same industry).

KyussBishop

A more general reply to the thread:
Kind of a contrary topic title, seeing as (at least on boards anyway) you more often hear the "we're all to blame" crowd, who put all the blame on society as a whole, and shift blame away from banks/finance.

The people saying "you should have seen it coming" and such, expect people to have been expert economists with great forsight; this totally ignoring that the vast majority of actual economists did not see this coming, bar a tiny minority.


Ireland has a pretty crap rental market, making that a not so practical alternative for living a life and raising a family; so, property ownership is heavily incentivized by such a situation.

This means that banks should not have inflated the price of houses in the first place, by throwing out loads of credit, into an unsustainable property boom; purchases that were previously sustainable for buyers, only become unsustainable because of the banks stoking property prices so high, leading to a bubble and burst, that decimated jobs, wages and increased living costs.


It's rather convenient a level of scapegoating really, to just try and lame blame on the people and/or government; blame is always being shifted away from banks and finance in these discussions, which is alway rather suspect, because that is the one place there needs to be serious reform and criminal prosecution for fraud.


Also, it's very strange the mentality towards banks "they were only doing what they do, making a profit", and suddenly that means it's all ok? Fúck that, they're not there to be let blow up bubbles in the economy free from consequence, driving us into economic crisis and putting financial burdens on entire populations, and in many cases comitting fraud (i.e. breaking the law) in the process. Really weird mentality that, which seems to put them above the law.

It's attitudes like that, which are pretty prevalent, which makes me think banking/finanace (and perhaps wider areas of business) in Ireland, is full of systemic fraud at all levels, and that nothing is going to change until people start getting put in prison for white-collar crime, and money-trails start getting followed to discover the criminals/fraudsters, and have them ruined.


By the blame shifting "we're all to blame" crap, it's as if many think actually dealing with these fraud and regulatory issues isn't the real problem, but it is 'the people' instead; bullshít. People need to start getting put away in jail for a very long time, and having their assets seized, to deal with this fraud; can't see that happening in this country anytime soon.

Since government isn't going to earnestly undertake any such investigation (only crippled investigations where nobody is ever prosecuted), and journalists in this country seem neutered, it would be good to see more independent investigations carried out; this would not last long, before those involved in investigating/publishing start getting dragged through the courts and harassed though.

amacca

kingsenny wrote: »

He cited vast overspending but households (double mortagages), where some had only one earner in a non-professional job.

that there...theres your problem boss!

but it takes two (or perhaps three or four or five) to tango

gobsh1tes to put themselves in debt they had no realistic chance of paying back [I could well have been that gobsh1te]

gobsh1tes in power to allow/engineer this situation to have a nice budget for buying votes/feathering their own nest

gobsh1tes in banks to to agressively sell unsustainable loans for short term commissions and healthy looking balance sheet to boost share prices

gobsh1tes/shills in media/auctioneering to continually hype up the thing and create a feeding frenzy




amongst all these gobsh1tes were scumbags who knew exactly what was happening and played the whole thing to their advantage

also amongst all these gobsh1tes were people who knew well what was happening but also knew it was a runaway train and they might as well ride it until it was time to get off and leave the gobsh1tes to it


Gobsh1tes Ted, Gobsh1tes!

Three Seasons

KyussBishop wrote: »

Bank managers don't give a toss about the bank, they care about their salary, their bonuses and their pension; fraud today is about looting companies (which includes banks), which is done by the CEO/director/managerial class within those companies (and from within a bank, they can loot a significant portion of the entire economy).
The banks didn't meet any demise either; they have been bailed out.

To you, banks pumping the property bubble is just 'maximizing profits' and is therefore totally ok and justifiable; bollocks. Knowingly pumping a property bubble, that they know will lead to a massive economic crash and societal damage, is nothing less than pure sociopathic greed, and 'scum' as a description of people who were fully conscious of what they were doing, is a very mild criticism; these people should be rooted out, prosecuted, and financially/reputationally destroyed.

A lot of people should be in jail for perpetuating this bubble, and apologist arguments defending that are reprehensible (and is typical that they, by and large, come primarily from those working in or moving to work in, the same industry).

The banks "pumping the bubble" wasn't maximising profits, it resulted in losses. It was a mistake which the owners of the banks paid for, their entire shareholder value was wiped out. The owners lost their entire investment in the banks as a result of bad decisions.

You keep saying the banks knew their lending practices would lead to a property crash. You are talking out of your hole. If they knew their would be a property crash then why would they knowingly make huge losses?

Let's be honest, you haven't a clue what you're talking about. You just want someone to be angry with, like a teenager whinging to their parents because they don't get enough pocket money.

You feel powerless in life, and just want to take out your frustrations on any entity you see in power, logic doesn't really matter, you can twist it how you want.

I've heard it all now, the banks knew te property crash was coming so made losses on purpose. Oh, and they're greedy too. If you're greedy surely you want to make profits .

Frank Black

Lax regulation and excessive/high risk lending in the banking sector along with populist funding decisions by politicians more concerned with winning votes than sound economic management were huge factors in the boom and bust we experienced.

However, a lot of Irish people drew down the loans on offer from the banks and elected the politicans who promised them the most.

There is no one person or sector or reason at which we can lay the blame. A lot of people were complicit in the general madness that went on.

Anyway - the issue of blame is only useful in trying to put in place systems to try to ensure it doesn't happen again. By all means prosecute those bankers or politicans who have broken the law - but, it won't change the current economic situation we find ourselves in.

I'd prefer if there was more focus on solutions.

KyussBishop

Three Seasons wrote: »

The banks "pumping the bubble" wasn't maximising profits, it resulted in losses. It was a mistake which the owners of the banks paid for, their entire shareholder value was wiped out. The owners lost their entire investment in the banks as a result of bad decisions.

You keep saying the banks knew their lending practices would lead to a property crash. You are talking out of your hole. If they knew their would be a property crash then why would they knowingly make huge losses?

Let's be honest, you haven't a clue what you're talking about. You just want someone to be angry with, like a teenager whinging to their parents because they don't get enough pocket money.

You feel powerless in life, and just want to take out your frustrations on any entity you see in power, logic doesn't really matter, you can twist it how you want.

I've heard it all now, the banks knew te property crash was coming so made losses on purpose. Oh, and they're greedy too. If you're greedy surely you want to make profits .

Yes that was maximizing profits - for the CEO's/directors/managers, who got nice salary/bonus/pension perks for the increased short-term profits; fraud isn't about the long-term success of the business, it is about looting what you can in the short-term.

They don't give a toss about shareholders, or the business itself, once they've personally achieved their own gains; all of this was said in the post you reply to, yet you obtusely ignore, because you don't care about the argument you just want to repeat the same rhetorical point 'why cause losses for the bank' that has already been addressed.


Yes being angry with banks for stoking the property bubble is totally irrational and just looking for "someone to be angry with", nevermind the documented instances of fraud in financial institutions and the criminologists who have researched the economic crisis in Ireland, stating it bears all the marks of systemic fraud; nothing worth being angry about there I guess.

You run to the defense of banking/finance here because that is your own chosen industry, and you want to keep detached from the concept of any responsibility being shared by that industry, and that fraud is a criminal act which should land people in jail, and that profit/rent-seeking at the expense of society overall (particularly when it directly leads to widespread societal damage) is pure greed and sociopathy, not merely innocent 'profit seeking', and dogmatic attempts at justifications for it are morally/ethically/intellectually corrupt, revealing pretty detached and revolting attitudes.

Prettyblack

Three Seasons wrote: »

The banks "pumping the bubble" wasn't maximising profits, it resulted in losses. It was a mistake which the owners of the banks paid for, their entire shareholder value was wiped out. The owners lost their entire investment in the banks as a result of bad decisions.

You keep saying the banks knew their lending practices would lead to a property crash. You are talking out of your hole. If they knew their would be a property crash then why would they knowingly make huge losses?

Let's be honest, you haven't a clue what you're talking about. You just want someone to be angry with, like a teenager whinging to their parents because they don't get enough pocket money.

You feel powerless in life, and just want to take out your frustrations on any entity you see in power, logic doesn't really matter, you can twist it how you want.

I've heard it all now, the banks knew te property crash was coming so made losses on purpose. Oh, and they're greedy too. If you're greedy surely you want to make profits .

+1.

Mrs Garth Brooks

No, moaners are to blame.

Most of the time, I dont want to hear about this stuff, switch off news

But there's always moaners that will get you down

Three Seasons

Their were numerous factors which caused the crash, stupid loans given out by banks, stupid loans accepted from banks, a stupid government to name a few.

Three Seasons

Three Seasons wrote: »

The banks "pumping the bubble" wasn't maximising profits, it resulted in losses. It was a mistake which the owners of the banks paid for, their entire shareholder value was wiped out. The owners lost their entire investment in the banks as a result of bad decisions.

You keep saying the banks knew their lending practices would lead to a property crash. You are talking out of your hole. If they knew their would be a property crash then why would they knowingly make huge losses?

Let's be honest, you haven't a clue what you're talking about. You just want someone to be angry with, like a teenager whinging to their parents because they don't get enough pocket money.

You feel powerless in life, and just want to take out your frustrations on any entity you see in power, logic doesn't really matter, you can twist it how you want.

I've heard it all now, the banks knew te property crash was coming so made losses on purpose. Oh, and they're greedy too. If you're greedy surely you want to make profits .

You need to read up a little.

The individuals concerned made large amounts of money. They don't care about the future of the business. Why should they? If you can lend a lot, and get paid bonuses on that basis to the extent that you'll never have to think about money again - who cares if it gets paid back?

Modern capitalism in many ways encourages the systematic short term looting of economies and companies without considering long term consequences.

Worth reading "23 things they don't tell you about capitalism" which has a very neat essay on this subject - around how GM was basically run into the ground over the course of 20 years of 'maximising shareholder value"

BizzyC

Anyone who cant see that people are in part to blame for this mess is just being selectively ignorant.

People put the government in place who deregulated the banks and supported them.
People were happy with the ease of loan access during the boom years.
People were very happy with the money they were earning during the boom years.

It's not as if the lending practices of banks was a secret at the time, people just didn't care because everyone thought property was a solid investment, including the banks themselves.

People were falling over each other to be customers of these banks.
With that kind of public demand and a lack of regulation they stretched themselves too thin, they had to.

Any CEO at the time who took a more conservative approach would've been booted by shareholders in favor of someone willing to grab some of this easy profit that was floating around.
The only way to avoid this scenario is strong regulation, which we were missing.

Push Pop

Push Pop wrote: »

It's pretty simple really. People borrowed too much and now they are pissed off that they have to pay it back.
Banks were reckless for sure but surely grown adults should take responsibility for their debts.

I can only speak for myself, but I'm pissed off precisely because I pay back my debts and always have.

I am guessing that's the case for many people in this country.

What annoys me is picking up the tab for Anglo (with which I have never had any dealings) and the property developers and landowners who profited from the property bubble in the first place.

The responsible taxpayer is being stung twice. Firstly by paying a huge amont for a house to live in. Second by being taxed to the hilt to pay for the losses incurred by irresponsible lending institutions. I say irresponsible - what actually happened was criminal.

Three Seasons

[Deleted User] wrote: »

You need to read up a little.

The individuals concerned made large amounts of money. They don't care about the future of the business. Why should they? If you can lend a lot, and get paid bonuses on that basis to the extent that you'll never have to think about money again - who cares if it gets paid back?

Modern capitalism in many ways encourages the systematic short term looting of economies and companies without considering long term consequences.

Worth reading "23 things they don't tell you about capitalism" which has a very neat essay on this subject - around how GM was basically run into the ground over the course of 20 years of 'maximising shareholder value"

It's the owners and directors stupidity to put incentives in place which don't encourage long term profitability. Capitalism doesn't encourage short term profitability. People who devise idiotic incentives encourage short term profitability.

Noreen1

Three Seasons wrote: »

Absolute nonsense, do you think running a bank isn't hard work?

You are saying that banks knowingly pumped up the bubble, if they were so knowledgeable of the future economic circumstances why did they not prevent their own demise.

They simply made bad decisions, they weren't out to do evil, they were out to maximise profits as that is what they are required to do by their owners (the shareholders).

That's a convenient way of exonerating decision makers.
The problem is - those who made the poor decisions still got handsomely rewarded. Some of the shareholders got wiped out -that's hardly maximising profit, is it?. All of the public got ripped off.
With decision making comes accountability.
So far, there hasn't been any accountability by the decision makers.

KyussBishop wrote: »

A more general reply to the thread:
Kind of a contrary topic title, seeing as (at least on boards anyway) you more often hear the "we're all to blame" crowd, who put all the blame on society as a whole, and shift blame away from banks/finance.

The people saying "you should have seen it coming" and such, expect people to have been expert economists with great forsight; this totally ignoring that the vast majority of actual economists did not see this coming, bar a tiny minority.


Ireland has a pretty crap rental market, making that a not so practical alternative for living a life and raising a family; so, property ownership is heavily incentivized by such a situation.

This means that banks should not have inflated the price of houses in the first place, by throwing out loads of credit, into an unsustainable property boom; purchases that were previously sustainable for buyers, only become unsustainable because of the banks stoking property prices so high, leading to a bubble and burst, that decimated jobs, wages and increased living costs.


It's rather convenient a level of scapegoating really, to just try and lame blame on the people and/or government; blame is always being shifted away from banks and finance in these discussions, which is alway rather suspect, because that is the one place there needs to be serious reform and criminal prosecution for fraud.


Also, it's very strange the mentality towards banks "they were only doing what they do, making a profit", and suddenly that means it's all ok? Fúck that, they're not there to be let blow up bubbles in the economy free from consequence, driving us into economic crisis and putting financial burdens on entire populations, and in many cases comitting fraud (i.e. breaking the law) in the process. Really weird mentality that, which seems to put them above the law.

It's attitudes like that, which are pretty prevalent, which makes me think banking/finanace (and perhaps wider areas of business) in Ireland, is full of systemic fraud at all levels, and that nothing is going to change until people start getting put in prison for white-collar crime, and money-trails start getting followed to discover the criminals/fraudsters, and have them ruined.


By the blame shifting "we're all to blame" crap, it's as if many think actually dealing with these fraud and regulatory issues isn't the real problem, but it is 'the people' instead; bullshít. People need to start getting put away in jail for a very long time, and having their assets seized, to deal with this fraud; can't see that happening in this country anytime soon.

Since government isn't going to earnestly undertake any such investigation (only crippled investigations where nobody is ever prosecuted), and journalists in this country seem neutered, it would be good to see more independent investigations carried out; this would not last long, before those involved in investigating/publishing start getting dragged through the courts and harassed though.

+10,000
For all the "We are all to blame" waffle I keep reading, I very rarely hear anything about improving banking regulation to ensure that this can never happen again.
And yet - that should be the single most important lesson to be learned.

Three Seasons wrote: »

The banks "pumping the bubble" wasn't maximising profits, it resulted in losses. It was a mistake which the owners of the banks paid for, their entire shareholder value was wiped out. The owners lost their entire investment in the banks as a result of bad decisions.

You keep saying the banks knew their lending practices would lead to a property crash. You are talking out of your hole. If they knew their would be a property crash then why would they knowingly make huge losses?

Let's be honest, you haven't a clue what you're talking about. You just want someone to be angry with, like a teenager whinging to their parents because they don't get enough pocket money.

You feel powerless in life, and just want to take out your frustrations on any entity you see in power, logic doesn't really matter, you can twist it how you want.

I've heard it all now, the banks knew te property crash was coming so made losses on purpose. Oh, and they're greedy too. If you're greedy surely you want to make profits .

A person could be forgiven for thinking that a property crash had never, ever happened before, anywhere in the world, if they were to listen to you.

Truth is - boom and bust cycles are part of economics. I know that - and I have no background in economics or banking.
If anyone who took out a mortgage should have known that (I have no mortgage, nor am I the person who keeps trying to blame ordinary mortgage holders, btw) - then how much more was it the responsibilty of the lenders to know that?

The banks have destroyed the economy, ably assisted by lax/non-existent regulation, a Government that was unfit to run a sweet shop, much less a Country, and a whole Cabal of privileged "Golden circle" members.

Refusing to address that will only ensure that this "bust" will be followed by another.
I don't know about you - but I have no desire to be the serf who keeps paying to ensure the elite are kept in the style to which they have become accustomed.
I'd rather work to improve the lot of my own family, thanks!

Three Seasons

[Deleted User] wrote: »

I can only speak for myself, but I'm pissed off precisely because I pay back my debts and always have.

I am guessing that's the case for many people in this country.

What annoys me is picking up the tab for Anglo (with which I have never had any dealings) and the property developers and landowners who profited from the property bubble in the first place.

The responsible taxpayer is being stung twice. Firstly by paying a huge amont for a house to live in. Second by being taxed to the hilt to pay for the losses incurred by irresponsible lending institutions. I say irresponsible - what actually happened was criminal.

You stung yourself paying a huge amount for a house to live in.

By the way, I have a beautiful pen on my desk at home, it's a state of the art bic, for the incredibly cheap price of 10000 euro I would be willing to sell it you, be warned, you won't get a pen like this anywhere else. Would you like to buy it?

Sergeant

Noreen1 wrote: »

The banks have destroyed the economy, ably assisted by lax/non-existent regulation, a Government that was unfit to run a sweet shop, much less a Country, and a whole Cabal of privileged "Golden circle" members.

Never had more regulation. Acres of it. Whole office blocks in Brussels, Dublin and Frankfurt dedicated to it. Bureaucracy everywhere.

The Government was elected by the voters.

You too can become a member of this mysterious and sinister 'golden circle'.

Three Seasons

Three Seasons wrote: »

It's the owners and directors stupidity to put incentives in place which don't encourage long term profitability. Capitalism doesn't encourage short term profitability. People who devise idiotic incentives encourage short term profitability.

The 'owners' are shareholders.

In a public institution shareholders are the MOST mobile stakeholder in a business. They can put their money wherever they want, and they want to maximize dividends and capital gains NOW. There is no long term. They literally don't care if there is or is not an AIB in 10 years time. You are mistaken if you think otherwise.

In that context, they will reward management that sacrifices the long term for the short term every time. That is how the system works. If you doubt that, look around you, we are living with the consequences.

Noreen1

BizzyC wrote: »

Anyone who cant see that people are in part to blame for this mess is just being selectively ignorant.

People put the government in place who deregulated the banks and supported them.
People were happy with the ease of loan access during the boom years.
People were very happy with the money they were earning during the boom years.

It's not as if the lending practices of banks was a secret at the time, people just didn't care because everyone thought property was a solid investment, including the banks themselves.

People were falling over each other to be customers of these banks.
With that kind of public demand and a lack of regulation they stretched themselves too thin, they had to.

Any CEO at the time who took a more conservative approach would've been booted by shareholders in favor of someone willing to grab some of this easy profit that was floating around.
The only way to avoid this scenario is strong regulation, which we were missing.

Who is this "everyone" you speak of?

People vote in a Government, who have a Dept of Finance to advise them.
They have a right to expect that these people will do the job they are paid to do.

There is no requirement in a Democratic Country for the electorate to have qualification in, or an understanding of, economics.
That's what the Dept of Finance is paid to do - by the people who are now being blamed for the crisis, strangely enough.

No-one is denying that some people over-extended themselves.
However, to lay the blame on an entire population is patently ridiculous, untrue, and is either willful blindness, or pushing an agenda, imo.

Three Seasons

Three Seasons wrote: »

You stung yourself paying a huge amount for a house to live in.

By the way, I have a beautiful pen on my desk at home, it's a state of the art bic, for the incredibly cheap price of 10000 euro I would be willing to sell it you, be warned, you won't get a pen like this anywhere else. Would you like to buy it?

See if you can figure out the flaw in your 'clever' analogy.

BTW, I am not complaining about my own circumstances. My mortgage repayments are pretty low thanks to a rock bottom rate on a tracker mortgage and the fact that I first bought a house over 15 years ago so had loads of equity.

Doesn't change the fact that a lot of people got squeezed by the unholy trinity of bankers, developers and landowners. Believe it or not some of us are capable of thinking of others.

smash

Noreen1 wrote: »

No-one is denying that some people over-extended themselves.
However, to lay the blame on an entire population is patently ridiculous, untrue, and is either willful blindness, or pushing an agenda, imo.

The problem is that all these people who give out about those who purchased during the boom still haven't realised that the majority of purchasers are still actually servicing their loans. Yes, they're pissed off that someone can buy next door for half the price but they're not taking the country down by refusing to pay their mortgages.

true

KyussBishop wrote: »

This means that banks should not have inflated the price of houses in the first place, by throwing out loads of credit, into an unsustainable property boom; purchases that were previously sustainable for buyers, only become unsustainable because of the banks stoking property prices so high, leading to a bubble and burst, that decimated jobs, wages and increased living costs.

+1.
There are cases where banks lent out 30 and 40 times a person income. Such loans were not sustainable and imho the bankers who made and approved these loans should be charged and jailed.

who_me

No, it wasn't just the banks/government. They just made it worse.

For a few years, everyone jumped on the property investment bandwagon, sending the prices spiralling upwards. This lead to the construction industry going into overdrive to feed this frenzy - at one point I read 25% of the workforce was involved directly or indirectly in construction. Because of this, it meant if anything slowed/stopped the demand for property (the credit crisis) you'd now have a massive glut of unwanted property and a huge section of the population with little or no income for the foreseeable future. Builders, plumbers, plasterers, electricians, carpenters, engineers, surveyors, architects, estate agents, mortgage agents, solicitors, carpet shops, furniture shops, lighting shops, home appliance shops etc.. This has a massive impact across the economy, meaning a lot of people have reduced incomes but can no longer get rid of their mortgages as they're now in negative equity.

If you have a rapidly growing economy and someone/something suddenly puts the brakes on, bad things happen. And this is the worst case scenario - an investor driven, credit fuelled property boom:

- Because it's driven by investors (and fuelled by credit) the growth is far quicker, meaning any financial crash will be far more damaging.
- Unlike 'home owners', investors will jump at the first sign of property price falls, so the crash will happen more suddenly.
- Because it's paid for in credit, after the crash people will be burdened with long-term debt.
- And you're left with a glut of unwanted property. Unlike (say) cars or home electronics where the demand would naturally return in a few years, property lasts for decades or longer, meaning it could be a long, long time before there's demand for new property.

The one stat I would be interested in reading though, is how much of the banks' bad debts is due to home owners and once-off investors, and how much is due to much larger developers.

smash

true wrote: »

+1.
There are cases where banks lent out 30 and 40 times a person income.

Any links to cases like this? I don't believe they exist!