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Are the Bankers & Government the only ones to blame?
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Sure, people over borrowed, but personal financial hardship is not what brought the Troika to our door. It was dodgy dealing by Anglo, actual fraud as opposed to reckless lending.
If the only problems we had were high unemployment and lots of people in negative equity, we would not be fucked, at least not yet. We needed a bailout and brought the IMF here because of the smoke and mirrors game run by Anglo, oh and the government who guaranteed them.
Are the bankers and government the only ones to blame? No, but they are the reason that the problem is as huge as it is.
That was part of it. But consider that high house prices were a result of people paying over the odds for a two room semi. They all got loans for those properties. And the banks all have given mortgages for property that is now valued at a fraction of the cost. That means that the banks balance books are in the negative. Plus people got mortgages at a higher repayment rate than they could afford because they assumed the next 20 years would be the same as the previous 7.
Between 96 and 06 I saw houses in my town go from 40k to 400k for the same property(with most of the increase occuring between 99 and 06. But even then the price had doubled by 00.). Even ignoring the changover from punts to euro, that was a stupid increase. Yet everyone accepted that it was natural and would keep on increasing. It was obviously a bubble. It was obvious that it couldn't continue. But people kept on believing it could. It was willful blindness. And that led to the government giving even more tax breaks, to relaxing even more regulations to keep it going.
Everyone who participated in that reckless spending shares partial responsability.0 -
nlgbbbblth wrote: »Neither do I. Seven / eight times maybe.
Do you think if someone has evidence that the bank lent 30 times the persons income should go to the media about it? There was such lending.
The bank obviously made a mistake and would not do it again but I know of one case of such lending. There is no law against it, but obviously such lending was unsustainable and eventually a collapse would occur / the bubble would burst. The bank workers who done that for short term profit / bonuses have a lot to answer for.
Up against a wall and shoot them I say. ( The person or people in charge of lending / who made the decisions - the ordinary counter staff are innocent )0 -
Do you think if someone has evidence that the bank lent 30 times the persons income should go to the media about it? There was such lending.
The bank obviously made a mistake and would not do it again but I know of one case of such lending. There is no law against it, but obviously such lending was unsustainable and eventually a collapse would occur / the bubble would burst. The bank workers who done that for short term profit / bonuses have a lot to answer for.
Up against a wall and shoot them I say. ( The person or people in charge of lending / who made the decisions - the ordinary counter staff are innocent )
If they didn't break any laws then why "shoot them"?
People make bad decisions, that's what happened at the banks the owners of the banks suffered the consequences.
The banks don't exist as a public service, they exist to make profit. If you don't like their products then take your business elsewhere.0 -
Three Seasons wrote: »The banks don't exist as a public service, they exist to make profit. If you don't like their products then take your business elsewhere.
Like to another bank?0 -
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Three Seasons wrote: »Yes that's what competition is for.
They're all the same or have you not realised that yet?0 -
The likes of Fingleton who bed and breakfasted deposits with Anglo at auditing time deceived people. Bank managers who lent people 30 times their income destroyed their lives. Those who sold mortgages which were unsustainable messed up the economy. Maybe they did not break laws as such, but in the selfish greed of chasing bonuses for themselves, their actions have caused untold suffering this past few years in Ireland - not to mention suicides, emigration etc.Three Seasons wrote: »If they didn't break any laws then why "shoot them"?.
I was speaking metaphorically when I suggested "shoot them".
The owners of the banks have suffered - I know of pensioners and people who put money away for 3rd level fees for their kids who have seen their life savings disappear.Three Seasons wrote: »People make bad decisions, that's what happened at the banks the owners of the banks suffered the consequences.
.
The unscrupulous bank managers have not suffered the consequences. They still have their big pay + pensions.Three Seasons wrote: »The banks don't exist as a public service, they exist to make profit. If you don't like their products then take your business elsewhere.
Tell that to the couple 50 miles from Dublin locked in to a mortgage in an unsuitable dwelling, and who cannot escape.0 -
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The likes of Fingleton who bed and breakfasted deposits with Anglo at auditing time deceived people. Bank managers who lent people 30 times their income destroyed their lives. Those who sold mortgages which were unsustainable messed up the economy. Maybe they did not break laws as such, but in the selfish greed of chasing bonuses for themselves, their actions have caused untold suffering this past few years in Ireland - not to mention suicides, emigration etc.
I was speaking metaphorically when I suggested "shoot them".
The owners of the banks have suffered - I know of pensioners and people who put money away for 3rd level fees for their kids who have seen their life savings disappear.
The unscrupulous bank managers have not suffered the consequences. They still have their big pay + pensions.
Tell that to the couple 50 miles from Dublin locked in to a mortgage in an unsuitable dwelling, and who cannot escape.
How do you know the wages of all bank managers over a 7 year period or so.
You ruin your own life when you take out ridiculous loans. Banks don't exist to make you happy, your happiness is your own responsibility. They exist to make profits. It is your responsibility to spend your own hard earned money wisely. Why should any business care if you waste your money, each individual should look out for their own interest first and foremost.0 -
Three Seasons wrote: »Really, tell that to Ulster Banks customers.
The ones who are now getting hit with fees like all other banks? That's when they can access their money in the first place!0 -
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The ones who are now getting hit with fees like all other banks? That's when they can access their money in the first place!
You just missed my point spectacularly. Banks aren't all the same, just look at the sh1t service they give customers. PTSB don't have the same fees as Ulster Bank.0 -
Three Seasons wrote: »You just missed my point spectacularly. Banks aren't all the same, just look at the sh1t service they give customers. PTSB don't have the same fees as Ulster Bank.
They're all the same in terms of fcuking up the country. Some just did more damage than others!0 -
If it was physically possible to produce as much as people were consuming during the boom, and it's still physically possible (which it always would be, barring natural disasters or actual scarcity of raw material) then nothing should have changed with regard to wealth and spending power.
Our monetary system is supposed to be controlled by production limits, but in practise we've designed one which CONTROLS production limits even when there's no real, physical reason to.
The entire system of currency needs to be redesigned to reflect modern reality, starting with the shambles that is interest bearig central bank credit.0 -
hatrickpatrick wrote: »If it was physically possible to produce as much as people were consuming during the boom, and it's still physically possible (which it always would be, barring natural disasters or actual scarcity of raw material) then nothing should have changed with regard to wealth and spending power.
Our monetary system is supposed to be controlled by production limits, but in practise we've designed one which CONTROLS production limits even when there's no real, physical reason to.
The entire system of currency needs to be redesigned to reflect modern reality, starting with the shambles that is interest bearig central bank credit.
Would you like to suggest how this redesigned currency works?0 -
Three Seasons wrote: »Would you like to suggest how this redesigned currency works?
Lots of economists have written a lot about a monetary system that doesn't rely on the fractional reserve system of banking.
Boom-Bust cycles are a property of the interest dependant fractional reserve monetary system that primarily exists to exploit people and make the bankers wealthier. Again people at this point will scream out "conspiracy theory boo boo!!!" as if the current system that's in place is so perfect that there is no room for implementing an alternate monetary system and see if it may work better.
On a side note bitcoin is a prime example of why a gold backed monetary system works best. The key is regulation of the supply. Bitcoin has gotten the attention of many economics because it seems to present a kind of a "perfect" monetary system that is self regulated and in theory can never suffer from inflation. This is because the supply of bitcoins is tightly regulated to the degree where again in theory, it shouldn't experience any runaway deflation or inflation and it is virtually impossible at this moment to replicate it. But at the end of the day bitcoin is a virtual currency. It only exists as binary numbers on hard-drives somewhere. If someone were to "pull the plug" or mess with the program, it has the potential of being exploited, which is why economists are still very skeptical at taking bitcoin as a serious from of currency that'll last.
This is the very reason gold was the monetary standard for centuries. Gold is a physical substance that has a unique property in which it undergoes virtually no corrosion over time and thus gold that was mined centuries ago still exists in the same form as it did back then. Its value has remained nearly constant through centuries because its supply has been very limited, due to it being a precious metal. Gold works best because anything more precious like Platinum would be too scarce to be practically used as a currency and anything such as Iron and Copper is too abundant for its supply to be tightly regulated.
There are two factors that destabilise markets. Its either a run away inflation or deflation (such as a "gold rush") and the second factor is interest based fractional reserve banking. Any further than this, its becomes quite complicated to explain how interest leads to market collapse which then leads to inflation and how Bankers take advantage of these to grow bigger through stimulating boom-bust market cycles.0 -
No no, God did it. Jesus was angry.0
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The owners of the banks have suffered - I know of pensioners and people who put money away for 3rd level fees for their kids who have seen their life savings disappear.
The unscrupulous bank managers have not suffered the consequences. They still have their big pay + pensions.
How? If they invested in shares, then it's a gamble. Every junior cert student is taught of the wall st crash. And most living people can remember the smaller crashes that have happened since. Hell, the dotcom bubble burst less than 20 years ago. Shares go up and down. The best thing to do is to diversify a portfolio and even then it's a gamble, just less of a gamble.
And if it was in savings, their money should still be there. Banks haven't gone under except for anglo. And even then personal savings were guaranteed up to a certain amount. Nobody would be left bankrupt.0 -
How? If they invested in shares, then it's a gamble. Every junior cert student is taught of the wall st crash. And most living people can remember the smaller crashes that have happened since. Hell, the dotcom bubble burst less than 20 years ago. Shares go up and down. The best thing to do is to diversify a portfolio and even then it's a gamble, just less of a gamble.
And if it was in savings, their money should still be there. Banks haven't gone under except for anglo. And even then personal savings were guaranteed up to a certain amount. Nobody would be left bankrupt.
you forget people were told that Irish bank hares were " blue chip" shares. People were told the Irish banks were properly funded and properly regulated. People who thought or suggested there may be a drop in property values were told by the Taoiseach of the day to " go off and commit suicide".
Not surprising some people put their savings ( for their rainy day, retirement, kids education or whatever ) in some or all of the different Irish bank shares, as the banks made up most of the value of the Irish stock market, and anyway they were supposed to be the ones who were experts at financial matters.
For your info, some banks sshares are worth less than 1% of what they once were.
And some bank managers still give themselves 800,000 a year.0 -
af_thefragile wrote: »Lots of economists have written a lot about a monetary system that doesn't rely on the fractional reserve system of banking.
Boom-Bust cycles are a property of the interest dependant fractional reserve monetary system that primarily exists to exploit people and make the bankers wealthier. Again people at this point will scream out "conspiracy theory boo boo!!!" as if the current system that's in place is so perfect that there is no room for implementing an alternate monetary system and see if it may work better.
On a side note bitcoin is a prime example of why a gold backed monetary system works best. The key is regulation of the supply. Bitcoin has gotten the attention of many economics because it seems to present a kind of a "perfect" monetary system that is self regulated and in theory can never suffer from inflation. This is because the supply of bitcoins is tightly regulated to the degree where again in theory, it shouldn't experience any runaway deflation or inflation and it is virtually impossible at this moment to replicate it. But at the end of the day bitcoin is a virtual currency. It only exists as binary numbers on hard-drives somewhere. If someone were to "pull the plug" or mess with the program, it has the potential of being exploited, which is why economists are still very skeptical at taking bitcoin as a serious from of currency that'll last.
This is the very reason gold was the monetary standard for centuries. Gold is a physical substance that has a unique property in which it undergoes virtually no corrosion over time and thus gold that was mined centuries ago still exists in the same form as it did back then. Its value has remained nearly constant through centuries because its supply has been very limited, due to it being a precious metal. Gold works best because anything more precious like Platinum would be too scarce to be practically used as a currency and anything such as Iron and Copper is too abundant for its supply to be tightly regulated.
There are two factors that destabilise markets. Its either a run away inflation or deflation (such as a "gold rush") and the second factor is interest based fractional reserve banking. Any further than this, its becomes quite complicated to explain how interest leads to market collapse which then leads to inflation and how Bankers take advantage of these to grow bigger through stimulating boom-bust market cycles.
Precisely this.
This is the great big white elephant in the room, that those who defend the current system to the death seem to consistently ignore.
Apart from the fact that the fractional reserve wasn't regulated in the first place, in the absence of a new financial system, fractional reserve banking needs to be discussed - and, imo - controlled much more strictly.
The fact that we hear no such discussion from the so-called experts would lead me to suspect that there is no serious intent to ensure that such a "bust" must never be allowed to happen again - for all the "attempts" to solve the crisis.0 -
Precisely this.
This is the great big white elephant in the room, that those who defend the current system to the death seem to consistently ignore.
The great big white elephant in the room is that we spend €12 billion more than we take in.
Any ideas as to how we get rid of that inconvenience?0 -
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you forget people were told that Irish bank hares were " blue chip" shares. People were told the Irish banks were properly funded and properly regulated. People who thought or suggested there may be a drop in property values were told by the Taoiseach of the day to " go off and commit suicide".
Not surprising some people put their savings ( for their rainy day, retirement, kids education or whatever ) in some or all of the different Irish bank shares, as the banks made up most of the value of the Irish stock market, and anyway they were supposed to be the ones who were experts at financial matters.
For your info, some banks sshares are worth less than 1% of what they once were.
And some bank managers still give themselves 800,000 a year.
But all shares are gambling. You only put money in because you think you'd make more than you would in a savings account. And if you do that, you are gambling.0 -
The great big white elephant in the room is that we spend €12 billion more than we take in.
Any ideas as to how we get rid of that inconvenience?
What on earth does our current deficit have to do with whether or not fractional reserve banking is the best possible system we can come up with?
The thread title is "Are the Bankers and Government the only ones to blame" - not how we get rid of if an inconvenient 12 Billion deficit.
Actually, I've several ideas on how we get rid of that "little inconvenience" - but I'm more concerned with ensuring that we don't periodically end up generating such "little inconveniences" in the first place!0 -
But all shares are gambling. You only put money in because you think you'd make more than you would in a savings account. And if you do that, you are gambling.
you could argue that putting money bin a savings account is also gambling, because you think you'd make more than you would putting it in a tin box under the bed.
the irish bank shares were "blue chip" shares, and they were supposed to be regulated by the hundreds of people employed ( at great taxpayers expense ) in the central bank and regulators office.
a 20% or 40% driop in value of some or all the banks would have been acceptable, but to see them all decimated? Not good enough, esp when the regulator, bank managers etc all escape scott free. One even is in the news today for his 800k salary.
People have been kneecapped in this country for less0 -
What on earth does our current deficit have to do with whether or not fractional reserve banking is the best possible system we can come up with?
The thread title is "Are the Bankers and Government the only ones to blame" - not how we get rid of if an inconvenient 12 Billion deficit.
Actually, I've several ideas on how we get rid of that "little inconvenience" - but I'm more concerned with ensuring that we don't periodically end up generating such "little inconveniences" in the first place!
No, I've read the thread. It's the practical solutions as to how we move between the deficit and an end to fractional reserve lending that I'm having difficulty understanding. It's all a wee bit vague.0 -
Dont forget the property developers.0
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The great big white elephant in the room is that we spend €12 billion more than we take in.
Any ideas as to how we get rid of that inconvenience?
And what exactly caused us to end up spending €12 billion more than we take in?
A strong economy doesn't need to rely on government loans or bonds to run. Why do governments seem to end up in cycles of inescapable debt?
In a non interest based gold backed economy (one that doesn't suffer from inflation), if the government borrowed a million euros to fund some project such as a new motorway, then if the government spent the money efficiently, it'll soon get back its return of investment and can pay off its debt.
In an unstable fiat economy, when the government borrows a million euros, it needs to pay an addition 100k or so as interest. Then if there's an economic collapse, which happen often to such economies, suddenly the government is unable to pay off the dues in time. Another major factor that plays in is that of democratic governments. One government comes in borrows millions to build some infrastructure which would bring it into favour with the public. Once the government's term runs out, now when the next government comes in, it suddenly has to deal with the debt amassed by the previous government. Rather than making the country suffer in austerity, which is pretty unfavourable for the public, new government decides to take another loan to pay off the previous loan and continue where the previous government left off to keep the public happy. Now the government has two loans to pay off and the interest that keeps building up on these two loans. And over time governments end up finding themselves in big debts. Economic collapse simply add to this debt to ensure governments remain in the cycle of debt dependency.
I acknowledge I haven't explained this properly and succinctly enough here and that's because the way modern economics works is extremely complex and I don't have enough knowledge to explain how exactly A and B lead to C and D. There are many economists out there who can do a much better job explaining all these processes. Look up Peter Schiff for a start. He was warning people of an impeding economic collapse way back in 2004-2006 and everyone called him crazy back then only to later find out how wrong they were!0 -
Dont forget the property developers.
they did not make the rules on bank lending.
A tramp or "property developer" can walk in off the street, or be approached by a bank, and ask for or be offered xy million for some project. You cannot really blame the person for asking for the money, or blame the person for taking the call from the bank. It was the banks job to evaluate if the loan was sustainable / likely to be repaid. Sometimes the banks gave out money without wondering how it was to be repaid.0 -
af_thefragile wrote: »And what exactly caused us to end up spending €12 billion more than we take in?
A strong economy doesn't need to rely on government loans or bonds to run. Why do governments seem to end up in cycles of inescapable debt?
In a non interest based gold backed economy (one that doesn't suffer from inflation), if the government borrowed a million euros to fund some project such as a new motorway, then if the government spent the money efficiently, it'll soon get back its return of investment and can pay off its debt.
In an unstable fiat economy, when the government borrows a million euros, it needs to pay an addition 100k or so as interest. Then if there's an economic collapse, which happen often to such economies, suddenly the government is unable to pay off the dues in time. Another major factor that plays in is that of democratic governments. One government comes in borrows millions to build some infrastructure which would bring it into favour with the public. Once the government's term runs out, now when the next government comes in, it suddenly has to deal with the debt amassed by the previous government. Rather than making the country suffer in austerity, which is pretty unfavourable for the public, new government decides to take another loan to pay off the previous loan and continue where the previous government left off to keep the public happy. Now the government has two loans to pay off and the interest that keeps building up on these two loans. And over time governments end up finding themselves in big debts. Economic collapse simply add to this debt to ensure governments remain in the cycle of debt dependency.
I acknowledge I haven't explained this properly and succinctly enough here and that's because the way modern economics works is extremely complex and I don't have enough knowledge to explain how exactly A and B lead to C and D. There are many economists out there who can do a much better job explaining all these processes. Look up Peter Schiff for a start. He was warning people of an impeding economic collapse way back in 2004-2006 and everyone called him crazy back then only to later find out how wrong they were!
Peter Schiff? A believer in the Austrian School? He believes that the crisis is primarily caused by Government squandering other peoples money and making monumentally stupid decisions as a result.
I wouldn't use his theories as a cornerstone to develop a theory on how to end the fractional reserve system.0 -
It was the banks job to evaluate if the loan was sustainable / likely to be repaid. Sometimes the banks gave out money without wondering how it was to be repaid.
Banks do that all the time. Its how the banking system works. Banks need to give out loans to grow or else the fractional reserve banking system completely collapses and Banks will never be able to grow or compete.
In fractional reserve banking debt = capital. The more loans the banks give out, the more interest it amasses and then the more 'reserve' the bank can create on that interest.
So when a bank gives out a €100k to a person, the person then owes the bank €100k + interest. To keep things simple lets say the bank charges 10% interest on the loan, the person now owes in total to the bank €110k in total. The bank has earned €10K in interest as its "profit". It doesn't matter at this point the bank doesn't physically have the €10K in its treasury. All that matters is that the person owes the bank this €10k and thus the bank's 'reserve' has now increased by €10k. Now on this €10k by the process of fractional reserve banking, the bank can now loan out 10 times as much (in reality banks can loan out much more, investments like hedge funds can be at 300x the times of the reserve or even higher!).
So now through fractional reserve banking the Bank can give out another loan worth €100K on the interest from the previous loan. This new €100K loan will bring the bank another €10K interest and the Bank can give out bigger and bigger loans as it amasses more interest.
Now through all of this, at any point its not required for the Bank to physically have this 'reserve'. Simply the fact that the debtor owes the bank this 'reserve' is enough for the Bank to function and give out loans. So as long as Banks keep giving out loans, no matter how big they are, they can keep giving out bigger and bigger loans and keep getting wealthier on the interest these loans amass. Through Fractional Reserve banking it is absolutely possible for a "Banker" to start out with just a grand in his treasury and end up giving out millions in loans and profit from the interest on all these loans.
In this system as long as the debtors keep paying their monthly dues, the system keeps functioning. The trouble happens if suddenly all of the bank's customers demand their money back at once (as the bank never actually has the capital to pay back all of its customers!) or if there is an economic collapse and suddenly many debtors can't pay back their debt. Banks to go great lengths to avoid the first scenario from taking place. For the second scenario, banks need to pay big bets. Because its the public's money involved here, governments are almost always forced to end up "bailing out" these banks, paying off the public debt to keep the Banks from going bust and thousands of people to lose their savings. It is also to note here Bankers invest a lot of time lobbying with governments so that if such a scenario does take place, the governments come to their rescue. This is what makes Banks "too big to fail" and makes Bankers ridiculously wealthy throughout all history!
The most significant aspect of this system is that the "interest" wealth doesn't exist at all. All the wealth that exists is what the banks give out from their reserves or as multiples of their reserves. The "interest" by its design can never be paid off in wealth because the wealth to pay off this interest simple doesn't exist. Thus to pay off the interest economies need to continuously keep taking loans which bring with them even more interest. Its a vicious cycle. This works on a collective level when you factor in the whole economy connected to the Bank(s). Individuals aren't directly affected by this as many can make big money through this process themselves (such as through hedge funds). Its the economies that collectively suffer because they have to end up facing austerity to pay off the loans so you get the rise in taxes, inflation, collapsing markets, unemployment, even more taxes and all.0 -
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You seem to be confused about a lot of things. Hedge funds are not the same as banks. Leverage is not the same as fractional reserve lending.0
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