10 years since the start of the financial crisis.
Discussion
JagLover said:
ntiz said:
As you say it take 2 sides for the system to work.
But when I first became independent around 5 years ago I was shocked how easy it was to borrow money. Perhaps it was the way I was brought up but I kind of expected borrowing money to be a really big deal with loads of checks and lots of waiting while the powers at be decided I could have it.
The reality of course was that I went to look at a new BMW sales men said its X amount a month I said yes. Signed on the dotted line there and then, that was that I had borrowed money for a car. Was much the same with my house just more paperwork but actually sorting the mortgage was again very easy.
As I have said maybe it is me. I do think it should be made harder to borrow or more weight put on what you are actually committing yourself to. I have plenty of friends who dug themselves into big holes by not really sitting down and figuring it out. They are stupid for doing it on the other had it shouldn't go as far.
There is probably a middle ground some where.
You are effectively complaining about being treated like an adult capable of making your own decisions. But when I first became independent around 5 years ago I was shocked how easy it was to borrow money. Perhaps it was the way I was brought up but I kind of expected borrowing money to be a really big deal with loads of checks and lots of waiting while the powers at be decided I could have it.
The reality of course was that I went to look at a new BMW sales men said its X amount a month I said yes. Signed on the dotted line there and then, that was that I had borrowed money for a car. Was much the same with my house just more paperwork but actually sorting the mortgage was again very easy.
As I have said maybe it is me. I do think it should be made harder to borrow or more weight put on what you are actually committing yourself to. I have plenty of friends who dug themselves into big holes by not really sitting down and figuring it out. They are stupid for doing it on the other had it shouldn't go as far.
There is probably a middle ground some where.
I've never done anything stupid yet. But I have watched a couple of my friends be given more and more credit effectively just letting them hang themselves just think there should be a point were the lenders go are you sure you want to borrow another 10k sir? Not refuse to lend just potentially light guidance.
Both of those friends had to declare bankruptcy because they were stupid at Uni setting them back years. Was a laugh at the time they aren't laughing anymore.
There is a tradition at lots of Unis now were you and your mates all go to the bank take out credit cards together then blow the whole lot on one weekend. My wife mates all did it 2 years ago all of them had to go hands out to there parents to sort out the debt they took out.
The question is should it be the banks problem? As a business no I guess not buyer beware and all that. Just think a few more warnings to what some of these idiots are signing up for and ramifications if they don't pay it back.
On the other side of the coin I decided to draw some money from my bank account, enough money to alert the cashier to ask me the question ‘ buying something nice Sir? ‘. My bank looking after my interests, which I appreciated.
It’s a rare thing for me to show a little gratitude to a bank!
It’s a rare thing for me to show a little gratitude to a bank!
av185 said:
Eh?
Try reading my post again.
Seeing as you appear to be unable to grasp the subject for some reason, here are some questions for you to consider.
1) What percentage of people financing new cars have been forced to cut back elsewhere to meet payments?
2) Has the meteoric rise in car leasing resulted in a large rise in UK personal debt?
3) Do you think an increase in vehicles handed back will increase residuals?
4) Do you think increased pollution awareness and dieselgate will help residuals especially on diesel cars?
5) Does pcp rely on guaranteed gfvs?
6) Does a strong used car market affect gfvs?
7) Will saturation point affect gfvs?
8) Do you think stretched and indebted households ability to pay will be pressurised in any way following interest rate rises and increased likelihood of unemployment? Will this be good or bad for the economy?
In order:Try reading my post again.
Seeing as you appear to be unable to grasp the subject for some reason, here are some questions for you to consider.
1) What percentage of people financing new cars have been forced to cut back elsewhere to meet payments?
2) Has the meteoric rise in car leasing resulted in a large rise in UK personal debt?
3) Do you think an increase in vehicles handed back will increase residuals?
4) Do you think increased pollution awareness and dieselgate will help residuals especially on diesel cars?
5) Does pcp rely on guaranteed gfvs?
6) Does a strong used car market affect gfvs?
7) Will saturation point affect gfvs?
8) Do you think stretched and indebted households ability to pay will be pressurised in any way following interest rate rises and increased likelihood of unemployment? Will this be good or bad for the economy?
1 - no data to support either way - probably. Not a systemic risk, will never get that large (unless you believe the entire population lives per "Cant Pay, We'll take it Away")
2 - yes, government policy - direct anger appropriately
3 - decrease. Finance house problem, not customer (good for barge hunters). Its going to eat profit margin as stock gets written down, how much fat is in building cars?
4 - nope - see government policy. If you PCP, you have GFV inbuilt hand it back - finance house problem not consumer. Its simples. If the value is lower than the GFV you hand it back (they've handed you a zero strike put option - albeit the premium is loaded in the total financing / package cost)
5 - Yes, but a PCP (bought correctly on the right vehicle), has significantly more optionality and downside risk protection than a naked outright purchase. If the market for cars tanks, you take a bath on the asset (and you can still be -'ve equity if you HP'd or borrowed elsewhere). On PCP you hand it back (or in some instances VT early)
6 - Yes, but consumer habits have changed across the board.
7 - Yes - not a problem for anyone on PCP, anyone with cash wins as cars reach barge levels (finance house risk)
8 - Not seen a floating rate or benchmarked PCP, so any rate increase effects on household finances are from elsewhere. If you are over leveraged unemployment is always a risk (not the PCP) - whose fault is that? If the economy tanks and you own cars outright, they could be virtually worthless in any distressed sale. You won't cover any other borrowing you have liquidating the asset if its a buyers market. Actually putting in a finance house (whom maybe can absorb some of the market risk) actually acts as a velocity break in event of a firesale.
You need to tackle the education angle; and peoples relationship with debt - not the product.
sidicks said:
andy_s said:
A lot, being unprofessional and luring in stupid people without due diligence generally results in that.
Wrong, as ever. Default rates have been incredibly low.
k off.I took a guess - if the default rates were low then it wasn't down to people lying on their mortgage applications after all then...?
andy_s said:
'as ever' - oh do fk off.
I took a guess -
That’s the trouble - too much guessing, not enough knowledge to have a proper discussion.k off.I took a guess -
[wuote=andy_s]
if the default rates were low then it wasn't down to people lying on their mortgage applications after all then...?
stongle said:
Overloading the used market with barges at 27pence is PH porn anyway – no idea why its vilified so much (aside from a way for a few to look down upon others from the seat of their 15year old beige Volvo V78 or whatever).
Because they've all got flakey little diesel engines.sidicks said:
andy_s said:
'as ever' - oh do fk off.
I took a guess -
That’s the trouble - too much guessing, not enough knowledge to have a proper discussion.k off.I took a guess -
andy_s said:
if the default rates were low then it wasn't down to people lying on their mortgage applications after all then...?
Default rates being low doesn’t mean people didn’t lie on their application forms. You may recall that interest rates were massively reduced which has, to date, protected many borrowers who would otherwise have overextended themselves.So people lying on application forms has had no discernible effect on default? So the cause wasn't customer side then?
sidicks said:
I’ve explained on numerous occasions that the blame should be shared amongst banks (senior management and a relatively small number of individuals), regulators, the government and customers.
As the customers still have to pay the debt back or suffered the consequences of the bankruptcy what more can they do.I agree with you that the banks were complicit in the whole thing, which will be why there haven't been more prosecutions for fraud.
sidicks said:
desolate said:
Don't you think that the banks were complicit?
I’ve explained on numerous occasions that the blame should be shared amongst banks (senior management and a relatively small number of individuals), regulators, the government and customers.sidicks said:
desolate said:
Don't you think that the banks were complicit?
I’ve explained on numerous occasions that the blame should be shared amongst banks (senior management and a relatively small number of individuals), regulators, the government and customers.Convenient.
andy_s said:
That's also my view. But I would also say that the banks, being the professional, regulated, 'trusted' organisation should shoulder most of the blame rather than the people that are unqualified and poorly advised who either took advantage deliberately or were too dumb to fathom things out for themselves.
I don’t think that’s an unreasonable position to take.What I do think is unreasonable is those who try to extend this into ‘so senior bankers should all be in prison’ (or words to that effect).
For all the talk about ‘risky’ lending, default rates have been extremely low (as explained earlier, in part due to low interest rates) - the crisis was one of liquidity not defaults.
Further, the boom in the economy (and therefore in public spending) was being driven by this same period of easy credit, which was not sustainable.
Government spending benefited significantly prior to 2008. Blaming the banks for subsequent ‘austerity’ is nonsense - it was the government excessively spending money based on a temporary / artificial boom.
Had the government followed a prudent strategy on public spending during the boom then the public finances would have been robust enough to manage the withdrawal of the credit.
Lucas Ayde said:
The only surprise is that Northern Rock got to where it was; Today it would have been bailed out or provided with as much liquidity as needed behind the scenes - I believe they changed the law shortly afterwards to allow the BoE to keep banks on life support without telling the public who are effectively back-stopping the banks losses.
NR is interesting. It had a small capital base and its business model was to write lots of mortgages and then bundle them into an ABS FRN which would be sold to investors. When the collapse occurred the buyers of ABS disappeared. It was not about selling at any price there were no buyers. Therefore its business model no longer worked without a massive increase in capital. As a result it was nationalised with no compensation to shareholders. Its ABS vehicles (google granite) was technically in default because of the winding up but has never default on any payments, and will likely pay off all the investor tranches without loss. andy_s said:
That's also my view. But I would also say that the banks, being the professional, regulated, 'trusted' organisation should shoulder most of the blame rather than the people that are unqualified and poorly advised who either took advantage deliberately or were too dumb to fathom things out for themselves.
No, the government was the largest "individual" beneficiary. They are also responsible for education, assigning systemic risk monitoring and steering the economy. The problem is, most of them approach economics like my 7 year old asking for pocket money. Gimme more.sidicks said:
andy_s said:
That's also my view. But I would also say that the banks, being the professional, regulated, 'trusted' organisation should shoulder most of the blame rather than the people that are unqualified and poorly advised who either took advantage deliberately or were too dumb to fathom things out for themselves.
I don’t think that’s an unreasonable position to take.What I do think is unreasonable is those who try to extend this into ‘so senior bankers should all be in prison’ (or words to that effect).
For all the talk about ‘risky’ lending, default rates have been extremely low (as explained earlier, in part due to low interest rates) - the crisis was one of liquidity not defaults.
Further, the boom in the economy (and therefore in public spending) was being driven by this same period of easy credit, which was not sustainable.
Government spending benefited significantly prior to 2008. Blaming the banks for subsequent ‘austerity’ is nonsense - it was the government excessively spending money based on a temporary / artificial boom.
Had the government followed a prudent strategy on public spending during the boom then the public finances would have been robust enough to manage the withdrawal of the credit.
If in the 2 years before the crisis the BOE had increased rates to slow the growth of house prices, the crash would have been much less serious.
How does the 2008 financial crash compare to the 1929 version. By this I mean in technical senses, my basic notion is that the early crash was brought about by investments in shares being over inflated by every tom, dick & harry piling into them. The 2008 crash brought about by bad lending to every tom, dick & harry. Don’t seem to learn do we?
Scootersp said:
The public generally need (if you are concerned for their welfare) looking after or a steer in the right direction.
The populace in the 90's weren't any more/less knowledgable about banking but banks were low risk, no credit to students, most young people really, I remember getting that first loan or credit card required work to prove yourself, now it's "here you go see how you get on"!
The move away from this benefits who.........
I got rejected when applying for my first credit card and only got one because the manager for student accounts at my bank put a supporting reference in my second application (I was doing a year of work experience as part of my degree so actually was drawing a salary). Credit limit was £200. Back then you really had to make a case that you could actually pay back any money that you borrowed and the focus was on getting people to save and deposit their money with the bank.The populace in the 90's weren't any more/less knowledgable about banking but banks were low risk, no credit to students, most young people really, I remember getting that first loan or credit card required work to prove yourself, now it's "here you go see how you get on"!
The move away from this benefits who.........
Flash forward to today and going in to one of the few remaining high street branches these days means being accosted by offers of credit. They have just become focused on pushing as much credit (ie. debt) as possible onto their customer base. Interest rates for the few people who want to deposit savings are risible - you'd not be much worse off keeping your money in a suitcase under the bed and at least you wouldn't have to worry about bank solvency/counter party risk.
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