Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 9:27 am  

Dally wrote:

So as he saI'd, the banks lent recklessly to give the punters what they wanted - money that was unlikely to be repaid and unlikely to be supported by security.

Northern Rock were lending recklessly but in doing so encouraging borrowers to borrow recklessly. On the day the crap hit the fan with them I recall vividly people phoning into a radio station I was listening to on a long drive, stating how they had been attracted by NR adverts for 100% mortgages but once sat in front of the branch "advisor" had been tempted by stories of how their proposed property would increase by 7 or 8% per annum and so borrowing 110% was not reckless but financially advisable, after all in two years time you'd have equity in the house !

Some callers spoke openly of adding ten grand to what they really needed to pay for furniture, carpets etc, one caller went out and bought a new car on the excess mortgage cash - they were only just starting to realise that they had bought a carpet and a sideboard on 25 years finance, and they'd sold the car last year but would be paying for it for the next 22 years.

You cannot blame individuals for such poor financial decisions as the majority of adults don't even run a household budget let alone deal in financial markets or even stop to think when signing up to a mortgage - you can however blame the lenders who are the self proclaimed experts (or so they thought) for actively luring in people into the honey pot trap of free money.

The reason that we have controls on financial organisations is to save ourselves from their greed because without it they'd sign up all sorts of gullible people without a second thought for their welfare just so long as the "advisor" (who is nothing of the sort) gets his/her bonus this month.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 12:14 pm  

JerryChicken wrote:

Northern Rock were lending recklessly but in doing so encouraging borrowers to borrow recklessly. On the day the crap hit the fan with them I recall vividly people phoning into a radio station I was listening to on a long drive, stating how they had been attracted by NR adverts for 100% mortgages but once sat in front of the branch "advisor" had been tempted by stories of how their proposed property would increase by 7 or 8% per annum and so borrowing 110% was not reckless but financially advisable, after all in two years time you'd have equity in the house !

Some callers spoke openly of adding ten grand to what they really needed to pay for furniture, carpets etc, one caller went out and bought a new car on the excess mortgage cash - they were only just starting to realise that they had bought a carpet and a sideboard on 25 years finance, and they'd sold the car last year but would be paying for it for the next 22 years.

You cannot blame individuals for such poor financial decisions as the majority of adults don't even run a household budget let alone deal in financial markets or even stop to think when signing up to a mortgage - you can however blame the lenders who are the self proclaimed experts (or so they thought) for actively luring in people into the honey pot trap of free money.

The reason that we have controls on financial organisations is to save ourselves from their greed because without it they'd sign up all sorts of gullible people without a second thought for their welfare just so long as the "advisor" (who is nothing of the sort) gets his/her bonus this month.

No one was so gullible as to think they were getting the money for free. They just think they "deserved" a flashier lifestyle. To suggest they needed protecting from themselves (except for some disabled people) is frankly socialist nonsense.

NR had become (in my opinion) an unethical selling machine long before they crashed. I moved a mortgage away from them (at cost to myself) because that was my opinion and they disgusted me. I find it hard to believe others hadn't formed such a view.

Back to the question of austerity, Aaronovitch I today's Times makes a good argument that the only people who can't see that Europe's anti-austerity movement has failed to gain popular support are the British Labour party who seem intent on self-destruction.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 2:03 pm  

Some years ago a small rural town in Spain twinned with a similar town in Greece.

The mayor of the Greek town visited the Spanish town. When he saw the palatial mansion belonging
to the Spanish mayor, he wondered aloud how on earth he could afford such a house.

The Spaniard replied: ‘You see that bridge over there? The EU gave us a grant to construct a two-lane bridge, but by building a single lane bridge with traffic lights at either end, I could build this place.’

The following year the Spaniard visited the Greek town. He was simply amazed at the Greek mayor's house: gold taps, marble floors, diamond doorknobs, it was marvellous.

When he asked how he’d raised the money to build this incredible house, the Greek mayor said: ‘You see that bridge over there?’

The Spaniard replied: ‘What bridge.’

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 2:36 pm  

Dally wrote:

No one was so gullible as to think they were getting the money for free. They just think they "deserved" a flashier lifestyle. To suggest they needed protecting from themselves (except for some disabled people) is frankly socialist nonsense.

NR had become (in my opinion) an unethical selling machine long before they crashed. I moved a mortgage away from them (at cost to myself) because that was my opinion and they disgusted me. I find it hard to believe others hadn't formed such a view.

No-one suggested that they were getting it for free, but by over selling their mortgage products in an orgy of greed they failed to provide any sort of test for applicants being only interested in lending larger amounts than needed secured against assets that they seemed convinced would never devalue, that was their failing, not the borrowers failing, if someone promises you that you can afford to borrow more than you thought you'd ever be approved for then many will go for it and trying to pretend that the whole of the UK population are chartered accountants and will apply their own stress tests is frankly ridiculous, they won't and they didn't and were led by the nose by the greed of the sales staff.

NR were not always like that, I took out my first mortgage with them in 1982 when I lived in Newcastle and they left me with the impression that they were doing me a huge favour in lending me £9400 to buy a one bedroom flat, I virtually had to crawl on hands and knees and beg for the mortgage even though I was in a decent salaried job, I left the office after filling in forms for nearly an hour so that they even knew which day of the week I changed my underpants, the Gestapo would have probably required fewer details than NR did - that all changed when the bankers and their pals in government decided to trust them enough to release the reins and almost let them self govern, NR became a bank and the selling vultures took up roost.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 2:56 pm  

JerryChicken wrote:

Northern Rock were lending recklessly but in doing so encouraging borrowers to borrow recklessly. On the day the crap hit the fan with them I recall vividly people phoning into a radio station I was listening to on a long drive, stating how they had been attracted by NR adverts for 100% mortgages but once sat in front of the branch "advisor" had been tempted by stories of how their proposed property would increase by 7 or 8% per annum and so borrowing 110% was not reckless but financially advisable, after all in two years time you'd have equity in the house !

Some callers spoke openly of adding ten grand to what they really needed to pay for furniture, carpets etc, one caller went out and bought a new car on the excess mortgage cash - they were only just starting to realise that they had bought a carpet and a sideboard on 25 years finance, and they'd sold the car last year but would be paying for it for the next 22 years.

You cannot blame individuals for such poor financial decisions as the majority of adults don't even run a household budget let alone deal in financial markets or even stop to think when signing up to a mortgage - you can however blame the lenders who are the self proclaimed experts (or so they thought) for actively luring in people into the honey pot trap of free money.

The reason that we have controls on financial organisations is to save ourselves from their greed because without it they'd sign up all sorts of gullible people without a second thought for their welfare just so long as the "advisor" (who is nothing of the sort) gets his/her bonus this month.

I recently had a few valuations on my property with a view to selling. What one of the valuers told me was interesting. He said that a lot of the banks, if investigated properly, would be guilty of mortgage fraud. Forget people knowingly getting themselves into massive debt, the banks were actively encouraging it with reduced deposits and the promise of big returns in short timescales. When banks were sending surveyors out to give places a risk assessment and make sure that the value of the loan and the value of the property added up, in most cases they would just tick a box on a sheet without even going inside the property. Banks were more than happy to give 100% mortgages on property values that were totally unrealistic and with no risk assessments carried out.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 3:29 pm  

Juan Cornetto wrote:

It is worth remembering that Northern Rock went bust in the year before the world economic crash.

It was the year before the crash precipitated by Lehman Brothers Collapse, but what we know as the credit crunch started on the 9th August 2007 according to Google. Northern Rock went bust on the 14th September 2007, so a few weeks after the chickens had come home to roost.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 3:47 pm  

JerryChicken wrote:

No-one suggested that they were getting it for free, but by over selling their mortgage products in an orgy of greed they failed to provide any sort of test for applicants being only interested in lending larger amounts than needed secured against assets that they seemed convinced would never devalue, that was their failing, not the borrowers failing, if someone promises you that you can afford to borrow more than you thought you'd ever be approved for then many will go for it and trying to pretend that the whole of the UK population are chartered accountants and will apply their own stress tests is frankly ridiculous, they won't and they didn't and were led by the nose by the greed of the sales staff.

NR were not always like that, I took out my first mortgage with them in 1982 when I lived in Newcastle and they left me with the impression that they were doing me a huge favour in lending me £9400 to buy a one bedroom flat, I virtually had to crawl on hands and knees and beg for the mortgage even though I was in a decent salaried job, I left the office after filling in forms for nearly an hour so that they even knew which day of the week I changed my underpants, the Gestapo would have probably required fewer details than NR did - that all changed when the bankers and their pals in government decided to trust them enough to release the reins and almost let them self govern, NR became a bank and the selling vultures took up roost.

NR made a commercial decision on risky lending. It failed. What was reprehensible, as I said at the time, was Gordon Brown rescuing NR. He should have protected their depositors, sold their loan book and had it wound up asap. That would have sent a strong message out. Instead for political reasons (employment in the NE, I assume) he chose to prop it. It should have been seen to have failed and its name immediately expunged.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 5:42 pm  

Dally wrote:

NR made a commercial decision on risky lending. It failed. What was reprehensible, as I said at the time, was Gordon Brown rescuing NR. He should have protected their depositors, sold their loan book and had it wound up asap. That would have sent a strong message out. Instead for political reasons (employment in the NE, I assume) he chose to prop it. It should have been seen to have failed and its name immediately expunged.

At the time that it happened there were probably several other banking CEO's on the phone to him on the hour saying "I think we need to talk Gordon", Northern Rock didn't happen in isolation, they were just the ones to go out in the first round of musical chairs.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 5:45 pm  

Anti-austerity was always a hopeless doctrine.

The idea you can spend your way out of major debt it, quite frankly, ridiculous.

It's a bit like defaulting on a loan and then asking your bank to give you another £5,000.

Re: Anti- Austerity Doctrine Not Working : Thu Jul 16, 2015 5:47 pm  

King Street Cat wrote:

I recently had a few valuations on my property with a view to selling. What one of the valuers told me was interesting. He said that a lot of the banks, if investigated properly, would be guilty of mortgage fraud. Forget people knowingly getting themselves into massive debt, the banks were actively encouraging it with reduced deposits and the promise of big returns in short timescales. When banks were sending surveyors out to give places a risk assessment and make sure that the value of the loan and the value of the property added up, in most cases they would just tick a box on a sheet without even going inside the property. Banks were more than happy to give 100% mortgages on property values that were totally unrealistic and with no risk assessments carried out.

The last two houses I bought pre-2007 (in fact one of them April 2007) had the usual building society survey paid for by me and done by what I presume was someone qualified by the BS to do so, when I asked the vendors if they'd spoken to the surveyor on both occasions they never saw a surveyor let alone invite them in, the building society "survey" was obviously just a kerbside cursory glance to make sure there was a property at that address, or possibly not even that.