Does anyone understand the financial crisis?

lazygal

Anyone? Where did it all go wrong? Who can we all pin the blame on?

TeddyTedson

edit - Actually I don't know, or care right now, sorry.

bleg

Lehman Brothers.

Deus Ex Machina

Nobody here understands anything, ask somebody else.

summerskin

Simply put banks lent money to people, to companies and to other financial instituions that were unable to pay the loans back. The banks were therefore not getting their money back, which led to them having dangerously low levels of capital. This then led to a "run on the banks" with individuals and investors withdrawing their captial from said bank, leaving it even more precarious.

And then the government bailed them out, leaving the country short of finance.

And then the government begged the ECB to lend it more money so that it could pump even more into the banks.

Then our taxes went up and nobody batted an eyelid, in reality, as we all pay back the ECB for the rest of our lives as a result of irresponsible lending from banks and a lack of accountability from the people who borrowed more than they could afford to repay.

--Kaiser--

I'm sure someone does, however, most ordinary folk don't.
This is why I refuse to participate in any discussion with work-mates/family on how the 'economy is fecked' because in general they are just regurgitating poor journalism and most haven't the barest notion what is going on

jimthemental

I think David Mcwilliams does but he's ginger so no one will listen.

Gee Bag

Is there some kind of financial crisis at present?

Gosh! It's been kept very hush hush.

davet82

Its a big fcuking scam...

someday in 20 years time our kids will say how the fcuk did ya's all just sit by and let this happen, the same thing we do when we look back through history and go, why didnt somebody do something...


its all bollix i tells ya!

djk1000

Look up Ponzi scheme on wikipedia, there's your answer.

SeaFields

summerskin wrote: »

Simply put banks lent money to people, to companies and to other financial instituions that were unable to pay the loans back. The banks were therefore not getting their money back, which led to them having dangerously low levels of capital. This then led to a "run on the banks" with individuals and investors withdrawing their captial from said bank, leaving it even more precarious.

And then the government bailed them out, leaving the country short of finance.

And then the government begged the ECB to lend it more money so that it could pump even more into the banks.

Then our taxes went up and nobody batted an eyelid, in reality, as we all pay back the ECB for the rest of our lives as a result of irresponsible lending from banks and a lack of accountability from the people who borrowed more than they could afford to repay.

And also the last government using an unsustainable source of revenue (the property bubble taxes) to make long term investments. Therefore when the bubble burst we had less of an income and even more outgoings. Hence these 'austerity' budgets.

Havermeyer

Subprime lending.

Greed.

People buying stuff with credit, and not actual money.

I'm sure there's a couple of other reasons...

later12

These sort of short, simplistic, McWilliams-esque summaries never end well.

For an insight into the Irish crisis, which also gives an insight into the global crisis, perhaps you should read Prof. Patrick Honohan's report

http://www.bankinginquiry.gov.ie/The%20Irish%20Banking%20Crisis%20Regulatory%20and%20Financial%20Stability%20Policy%202003-2008.pdf

summerskin

later10 wrote: »

These sort of short, simplistic, McWilliams-esque summaries never end well.

For an insight into the Irish crisis, which also gives an insight into the global crisis, perhaps you should read Prof. Patrick Honohan's report

http://www.bankinginquiry.gov.ie/The%20Irish%20Banking%20Crisis%20Regulatory%20and%20Financial%20Stability%20Policy%202003-2008.pdf

I think that if she had any genuine interest she'd have read that sort of thing already. Simple is the only way to go on here.

Havermeyer

later10 wrote: »

These sort of short, simplistic, McWilliams-esque summaries never end well.

For an insight into the Irish crisis, which also gives an insight into the global crisis, perhaps you should read Prof. Patrick Honohan's report

http://www.bankinginquiry.gov.ie/The%20Irish%20Banking%20Crisis%20Regulatory%20and%20Financial%20Stability%20Policy%202003-2008.pdf

Edit:

My mistake. :P

ejmaztec

bleg wrote: »

Lehman Brothers.

I thought it was the Gallagher Brothers?

Seachmall

In 1992 a Jewish committee met up to discuss the global conflicts and financial situation. In 1990* they reached a conclusion that the two were inexplicably linked. In an attempt to turn the major players in global trade into pacifists they launched a plan known only as "SupaDupaBailOutFail".

In 2001, with the fall of the twin towers, this plan began to take form. Within 10 years we were facing the largest recession this generation has ever seen. In 2009 they moved Barrack Obama into office, his job was to maintain being black in order to appease the left-wing opposition. They also launched the Paris Hilton sex tape "A night in Paris" for reasons unknown.

By the end of the year they will have achieved their goal of world domination. And the world as we know it will end.

Many reject the above, they do so only because of fear. Fear and reason. But mostly fear.

Don't be a sheep. Oppose the NWO.

*Note they concluded this before the committee actually met, this indicates time-travelling abilities.

ThinkAboutIt

I don't know anything. All I know is it is everyone else's fault bar my own.

© Boards.ie opinion 2008 - current.

mikemac1

Bertie and Brian Cowan said it was Lehman Brothers

Sure who am I to doubt them, they had department of Finance and dept of An Taoiseach to get them info

And they are experts and have all the best info right?

dxhound2005

I take the long view. I am not that old and I remember much worse times in Ireland with actual poverty. I see a lot of waste and squandering of resources happening here still which would not be possible in a poor society. Capitalism always has cycles of recession and growth, I see on Wikipedia that there have been 47 recessions in the United States since 1790.

MadYaker

Aliens.

Stiffler2

Ye - we owe the banks money
the banks owe other people money but don't have it so...
they borrowed some money from the ECB to pay back their loans
Banks basically owe bondholders money

I'm sure it doesn't stop at the bondholders though

the bondholders probably owe the Rockerfellers
The rockerfellers have to pay back their loans to the Chinese

Final Conclusion - The Chinese own everything now.

Chuck Stone

Everyone wanted 3 houses, a hot tub in the back garden, and a fur coat for every man woman and child. The banks said 'no problem - take this money' the easy supply of credit and demand for houses, hot tubs and fur coats couldn't keep up with supply which meant the prices kept rising and people kept borrowing to buy these things.

The government, as bad as the banks, thought 'yipee aren't we great look at our tax revenue from the housing market' and started giving out money left-right-and-centre which inflated the costs of the PS and the income of welfare recipients.

Then the bubble burst starting in the US when speculators realised that bad apples (sub-prime mortgages) had been mixed in with good apples and sold as high quality apple products. Nobody was too sure if they'd bought a barrel of apples that was rotten and everyone got scared. People started withdrawing monies from banks and credit dried up. In Ireland the housing market collapsed and the banks were effectively broke.

The govt. (i.e. tax-payer) guaranteed all deposits and took on responsibility for all bank debts along the way. The revenue the government was taking in from the housing market dried up but the PS and welfare costs remained along with the bank debts which have been socialised and will take at least a generation, all being well, to pay back.

That's my understanding.

Yakult

Used to know, then I got high and forgot what I'm even talking about now. Did someone mention Walkers cheese and onion? mmm

opinion guy

Pyramid schemes always collapse. Simples.

Hayte

The essence of the financial crisis can be summed up as:

(Investor demand for property P + artificially high credit C) x borrowed money B/square root of the price decline in a bear market over N years) + negative equity in your home over the same period x (G euros guaranteed by the state/liklihood of a wealthy person in Ireland going to jail expressed as a fraction of 1) = ALL YOUR MONEY ARE BELONG TO US.

Don't worry if you can't follow the math. All you really need to know is that ALL YOUR MONEY ARE BELONG TO US.

Spacedog

Neomi Klien is the only economist even close, turns out Karl Marx was right all along! :pac:

dxhound2005

All the "rich" countries in the world are up to their eyes in debt. And even China is in debt. Countries which have a reputation for doing well recently like Norway and Canada have more debt per head of population than the USA. And Japan is a basket case.

http://www.economist.com/content/global_debt_clock

Phill Ewinn

In essence Cowen and Lenihan ''consulted'' with bankers, developers and derivatives gamblers on how to sort out the financial mess caused by bankers, developers and derivatives gamblers.

The result was a resounding success for the bankers, developers and derivatives gamblers and a total loss for the tax payer.

OP simply watch RTE and then believe the opposite of what they tell you. That way 50% of the time you'll always be right.

Nothingbetter2d

lazygal wrote: »

Anyone? Where did it all go wrong? Who can we all pin the blame on?

a few things caused this recession

1. Foolish german bondholders pushed low interest loans on our banks

2. Foolish irish bank managers took this money and foolishly lent it to dodgy developers and didn't bother to check if property being used as collateral was being used as collateral elsewhere.

3. Foolish Government didnt charge enough income tax, and paid out too high for welfare.

4. Foolish people paid silly money for a shoebox house. Then demanded more money to pay for such foolishly purchaced houses

5. Clever factory owners said f'u greedy irish workers and set up camp in india and china where slave labour is still ignored

6. Foolish overpriced house purchasers lost jobs and defaulted on thier overpriced morgages

7. Foolish irish banks ran out of money as foolish irish people with over priced houses couldnt make morgage payments.

8. Foolish irish government made foolish decision about gaurenteeing foolish german bond holders would get their money back despite the obvious that they were foolish to make such silly investments in the first place by using angry irish tax payer's money.

9. Foolish irish people elect an even more foolish government with no balls to stand up for the now really angry irish tax payer and tax us to the high heavens so that the foolish german bond holders get their money back.

10. No foolish irresponsible bank officials goes to jail for all this mess but instead get big generous pensions while the angry tax payer foots the bill once more.

foxyboxer

Lehmans and JP Morgan have a standard practice of providing overnight loans to each other on a regular basis.

So for example Lehmans wants to borrow €10m over night from JP Morgan. Let's say it needs the money to cover a corporate bond sale due to mature.

However Lehmans must meet JP's collateral requirements of a value of €10m.

JP Morgan only accepts AAA rated german government bonds which Lehman must provide in order to get the overnight loan of €10m cash.

So how does it meet that?

It tries to borrow €10m worth of german government bonds from Morgan Stanley.

But Morgan Stanley only have €8 million of those bonds on it's books and will only accept collateral for loaning the bonds to Lehman in the form of Federal Reserve C-Notes (triple AAA rated by our friends in Moody's) but is happy to do so.

However instead of borrowing these from another institution, it makes a collateral debt obligation to Morgan Stanley which does not have it's collateral lending rules satisfied but as Lehman has a AAA rating and will pay a €20,000 fee for the loan, it pays out the government bonds to Lehman readily.

Lehmans repeats the process with another institution to cover the €2 million shortfall in german government bonds to meet JP Morgans collateral needs.

Finally, Lehmans gets the cash and pays the corporate bond out.

Now Lehmans goes bust and a multitude of scenarios like the above has been going on amongst the financial institutions.

Lehmans owes JP Morgan €8m in cash and another bank €2m.
JP can't get it's collateral back because Lehmans has disappeared.
The government bonds Morgan Stanley loaned out have been downgraded.
Lehmans can argue through the courts that it cannot meet it's collateral obligations. (if JP want AAA bonds back, can it accept AA+ ones instead)

I need to sit down now.
Still with me because even I'm not still with me after all that.

John Doe1

Probably the jews but i have a solution, a final solution;)