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Are the Bankers & Government the only ones to blame?
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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!0 -
[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?0 -
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'.0 -
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.0 -
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.0 -
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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.0 -
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.0 -
+1.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.
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.0 -
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.0 -
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The popular opinion is and will remain that the bankers and the government are to blame.
The problem is it ignores all other contributors. There were lots of people with their hands in the cookie jar. Trades men were earning easily double what they would get now for a days work. They kept upping their rates. This pushed house prices up and also made renovations very costly.
The civil service insisted on bench marking without consideration to security or pensions. Remember all the teachers would be gone to the private sector if the pay rise wasn't made.
People lied on mortgage applications to get more money and got extra credit union loans.
Loans to buy bigger and better, used to be 30% of the cars on my road were new SUVs and I live in a Dublin suburb and these people didn't need such cars.
The insistence on 3 bed semis drove the property boom more so than anything else the banks just facilitated this desire with the builders. Not everybody needed such property or still does. A lot of these new estates were built for demand. Friends of mine often went on about how they could get much bigger places further out and didn't mind the commute. That is a key element to the property boom.
People willing to commute a long distance pay for the fuel and then require all services to deal with the new estates.
Yes the government could have curtailed all this development but people seem to forget what the public were saying. Outrage at refused planning permissions, insistence that the banks loan more, pushing family to go guarantor etc... That was the people and it was easily as many who now blame the government and the banks.0 -
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'.
Did we have regulation pre-2008? Was it enforced? Is it adequate now? For example, what cash reserves does a Bank need to hold vs. loans - and is the risk acceptable?
I'm aware of who elected the Government, thanks - and it wasn't "everyone"!
Finally, I'll pass on joining the Golden Circle, thanks.
I sleep better at night when people who can ill afford it aren't expected to pay my debts (which at the moment consist of household utility bills, btw.)0 -
[/I]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.
If you'd read my posts you'd see that I'm not saying blame is solely on the people.
But that people need to recognize that they're not entirely free of blame.0 -
Bank shareholders really need to take action against the management who collapsed the institutions too.
There hasn't been enough accountability.
When you think about it, banks are largely owned by small shareholders and via pension funds who have traditionally been very inactive when it comes to the day to day management of the institutions.
Those people need to sue, as the banks basically destroyed *their* shareholdings.
If capitalism were working correctly, that's how those people would be held to account and how management would be kept on its toes at all times.0 -
The banks are regulated by the government. The government is elected by the people. Therefore the majority of the voting population of Ireland approved of the light-touch regulation, property boom, and all the other wonderful things that the Bertie/Fianna Fail years brought us.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.
The overpriced coffee and sandwiches just showed that people were not being careful with their money. But I think there was another angle to the overpriced rubbish that was sold during the celtic tiger. It helped to fuel the myth that if a coffee and sandwich cost the same as in New York, and an apartment in Dublin costs the same as an apartment in New York... Dublin is just like New York!0 -
The banks are regulated by the government. The government is elected by the people. Therefore the majority of the voting population of Ireland approved of the light-touch regulation
Never heard such shit in my life. The people don't even get a say as to who gets what position in the government when a party is voted in.0 -
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At the end of the day, its a mess of seismic fucking proportions that the generations above us have landed us in, and quite frankly they're fucked if they think I'm going paying for it.
This is an important and worrying aspect to the financial crises.
Future generations being forced to pay for the sins of others.0 -
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Ray Palmer wrote: »The popular opinion is and will remain that the bankers and the government are to blame.
The problem is it ignores all other contributors. There were lots of people with their hands in the cookie jar. Trades men were earning easily double what they would get now for a days work. They kept upping their rates. This pushed house prices up and also made renovations very costly.
The civil service insisted on bench marking without consideration to security or pensions. Remember all the teachers would be gone to the private sector if the pay rise wasn't made.
People lied on mortgage applications to get more money and got extra credit union loans.
Loans to buy bigger and better, used to be 30% of the cars on my road were new SUVs and I live in a Dublin suburb and these people didn't need such cars.
The insistence on 3 bed semis drove the property boom more so than anything else the banks just facilitated this desire with the builders. Not everybody needed such property or still does. A lot of these new estates were built for demand. Friends of mine often went on about how they could get much bigger places further out and didn't mind the commute. That is a key element to the property boom.
People willing to commute a long distance pay for the fuel and then require all services to deal with the new estates.
Yes the government could have curtailed all this development but people seem to forget what the public were saying. Outrage at refused planning permissions, insistence that the banks loan more, pushing family to go guarantor etc... That was the people and it was easily as many who now blame the government and the banks.
+1
People being turned down for mortgages on the basis of affordability and saying
"F*ck you. I'll take my business elsewhere" and then borrowing from another institution.0 -
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KyussBishop wrote: »The banks didn't meet any demise either; they have been bailed out.
What a load of crap.
Do you know how many jobs have been lost in Irish-based banks [state-owned and foreign banks] over the last few years?0 -
That's kind of ancillary to the point I was making in my post; the banks are certainly in pretty bad shape, I don't deny that, but they are still there for now, they haven't met their demise.nlgbbbblth wrote: »What a load of crap.
Do you know how many jobs have been lost in Irish-based banks [state-owned and foreign banks] over the last few years?0 -
KyussBishop wrote: »That's kind of ancillary to the point I was making in my post; the banks are certainly in pretty bad shape, I don't deny that, but they are still there for now, they haven't met their demise.
Shareholder value has been wiped out, the owners lost billions.0 -
It was because we turned are back on Jesus. Religion does nasty things if you turn your back.0
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Yep. I'm still shocked by the failures of basic financial literacy that were involved. Taking out 40-year mortgages at age 30, which means assuming that you'll still be working and making mortgage payments at the age of 70. Oh, wait, maybe not, since you'll always be able to sell at a profit, since house prices always go up ... right? Got to get on that "property ladder", since they aren't making any more land, are they ..? :rolleyes:
So people didn't spot the property price bubble, or even if they did, perhaps they thought "I'll sell at the top of the market". Well: by the time it's clear that a bubble market has hit its top, it's too late for people in that market to do anything about it. Try and sell your overpriced asset, and you quickly find that no-one's buying, because everyone knows that the market is going down. Irrational exuberance sent it up ... there's a reason why it's called a "bubble". Pop.From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, ‘Look at that, you son of a bitch’.
— Edgar Mitchell, Apollo 14 Astronaut
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This is an important and worrying aspect to the financial crises.
Future generations being forced to pay for the sins of others.
When people tell me that the recession in the 80's was way worse than current, I ask them are they still paying for it to this day. Because that's what we've been dealt. At least we can be sure on the fact that Ahern and co can't take their handsome pensions to the grave.0 -
Never heard such shit in my life. The people don't even get a say as to who gets what position in the government when a party is voted in.
You have led a very sheltered life, and I do not get your point about who is in what position. Everybody knew what Fianna Fail stood for (self enrichment through property investement) and the majority (not everyone) voted them in, tacitly approving of their economic genius.
"The government" represent the people who elected them. There were very few people shouting "stop the property boom".0 -
+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.
And what about the people who drew down such loans?
Should they be charged and jailed too for reckless borrowing if they are unable to meet their repayments?
I don't make decisions on the size of loan I'm going to take out on the basis of the amount some bank employee is willing to lend me. I'm going to look at how afforadable it is for me to make the re-payments. I'm going to stress-test the re-payments for higher interest rates, drops in income and changes in my personal circumstances.
A mortgage is most likely the largest sum of money you will ever borrow and you'd want to be very sure as to your capacity to meet the repayments before you draw it down.
Am I just a weirdo for doing this? Did most people just drop into thier lending institute and ask them the maximum amount they would lend them?
For every reckless loan advanced there was a reckless borrower involved.
Rallying cries of charging and jailing bankers are all well and good to release a bit of frustration, but what are you charging them with exactly? How will you prove these charges in a court of law?
By all means let's introduce appropriate regulation and legislation to try to prevent this from happening again. But it would be nice to see Irish people learning from this mess as well. How about an electorate that rewards Governments for prudent economic management of the country as opposed to one that elects the chancers that promise the most? Look at the Shinners, out there whispering in people's ears about how they'll burn the bond holders and abolish the property tax and won't cut Social Welfare or public servant pay. Seems to me that this kind of bull**** works on enough people to make it worth their while.
Unless this changes, we'll probably make the same mistakes in the future.
But sure if it does happen, we'll just charge and jail a few bankers and we'll be grand.0 -
Frank Black wrote: »And what about the people who drew down such loans?
Should they be charged and jailed too for reckless borrowing if they are unable to meet their repayments?
I don't make decisions on the size of loan I'm going to take out on the basis of the amount some bank employee is willing to lend me. I'm going to look at how afforadable it is for me to make the re-payments. I'm going to stress-test the re-payments for higher interest rates, drops in income and changes in my personal circumstances.
A mortgage is most likely the largest sum of money you will ever borrow and you'd want to be very sure as to your capacity to meet the repayments before you draw it down.
Am I just a weirdo for doing this? Did most people just drop into thier lending institute and ask them the maximum amount they would lend them?
For every reckless loan advanced there was a reckless borrower involved.
Rallying cries of charging and jailing bankers are all well and good to release a bit of frustration, but what are you charging them with exactly? How will you prove these charges in a court of law?
By all means let's introduce appropriate regulation and legislation to try to prevent this from happening again. But it would be nice to see Irish people learning from this mess as well. How about an electorate that rewards Governments for prudent economic management of the country as opposed to one that elects the chancers that promise the most? Look at the Shinners, out there whispering in people's ears about how they'll burn the bond holders and abolish the property tax and won't cut Social Welfare or public servant pay. Seems to me that this kind of bull**** works on enough people to make it worth their while.
Unless this changes, we'll probably make the same mistakes in the future.
But sure if it does happen, we'll just charge and jail a few bankers and we'll be grand.
Few, if any, bankers will be jailed because they didn't commit any crime, especially regarding lending money. Anyone who is convicted will be charged with offences related to manipulating accounts.
But the country is still full of high stool economists calling for "economic treason" charges and other assorted populist bull**** that doesn't exist. As usual empty vessels make the most noise so we will be hearing plenty more0 -
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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.0
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