"it's The Banks That Caused It"

[curious1]

The bank bailout did not only consist of purchasing shares that now make a profit, that is a smokescreen put forward by bankers.

Since the crisis started the Treasury have been purchasing non liquid/performing investment vehicles from the banks at 95% of bank self-valuation(think about it) and the banks have been reinvesting the cash in Gov Bonds, therfore getting interest on borrowings that they got from the taxpayer..... They were supposed to use the money to get industry running again by keeping borrowing going. They instead stuck it back to the Treasury and are now getting interest paid.

The government had to insure the depositors money and stand behind the banks.......that guarantee has a value and a cost.

Specific banks were given cash injections.

Anyone who says the banks were innocent must be a banker or has blinkers on. The blame sits very squarely with the banks. The shareholders of all UK banks should have been wiped out and bond holders should have been given big haircuts. None of this happened as would have happened with any other business, any treasury money should have been use purely to make depositors whole. The taxpayer is now holding all the bad assets and are currently paying the banks interest on cash that the banks borrowed from the taxpayer......every single day.

Good post.

I'd be fascinated to see the evidence and figures to get an idea of the scale of this scam and cost to the taxpayer...

I'm neither a banker or wearing blinkers, I'm merely...erm...curious. (and mildly macro-economically illiterate)

[South Lorne]

or even

"Dear Shareholders. We have decided to limit mortgage lending to 2x salary because we believe that current lending trends fraud will lead to significant future macroeconomic instability. We expect this to impact our bottom line by X% and reduce our dividend by Y pence in the pound. We also believe this will help prevent our current directors being subject to future potential litigation."

How do you think the shareholders would respond to that ?

.....more likely to have upset the Government of the day than shareholders .....would also have prevented Bank from going bust and protected shareholders....would have ruined the bubble for the architect of the Crash ...the Brown Gordo ....

[eric pebble]

.....more likely to have upset the Government of the day than shareholders .....would also have prevented Bank from going bust and protected shareholders....would have ruined the bubble for the architect of the Crash ...the Brown Gordo ....

Yup - that ar$e Brown - he should be strung up - he was an evil sh t.

[Byron]

In America, it is becoming more and more apparent that the banks caused it facilitated by bribed/ captured regulators and politicians. In the housing market they:

- mis-sold mortgage-backed securities to investors

- destroyed the mortgage documentation that would have incriminated them in mis-selling

- forged new mortgage documents to enable them to foreclose on delinquent mortgagors

Furthermore, a senior retiring judge has claimed that the court responsible for settling commodities and derivatives lawsuits made agreements with the banks that there would be no judgements against them - judicial capture. Remember derivatives, specifically intertwined CDS contracts on financial firms, were responsible for the meltdown in the synthetic CDO space, financial fraud by banks looking to 'boost' their capital position and the AIG crash of 2008.

And the FBI claimed there was an epidemic of mortgage fraud back in 2004, after which its officers were promptly reassigned away from financial fraud

In America, the mortgage banking system is corrupt and criminal to its core.

Quite how much the same applies here we don't know. But we do know that London was a favoured destination for financial companies engaged in fraudulent accounting because of its 'light touch' regulatory structure. The AIG group responsible for the meltdown in September 2008 worked out of London

We also know that banks have received vastly more in bailouts than those equity injections. ZIRP and record net lending margins, the QE Santa Clause for primary dealers, state guarantees on toxic assets, fraudulent mark-to-model accounting to enable banksters bonuses to be paid off those toxic assets, the liquidity schemes, predatory lending practices, Geithner's corrupt auction process for toxic assets... the list goes on and on, yet is not captured in those graphs. Banks directly benefit from the inflationary policies of central banks, while the rest of us see our purchasing power decline

The deficit was caused by a credit bubble that encouraged government overspending in 'good times' because it didn't look like overspending then. The banks are directly responsible for the size of that bubble, along with accommodative monetary policy coming from the Fed, BoE and BoJ and regulatory malfeasance. Because the malfeasance is mostly down to politicians and regulators taking bribes, and the central banks are effectively controlled by certain private banks, I would suggest they bear the most responsibility.

We actually require a 'Nuremberg' type judicial process to punish those responsible

Cannot really argue against what you say. But the rise in public servants is fuelled by public demand for more laws, more protection from whatever. Hence the Greens wanted recycling=Bin Police, Health Fascists wanted no smoking=smoking advisors. The list goes on and on. The government granted these demands until it ran out of money.

Exactly what laws would you keep, amd which would you scrap?

Everybody would have their own lists. That's why we have 'Single parent outreach co-ordinating, disadvantage detecting Local Authority employees.'

Remember Labours election slogan?

'A future fair for all'

They didn't say how much it would cost.

[threesixty]

The deficit wasnt directly caused by the banks. Thats correct, the US and the UK have been running unusually high deficits for years and have been warned about the consequences (there was even a bbc doc about it a few years back).

However the deficit is a symptom of the expansion of credit for which the US and American Goverments of the last 10 yrs are completely to blame.

We only have a deficit because governments have been able to borrow so cheaply that it (at the time) didnt make sense to them to save because it was the "velocity" of money and the expansion of the money supply (monetarism) that they felt kept everything going.

They never envisaged that sentiment could get so low that money just stopped moving around as it did. Its the emperors new clothes all over again. Even now with the cuts Labour are still spouting the same flawed economic principles that belong in a laboratory and not in the real world.

The theory of monetarism doesnt work under the extreme pressure of reality. Its like you continuingly lending money to a friend who has shown you his bank statements that say he's got zero money in the bank and been signed off work for the next 10 yrs. Its absolute madness to expect confidence not to buckle in the way it did.

We spend hundreds of years building sound business principals that are proven to work and then throw them out the window when the latest fad theory comes in. The credit situation is like the Atkins diet of money. It works for a bit but its unsustainable.

I find the morality of the left on this issue absolutely sickening at the moment. There's nothing worse than a man who cannot admit when he is wrong. I dont know if they are just evil or dillusional.. I just cant tell anymore..

[bogbrush]

Brown nationalised the banks for a laff, something to do - just for fun. They didn't really have any problems and were doing fine. Eric's rants about Liar Loans have no foundation in truth, the banks were honest and never made a mistake. Securitization was a good idea. Gordon Brown moonlighted from his job as UK PM to run the economies of the USA, Ireland, Iceland, Portugal, Spain, Dubai and a host of other places that are in the sh1t. No, I have no idea at all why the world's press or economists cannot see that it was all Gordo and that the collapse of Lehman Bros was due entirely to an over-order of teabags by the Food Standards Agency.

If people are going to start spotting that the annual deficit was there long before a banking crisis, when there was supposed to be a boom going on, you'll have to slap them down every time they do, eh?

[eric pebble]

Did the bankers cause this??

Huh!!

Coming soon - it should be gooooooood!!

http://www.sonyclassics.com/insidejob/dates.html

[Riedquat]

But interestingly poses less of a threat to me personally than a person for whom :

"the law most certainly does not define what is and what is not acceptable."

I ask again then - why else is the law what it is? Because it attempts to reflect what is and is not acceptable. If it's the other way around then the law could say any random thing - "You must spend an hour a day standing in a bucket of cold porridge", and it would be unacceptable not to. If it's not aiming for that then it serves no purpose (it's also ridiculous to assume that it'll ever achieve that, due to historical baggage, differences of opinion, and being sensible enough to realise that slight unpleasantness doesn't merit the law getting involved.)

There are a few other points I would make in response, but this discussion is going a bit off topic.

Imagine the MD of Big Bank PLC in 2005. At the AGM.

"Dear Shareholders. We have decided to limit mortgage lending to 2x salary because we believe that current lending trends will lead to significant future macroeconomic instability. We expect this to impact our bottom line by X% and reduce our dividend by Y pence in the pound. We also believe this will help prevent our current directors being subject to future potential litigation."

How do you think the shareholders would respond to that ?

By being part of the problem no doubt and therefore also being responsible for the final result. I'm struggling to see what argument there can be for not having to accept the reponsibility for the consequences of your actions, no matter what excuses were used for those actions in the first place. If I leave £1000 in cash next to an open window and someone leans in and takes it then they're still a thief, and still completely responsible for that theft, and whatever consequences they face if they get caught. The fact that I was an idiot to leave it there doesn't change any of that. All rules do is make clear what situations are more likely to result in others trying to force negative consequences on you personally.

[eric pebble]

We spend hundreds of years building sound business principals that are proven to work and then throw them out the window when the latest fad theory comes in. The credit situation is like the Atkins diet of money. It works for a bit but its unsustainable.

Mmm....... I like that quote.

[South Lorne]

I find the morality of the left on this issue absolutely sickening at the moment. There's nothing worse than a man who cannot admit when he is wrong. I dont know if they are just evil or dillusional.. I just cant tell anymore..

..... ......both "evil and delusional"....... ......pull yourself together man ...you can tell .....

[stormymonday_2011]

Excuse me for being stupid, but I'm struggling to see where the claim that the deficit is entirely the banks fault comes from....

If the banks caused it, the argument must be that they caused the inbalance between government expenditure and tax receipts.... one assumes through a collapse in tax reciepts as a result of the economic woes.

The problem I have is that I cannot see any evidence that the credit crunch is the direct cause of the 160bn deficit the country is currently running at....

Here's the tax receipts for the last 50 yrs....

http://www.hm-treasu...es_databank.xls

In fact as Reuters correspondent John Kemp pointed out in an article it is the levels of Private Debt that is unprecedented and that threatens both the financial and economic systems of the US and the UK

http://www.reuters.com/article/idUSTRE50I4BU20090119

There is also the small issue of the UK monster current account deficit in traded goods and services

George Osborne has done nothing to tackle these issues yersterday . In fact they may well be about to get a whole lot worse.

All discussed on HPC in the past

http://www.housepricecrash.co.uk/forum/index.php?showtopic=144676

Edited October 21, 2010 by realcrookswearsuits

[needsleep]

Not everybody agrees with Hayek but in 1935 he described exactly how unregulated financial institutions can damage an economy. And it came to pass, as a result of Maggies policies and Labour's willingness to continue them that the shadowing banking system grew and grew with London as its global centre. And lo and behold we were ******ed over by leverage, hedge funds, CDOs, CMOs etc... etc... etc..

http://mises.org/books/hayekcollection.pdf

"The characteristic peculiarity of these forms of credit is that

they spring up without being subject to any central control, but

once they have come into existence their convertibility into other

forms of money must be possible if a collapse of credit is to be

avoided. But it is important not to overlook the fact that these

forms of credits owe their existence largely to the expectation

that it will be possible to exchange them at the banks against

other forms of money when necessary, and that, accordingly, they

might never come into existence if people did not expect that the

banks would in the future extend credit against them."

The mainstream banking sector isn't necessarily where the blame lies. It also lies with the shadow banking sector and the ways that mainstream banks interfaced with it and evolved as a result of their interface with it. It lies with governments for letting this danger build up over decades. It lies with the public as well, the people that provided the demand.

[wonderpup]

The distinction between the banks and the political class is less and less worth making- but any theory that tries to get the bankers off the hook has to explain why the entire world economy went into meltdown at the same time as the bankers securitisation fraud blew up.

As to the notion that the bankers were compelled to behave badly because of the conditions created by governments- I refer you to my dog.

If I leave my lunch unattended on the sitting room table my dog will have the self control not to eat it because he knows it does not belong to him.

I would expect a banker to be capable of a similar level of moral discrimination and self control as my dog. Is this too much to ask?

Apparently it is, since the bankers have eaten everyone's lunch and are now coming back for more.

Edited October 21, 2010 by wonderpup

[eric pebble]

I would expect a banker to be capable of a similar level of moral discrimination and self control as my dog. Is this too much to ask?

Apparently it is, since the bankers have eaten everyone's lunch and are now coming back for more.

Put poison it it!!

[South Lorne]

The distinction between the banks and the political class is less and less worth making- but any theory that tries to get the bankers off the hook has to explain why the entire world economy went into meltdown at the same time as the bankers securitisation fraud blew up.

As to the notion that the bankers were compelled to behave badly because of the conditions created by governments- I refer you to my dog.

If I leave my lunch unattended on the sitting room table my dog will have the self control not to eat it because he knows it does not belong to him.

I would expect a banker to be capable of a similar level of moral discrimination and self control as my dog. Is this too much to ask?

Apparently it is, since the bankers have eaten everyone's lunch and are now coming back for more.

...yes ....but without the Bankers and their securitisation Brown would not have had his 'miracle economy' .....he encouraged the Bankers who were his Bubble of Britain friends....and the fraud of the liars applying for loans with false data on the other side of the counter within every High Street in the country contributed.....there was a culture of greed throughout the land .....

[eric pebble]

...yes ....but without the Bankers and their securitisation Brown would not have had his 'miracle economy' .....he encouraged the Bankers who were his Bubble of Britain friends....and the fraud of the liars applying for loans with false data on the other side of the counter within every High Street in the country contributed.....there was a culture of greed throughout the land .....

Yup - just like - without petrol/diesel, a car can't go. You HAVE TO HAVE the fuel. The Banksters provided it in abundance in the form of

LIAR LOANS.

[Injin]

Excuse me for being stupid, but I'm struggling to see where the claim that the deficit is entirely the banks fault comes from....

If the banks caused it, the argument must be that they caused the inbalance between government expenditure and tax receipts.... one assumes through a collapse in tax reciepts as a result of the economic woes.

The problem I have is that I cannot see any evidence that the credit crunch is the direct cause of the 160bn deficit the country is currently running at....

Here's the tax receipts for the last 50 yrs....

http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963

Here's a graph of private and government debt.... which suggests that the rate of increase of debt hardly changed during the crisis.

http://lightwater.files.wordpress.com/2010/01/mckinsey-international-debt-chart.

UK Gov spending.... where's the big jump due to the "bankers"?

http://flipchartfairytales.files.wordpress.com/2009/09/uk-public-spending-total.png

Now, I accept there's been money thrown into the economy to boost public sector spending to ease the effects of the global slowdown, but none of these graphs show much rate of change between what we were spending before the crisis and after...

Am I missing something?

Fractional reserve banking.

Zero capital banking.

Basel 2 banking.

or basically, lying that you have money when you don;t but it being enforcable in law if the victim doesn't notice and object.

Telling everyone that there are 30x more resources than there really are causes malinvestment. The ability to steal from the wider economy via inflation means the political class doesn't have to pay much attention to what the man in the street actually wants to happen, and so they can get up to all kinds of things which simply must end when the FRB system stops working due to the fraud being revealed.

This means the government is malinvested, the population is malinvested and all future plans are a nonsense based on lies.

The malinvestment has to be revealed and liquidated for the economy to recover. Given that they started inflating in earnest 30 years ago, we are in for a very bumpy ride to get where we should be.

[Gigantic Purple Slug]

I ask again then - why else is the law what it is? Because it attempts to reflect what is and is not acceptable. If it's the other way around then the law could say any random thing - "You must spend an hour a day standing in a bucket of cold porridge", and it would be unacceptable not to. If it's not aiming for that then it serves no purpose (it's also ridiculous to assume that it'll ever achieve that, due to historical baggage, differences of opinion, and being sensible enough to realise that slight unpleasantness doesn't merit the law getting involved.)

By being part of the problem no doubt and therefore also being responsible for the final result. I'm struggling to see what argument there can be for not having to accept the reponsibility for the consequences of your actions, no matter what excuses were used for those actions in the first place. If I leave £1000 in cash next to an open window and someone leans in and takes it then they're still a thief, and still completely responsible for that theft, and whatever consequences they face if they get caught. The fact that I was an idiot to leave it there doesn't change any of that. All rules do is make clear what situations are more likely to result in others trying to force negative consequences on you personally.

This response has just confused me.

I agree the law attempts to define what is and what is not acceptable. But to expect businesses to comply with self imposed restraints not required by the law is unrealistic (I believe this is what you said earlier).

If you ran a business you'd know that it's hard enough to comply with the regulation that is in place, let alone anything extra. Indeed, applying additional constraints in excess of the law is likely to make a business uncompetitive and ultimately unsuccessful.

Some businesses impose additional moral considerations on their actions (for example ethical investment). But this isn't because of some greater altrusim. It's because they want to attract a certain customer base and believe they can make money out of that business model. If they were really altruistic then they would register themselves as a charity due to the benefits they gain from this.

Businesses are generally too busy doing business to worry about what other businesses are doing, and whether the combined activity as a whole will lead to macroeconomic instability. In general regulation is developed from a collaboration of business and the regulators, with regulators asking for input from businesses and consultation processess taking place. I am sure that certain banks indicated to the government and the regulators long before the financial crisis took hold that the financial processes in place would lead to dangerous instability (and you can find examples of this in the press), but ultimately it is not for business to curtail their activities based on altruistic motivations as their ultimate responsibility does not lie with society, but in the interests of their shareholders.

Regulators are called regulators for a reason. Because they regulate the markets. The banks are participants, but they are not regulators. And when the market melts down due to inappropriate regulation, it's hard to hold the banks responsible.

Regarding your last example of the crime of theft. Yes, it is a crime and should be punished. As I have said before, if the banks have commited crimes then they should be prosecuted for them by the regulators and the government. But it's unreasonable to expect businesses to self regulate over and above the law and take issues like macroeconomic stability as part of their modus operandi. This is the job of the regulators and the government, who are elected on our behalf to protect us from systematic failure.

I believe your position is grossly idealistic, in which you live in a world where you hope everyone will behave and will take on responsibility over than what is defined by law in order to protect society. It would be nice if the world worked like this, but it doesn't. Rather than hopefully leaving people to behave themselves (which they won't), I'd rather have effective policing, laws and regulation that forces people to act in a responsible way condusive to the greater good (the greater good).

[Injin]

This response has just confused me.

I agree the law attempts to define what is and what is not acceptable. But to expect businesses to comply with self imposed restraints not required by the law is unrealistic (I believe this is what you said earlier).

Happens all the time.

If you ran a business you'd know that it's hard enough to comply with the regulation that is in place, let alone anything extra. Indeed, applying additional constraints in excess of the law is likely to make a business uncompetitive and ultimately unsuccessful.

Except the best businesses do in fact do that.

Some businesses impose additional moral considerations on their actions (for example ethical investment). But this isn't because of some greater altrusim. It's because they want to attract a certain customer base and believe they can make money out of that business model. If they were really altruistic then they would register themselves as a charity due to the benefits they gain from this.

Doesn't follow.

Businesses are generally too busy doing business to worry about what other businesses are doing, and whether the combined activity as a whole will lead to macroeconomic instability. In general regulation is developed from a collaboration of business and the regulators, with regulators asking for input from businesses and consultation processess taking place. I am sure that certain banks indicated to the government and the regulators long before the financial crisis took hold that the financial processes in place would lead to dangerous instability (and you can find examples of this in the press), but ultimately it is not for business to curtail their activities based on altruistic motivations as their ultimate responsibility does not lie with society, but in the interests of their shareholders.

As well, shareholders don't have to carry the can for bad decisions. Business would be a very different thing if you were responsible for the pensions of workers personally because you had a share, wouldn't it?

Regulators are called regulators for a reason. Because they regulate the markets. The banks are participants, but they are not regulators. And when the market melts down due to inappropriate regulation, it's hard to hold the banks responsible.

Regulators are there to put you to sleep so you can be robbed more easily.

Regarding your last example of the crime of theft. Yes, it is a crime and should be punished. As I have said before, if the banks have commited crimes then they should be prosecuted for them by the regulators and the government. But it's unreasonable to expect businesses to self regulate over and above the law and take issues like macroeconomic stability as part of their modus operandi. This is the job of the regulators and the government, who are elected on our behalf to protect us from systematic failure.

So people don't steal only because of the law?

Really?

I believe your position is grossly idealistic, in which you live in a world where you hope everyone will behave and will take on responsibility over than what is defined by law in order to protect society. It would be nice if the world worked like this, but it doesn't. Rather than hopefully leaving people to behave themselves (which they won't), I'd rather have effective policing, laws and regulation that forces people to act in a responsible way condusive to the greater good (the greater good).

You can't have it.

[Riedquat]

I agree the law attempts to define what is and what is not acceptable. But to expect businesses to comply with self imposed restraints not required by the law is unrealistic (I believe this is what you said earlier).

But that's not what I said (or if I did then it's because I got confused with what I was saying). I can only repeat yet again - the law (should) reflect, not define, what is and what is not unacceptable. How else do you define what the law should be?

Regarding your last example of the crime of theft. Yes, it is a crime and should be punished. As I have said before, if the banks have commited crimes then they should be prosecuted for them by the regulators and the government. But it's unreasonable to expect businesses to self regulate over and above the law and take issues like macroeconomic stability as part of their modus operandi. This is the job of the regulators and the government, who are elected on our behalf to protect us from systematic failure.

I believe your position is grossly idealistic, in which you live in a world where you hope everyone will behave and will take on responsibility over than what is defined by law in order to protect society. It would be nice if the world worked like this, but it doesn't. Rather than hopefully leaving people to behave themselves (which they won't), I'd rather have effective policing, laws and regulation that forces people to act in a responsible way condusive to the greater good (the greater good).

My position is not grossly idealistic because I can distinguish between what people actually do do and what they should do. I don't expect them to behave at all decently in real life. That doesn't mean that I don't think that they shouldn't. It's only unrealistically idealistic if I actually entertain some belief that they will behave themselves out of their own goodness.

So yes, it is unrealistic to actually expect businesses to self-regulate, but you appear to be treating it as if that lets them off the hook of being responsible for the consequences of their actions. It's unrealistic to expect thieves not to steal, but that doesn't mean they shouldn't. The fault of their actions lies entirely on them, not on the people who should've stopped them. Those people are just to blame for not doing their job, for letting the thief have the chance to steal. It does not for a second let the thief off the hook.

You appear to be getting hung up on the fact that the thief should be punished because it's crime. If it wasn't a crime - some legal cockup had accidentally removed theft as a crime, for example, or someone had thought up some brand new unpleasantness for their own gain, then your position would be to condone the action, or at least not actually condemn it. You only appear to have a problem with the action because it's been defined as a crime. It comes back to WHY is it a crime - society has decided that it's an unacceptable action, and happens sufficiently often to need some action taken against it.

If I were to go around leaving a load of broken, miserable lives in my wake, without actually committing a crime, you would be fine with that? After all, I enjoyed all those women I slept with then unceremoniously dumped who though they were in a meaningful relationship, all the poor saps who lost everything in games of poker with me, and so on (theoretical examples only !) And if I suddenly need their help they wouldn't be wrong to tell me to get stuffed - it wasn't my fault I exploited them, someone should've stopped me? Everyone else shouldn't shun me, knowing what a ******* I've been? And those are areas where the law can't really get involved.

There's also the issue of whether the problems were caused by malice or incompetence. I suspect the latter more often (mostly because people are better at self-justification than outright malice).

[wonderpup]

...yes ....but without the Bankers and their securitisation Brown would not have had his 'miracle economy' .....he encouraged the Bankers who were his Bubble of Britain friends....and the fraud of the liars applying for loans with false data on the other side of the counter within every High Street in the country contributed.....there was a culture of greed throughout the land .....

You are so trusting in some ways- do you actually believe that our securitising friends didn't know that half the mortgages they sold were crap? It would have been easy for them to insist on high lending standards- they chose not to do so, because this would have gotten in the way of the bonus party.

The bankers are at the root of this because they facilitated the perversion of the housing market into a ponzi scheme for their own short term profits- these people are fraudsters. They have defrauded their investors, many of who were pension schemes.

These people have f*cked the public several times over- through HPI, through credit crunch and recession, through destroying pension values.

I agree that Brown was an idiot- but I guess even he never imagined that the Bankers would end up running the biggest fraud in history.

Edited October 22, 2010 by wonderpup

[Injin]

You are so trusting in some ways- do you actually believe that our securitising friends didn't know that half the mortgages they sold were crap? It would have been easy for them to insist on high lending standards- they chose not to do so, because this would have gotten in the way of the bonus party.

The bankers are at the root of this because they facilitated the perversion of the housing market into a ponzi scheme for their own short term profits- these people are fraudsters. They have defrauded their investors, many of who were pension schemes.

These people have f*cked the public several times over- through HPI, through credit crunch and recession, through destroying pension values.

I agree that Brown was an idiot- but I guess even he never imagined that the Bankers would end up running the biggest fraud in history.

We knew, he knew and he's almost certainly got paid handsomely from it.

his job was to sell it to the public. Tony for the good times, Gordon for the bad. Kick Gordon out and all the right wingers can attack benefits and everyone will feel all better.

[eric pebble]

I agree that Brown was an idiot- but I guess even he never imagined that the Bankers would end up running the biggest fraud in history.

Anyone ever been to the City? Go there on a Friday lunchtime: Observe the arrogance, aggression, poncing around, preening.... etc. It is a sight to behold. And it is indicative of the reality.

[South Lorne]

You are so trusting in some ways- do you actually believe that our securitising friends didn't know that half the mortgages they sold were crap? It would have been easy for them to insist on high lending standards- they chose not to do so, because this would have gotten in the way of the bonus party.

The bankers are at the root of this because they facilitated the perversion of the housing market into a ponzi scheme for their own short term profits- these people are fraudsters. They have defrauded their investors, many of who were pension schemes.

These people have f*cked the public several times over- through HPI, through credit crunch and recession, through destroying pension values.

I agree that Brown was an idiot- but I guess even he never imagined that the Bankers would end up running the biggest fraud in history.

...in no way was it inferred the quality of loans was good ...in fact these bankers thought securitisation would dilute the risk of bad debt ......and therefore you are barking up the wrong tree.....and don't excuse someone like Brown who was close to the Bankers ....or the many greedy people on the high streets of the land on the customer side of the counter who lied in attempt to make a quick buck ....open your eyes ....

[1929crash]

The banks caused the financial system to sieze up because they sold derivatives and other toxic assets that were worthless.

They nearly went bust and were bailed out. In addition, because we have a debt based money system, there were deflationary effects as the money supply began to contract. The Labour government pumped money into the economy in the form of public sprending and QE.

In order to encourage liquidity interest rates were dropped, thus punishing savers, while toxic assets created by the banks' fraud have dropped a ticking timebomb into savings and pension funds.

The banks have borrowed money on the cheap from the BoE but the interest they demand on gilts does not really reflect the BoE's low interest rates. So more money transfer to the banks.

The CSR and the Budget hit the poorest hardest, while the banks have got away with a massive wealth transfer from taxpayers.