Seriously uncomfortable questions!!!
 

I guess quite a few of you have been following the fortunes of various global economies and asking how our answers here in the UK shape up in comparison with other countries. I know I have as I'm seriously concerned about the effects this depression is going to have not just on us now but on the generations to come who have the backwash of this tragedy to pay off.

So a few questions that it would be interesting to hear your comments on:

Why, given that people in the street were expressing concerns over the ludicrous extension of all forms of credit from years back didn't the government foresee this inevitable crash?

If as they keep suggesting there was no way that they could have forseen it doesn't it present the frightening prospect that the government is totally economically inept?

Why were the banks allowed to go unregulated for so long? Will it not now be essential to regulate how they function in the future?

Why were £billions thrown recklessly at the banks, particularly RBS which we now own around 70% of without any insistence on executive powers being given?

Is it right given how RBS has been funded that its employees are being given £billions in bonuses? Admitedly there are some contractual considerations but in these unprecedented circumstances, where regulation can be relaxed to allow the tragic merger of 2 banks against current legislation can't/shouldn't those contracts be revised?

How much further do you believe the banks will need to be baled out using our money?

Is the horrendous credit situation entirely the fault of the banks for encouraging the lending or does blame in part fall on those who took on the credit knowing in all honesty that they could never pay it back?

How will rapidly declining numbers of people in work be able to fund the welfare state to cater for those not working? Without increasing taxes is this possible? If increasing taxes on the higher earners does that encourage them to be innovative and earn more just to pay it all back in tax?

Is the concept of established businesses relying heavilly on credit to be able to function fundamentally flawed?

Is it fair that those who have lived responsibly and invested hard earned savings are getting such poor levels of interest having played no part in the financial meltdown?

Does anyone believe that the £50,000 government guarantee on your bank deposit is likely to be viable should a bank go pop?

How do we justify forcing the banks to start lending again when irresponsible lending/borrowing has been the root cause of our situation? Doesn't it potentially just restart the same cycle?

Do you believe that this will be the biggest financial depression in history?

How can we encourage people, particularly the younger generations, to return to a savings ethos rather than a massively credit based one? Isn't it imperative that this happens?

What will the true unemployment figure be at the trough of this depression? Is 3 million a conservative estimate? Should we include in the figures people who are in further education on courses that will never fit them for wark afterwards?

Is it right in the current employment crisis that a contract for new railway equipment went to a Japanese company rather than being used to protect jobs and cashflow in the UK by using a UK contractor?

Just a few of many, so what do you think? What other issues concern you in these worrying times?

Paul

Will be for me, spent all mine on the 848 :lol:

Im ok I have mine in HBOS/Lloyds surely Brown wont let them go bust now !!

Interesting points Paul. In one word that will answer most points GREED
One thing my father taught me was, it you cannot afford it you dont have it. I have no debts and what I have is mine. Its all so easy to to have what you can afford Buy now pay later get in as much debt as you can a Live today Die Tommorrow attitude.
I hope to think that the new youth of today will take heed of events that have unfolded and like the drink driver scoured upon for there stupidity and selfish behaviour.
What we need is a Goverment with a bit of backbone and start to get to grips with the true state of this country. Sure we should have British jobs for British workers but many British workers are working in the EU now ?
Does it really pay to have money and savings in this country it seems the less you have the more you get.
Nationalize the banks and the railways. Ban the word profit and put shareholders down the mines and see them earn a living, not make it on the sweat of other. Dont pay Dole money out unless its earned and stop paying Scroungers from outside Britain or only those with a NI number and have at least contributed some thing.
As you say its going to get worse before it gets better and only the MT ooops sorry Goverment with a big stick will get us out of it,but then all we will hear is the do gooders and Human Rights brigade bleating
You can't win Ill just get back under me rock 4D

As Fordie says. If you can't afford it, don't buy. The good thing is that you will not be any sadder without it.

I Asked my bank manager this very question last week, Like most small Companies We have this thing called Profit, We put it into a bank to-
A. Buy new stock to make even more Profit
B, Save it for a period when times are a little more difficult.
C, Pay ourselves a wage.
Apparently the companies that rely on Credit to Operate have this the wrong way around, and the Likes Of RBS are quite happy to let them do it....
I'm Glad Im with Barclays.

private equity is far worse

Because Gordon Brown didn't want to scare of the wealthy investors. They've been pulling his strings for years and he's been scared stiff of them taking their money abroad. The tax incentives given to the mega rich over the past few years are disgraceful.


Totally. Whilst much of this crisis is global, much of GB's policies have led to the problems being worsened for the UK.

They've gone unregulated becuase of the huge sums of money they were playing with. GB has seen private equity investment as being the cornerstone of UK growth and hasn't wanted to do anything to cause that investment to go elsewhere. Now that the bubble has burst I think he'll have no choice but to introduce regulation.

I reckon history will prove this to have been a disastrous mistake. It was an ill-thought out knee jerk reaction. GB missed a golden opportunity to force the financial institutions to fall in line. It became apparent when the BoE reduced interest rates by 1.5% and Darling had to summon the heads of the banks to Downing Street to ask them nicely to drop the mortgage rates. It was all spin. Has he done it since following further rate cuts? No he hasn't because they'll tell him to sod off. A few have dropped a bit but not one of them has passed on all the reductions, especially Northern Rock who we apparently own in entirety.

Quite a bit I reckon. I don't think the full scale of the problem has been identified yet. The banks are blaming the problems on lending to the home owners but the real problem lies with the billions that were lent recklessly to the private equity markets, and as share prices collapse and companies go to the wall, the banks' exposure could be massive.

I think that the banks' problems are down entirely to the banks. They've got involved in areas they didn't understand, they've packaged and marketed dodgy loans as securities, and then conned themselves by passing these toxic securities around as investments. They've got so wrapped up in making ludicrous amounts of money that they've lost sight of reality. Nobody forced the banks to lend the money.

Yes and no. Before Christmas my company needed to extend it's overdraft. Not because I had managed anything badly but because a couple of customers fell behind settling invoices. The amount owed amounted to over £30k. This was over and above our normal £60k of trade debt. Without I could not pay suppliers and could not continue trading. The bank didn't have to extend their lending to me, it was their choice. They chose not to. If they had then we could have traded through the problem.


To answer this then you need to remember how banks make their money. They earn interest from LENDING money to borrowers, charged as interest. To get the money to lend out, they have to get investors to lend it to them. The only way they can do that is by paying them interest, which they do at a lower rate than they lend it out. The difference is the profit. Ultimately they don't really care what the interest rate is as long as the difference between the lending and borrowing rates remain the same. They still make the same amount of profit if the gap remains at 2% if the rates go up or down.
And that's banking in it's simplest form. The problems for the banks have not come from the high street activities of borrowing to lend, but form the greedy investment parts of the banks to earn a fast buck.

It wasn't lending to UK mortgages that has been the root of the problem, but the lack of lending to mortgage borrowers is now impacting the UK economy.

Yes

I don't think so. As long as the loan and the interest gets repaid then what's the problem. A mortgage is just a secured extended loan. We don't tell people to save for 18 years before buying their first home.

A few months ago I forecast 2 million for then end of 2008. I was right. I can easily see this getting to 3 million by the end of this year.

UK contractors were invited to tender for the contract. The Japanese bid was more attractive. We have to accept that we now operate in a global economy.


I try hard not to just blindly accept what is put out on the news and in the press. I think after all this is over and the post mortem is carried out, it will not be as cut and dried as it appears at the moment. I really do hope that all the facts come out and that those responsible for this mess are held to account, although I somehow doubt it.

In short, no one wants to ***** a bubble! be they politicians, bankers, brokers, financial pundits et al, one pricked however, the media have done a fine job in re-inforcing the financial and mental depression of the nation!

oh for the days of quill, chalk and slate board eh pete ;) :lol:

Hello

I personally think, the reason we are as a nation in a worse situation than our counter parts,
is due to the fact many countries saw the UK as a free for all with regards to the financial sector.
Icelandic banks case in point. The government opened the doors to anybody without regulation,
and was happy to allow them to sell their wares to the public. Encouraging mass dept amongst the populace
with mortgages set at in some case 100% of earnings.
What was the song of the opening Blair Years “Things can only get better”


We are constantly being told it’s a world recession, but Gordon Brown was the chancellor or the exchequer
for a good few years, and I believe he must of known that this open market, would result in a down turn,
and come back to bite. So now he has instructed Alistair Darling to throw money at the banks to try and kick
start the market reduce VAT etc . . Which I believe will not solve the problem.


People are now pulling in the purse strings, as savings are being hit, and bills are rising out of control,
and the government hope we will spend our way out of recession? On top of that the bank bosses
sit around apologising to its share holders and claim they never perceived the economy would react in this way?
I honestly believe there were many who had the foresight to predict these times,
but their advice was not sought or acted on. Its all doom and gloom for the perceivable future,
and hard times are a coming and it looks like nobody will take the blame or be held accountable.
Which sounds about right, from the people playing with our money.

TopiToo

Wow!!! Some great debate and responses guys. I did wonder if I'd just get a "pi$$ off you miserable old git" reply but these issues have obviously provoked a lot of thought, quite understandably.

I believe it will end up being by far the worst crash in history and just hope that most of you manage to ride it out. Fortunately I did see it coming and have for the past 6 years been "saving for a rainy day", we are without doubt in monsoon season!!!

I've always adopted Fordies attitude "if you ain't got the cash you can't afford it" apart from the house which was bought on a mortgage and paid off within 5 years as planned

Unfortunately those of us who have acted in that way will still have to fund the recovery caused by the irresponsibilities of others be they lenders or borrowers.

Paul

And that has been one of the major problems with our modern society, people just want it now. From my own experience, Bev's son Ben was given a £7000.00 credit card without even asking for it and this is happening all over the place. Young people and even older people are just using the so called "Equity" in their over inflated priced house to fund an ever more luxurious lifestyle, me, I say lets get back to basics as Fordie says.

My biggest worry is now if I lose my job how will I get another, at fast approaching 50 my skills are as good if not better than most of the people I work with but when it comes down to getting an interview the younger will almost certainly get a chance.

Any how lets try talking up the country and maybe some of it will rub off.

you guys with cash to burn are so lucky :rolleyes:

banks will be back in profoit next year, hopefully the greed-driven heads will have been guillotined (spellinh?!) and thiose left will resemble once again the community-led ethos which institutions such as banks were...and with real luck private equity will collapse and all those to$$ers who make billions on teh back of other will end up penniless!!

Funny thing I found Paul.......more effort I put in the luckier I got ;)

Never did much more than get by until I started working for myself running my own businesses. It isn't for everybody but I've been fortunate enough to find some niche markets that have worked for me given my engineering background.

What we need is more genuine entrepeneurs as it is they and not the government who create and always have created real jobs and overall prosperity for the country. The problem I foresee is that they will again be crushed by penurious taxation, the last thing we need if we are to get back on our feet.

Murray has touched on a really serious worry; with the government having allowed our manufacturing heritage to be lost, lack of real training for engineers and for people who can leave university with a degree that suits them for a real job I can't see how the economy can genuinely pick up.

The government go on about the 250,000 skilled vacancies that we have no people to fill, what an admission of abject educational failiure!

The major economies of the world rely on consumerism; China which has witnessed an absolute manufacturing boom will I predict be very badly positioned to ride this out as their rise to heady economic heights has largely been down to selling to the affluent West. With the scarcity of credit people can no longer buy the luxury items they were buying well beyond their means, the manufacturers will not be selling product and will in many cases go bankrupt leading to more unemployment, less people paying into the government coffers and more drawing benefits in an exponentially increasing downward spiral.

The $64 million question is when does it touch bottom.

Help in the worng place!
 

Having been recently hit with the news at as of next Tuesday (24th) I'm unemployed (again) from the auto industry, I am seeing things first hand as well.

Companies are pulling in their belts with decining sales, stopping investment in new/better products, as their cash flow dries up.

The government says it is going to hep the companies by pouring cash into them, the same way it is propping up the banks, who seem to be vast black holes for 'our' money.
It also says 'we' are going to spend our way out of recession, but how can 'we' if 'we' haven't got any money to spend and the the loans have all dried up?

Instead of pouring more and more into the banks, how about setting up a sort of guaranteed loan scheme to individuals for environmentaly friendly products?

Say if you wanted / needed a new car/van, how about an interest free bank loan over 5 years, guaranteed by the government on identified 'eco' products?
That way, people would have more incentive to buy, companies would get the boost in sales, banks get their cut as they normally do, money filters through the sytem, everyone is working again, and can afford the loans to buy new / better products.

Pouring 'bad money' after 'even worse money' is not helping anyone and making the situation worse!

Or am I missing something here?????

Not sure you are missing much in what you say Mark, the government in their infinite wisdom have a new plan in the wings to help the car industry by some sort of trading in scheme that allows people to offset the new car price against an artificially high price for their old car. Can you recall last year how the housing industry was "helped" by rumours of a change in stamp duty? Virtually brought the market to a standstill while people waited on the rate cut decision. I think the same will apply here.

You've hit it spot on IMHO: how can we "spend our way out of recession" when nobody has any money irrespective of how much credit they can get hold of. I've got a great idea.......why don't we get the banks to lend zillions of pounds to people who can never pay it back then encourage them to buy a load of old **** they don't really need and can't afford. Wouldn't that work? Well at least until the banks had to pull the money back in. Didn't something like that happen recently ? :rolleyes:

Hope you do find another job Mark, not sure what your background is within the industry but I think anybody who can be flexible will be in with the best chances.

there are more that start and fail than succeed

and effort is no gurantee of success if the concept, ides etc is not the 'right' one

Very true Paul, many unfortunately fail due to having a flawed game plan at the outset, the old adage of "sticking with what you know" isn't far off the mark.