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Banker's Bonus Payments - A disgrace

JackanorySFC

By JackanorySFC,
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buctootim

buctootim

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Posted (edited)

Its the same argument imo. The banks losses caused the credit crunch which caused the recession. UK debt was 36% of GDP in 2007 (before the banking crisis), lower than the 40.5% inherited from the Conservatives in 1997. The explosion in debt since then is attributable to the banks, whether as direct bailouts or as a consequence of the recession caused.

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Whitey Grandad

Whitey Grandad

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Its the same argument imo. The banks losses caused the credit crunch which caused the recession. UK debt in 2007 was 36% of GDP in 2007 (before the banking crisis), lower than the 40.5% inherited from the Conservatives in 1997. The explosion in debt since then is attributable to the banks, whether as direct bailouts or as a consequence of the recession caused.

 

No, the banks were only one of many causes.

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Whitey Grandad

Whitey Grandad

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You can't just ignore tim's point though.

Which one? That the banks caused a recession that caught the government unawares? The banks did not cause this recession, just as they did not cause the previous ones. The government spent money that they did not have because they thought that the good times could 'only get better'. Just like everybody else who overborrowed. Are you going to blame the banks for lending to these people? Perhaps if they had imposed tougher lending criteria then things would not have collapsed so spectacularly, but you are really talking about American banks here in the North American housing market where people like Clinton were encouraging home ownership amongst people who could not really afford it. Once more than a small percentage started to default then everything went belly up and we were caught in the downdraught.

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buctootim

buctootim

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Which one? That the banks caused a recession that caught the government unawares? The banks did not cause this recession, just as they did not cause the previous ones. The government spent money that they did not have because they thought that the good times could 'only get better'. Just like everybody else who overborrowed. Are you going to blame the banks for lending to these people? Perhaps if they had imposed tougher lending criteria then things would not have collapsed so spectacularly, but you are really talking about American banks here in the North American housing market where people like Clinton were encouraging home ownership amongst people who could not really afford it. Once more than a small percentage started to default then everything went belly up and we were caught in the downdraught.

 

You're half right. The banks didnt cause previous recessions, but they did cause this one. This wasnt a uniquely UK recession, it was one created because people became afraid to lend and to invest (even if they had the money) because there was real and justified fear that many banks were on the verge of collapse (as indeed they were). This was entirely of the banks own doing - allowing themselves to get caught up in a herd mentality of reckless lending on highly speculative and improbable projects and taking worthless paper as security or collateral.

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Verbal

Verbal

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Which one? That the banks caused a recession that caught the government unawares? The banks did not cause this recession, just as they did not cause the previous ones. The government spent money that they did not have because they thought that the good times could 'only get better'. Just like everybody else who overborrowed. Are you going to blame the banks for lending to these people? Perhaps if they had imposed tougher lending criteria then things would not have collapsed so spectacularly, but you are really talking about American banks here in the North American housing market where people like Clinton were encouraging home ownership amongst people who could not really afford it. Once more than a small percentage started to default then everything went belly up and we were caught in the downdraught.

 

No, not the one which enables you to disappear into voodoo economics, but the comparative point about 97 and 07.

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bridge too far

bridge too far

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You're half right. The banks didnt cause previous recessions, but they did cause this one. This wasnt a uniquely UK recession, it was one created because people became afraid to lend and to invest (even if they had the money) because there was real and justified fear that many banks were on the verge of collapse (as indeed they were). This was entirely of the banks own doing - allowing themselves to get caught up in a herd mentality of reckless lending on highly speculative and improbable projects and taking worthless paper as security or collateral.

 

Wasn't I reading just the other day that one of the American banks (JP Morgan?) was in trouble because it had a hedge fund that bet on the banks (collectively) failing?

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buctootim

buctootim

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No, not the one which enables you to disappear into voodoo economics, but the comparative point about 97 and 07.

 

Depending on which figures you look at (eg including PFI or not; government debt only or including private debt) the difference can be even more striking.

 

UK debt end 1997 : 413,2 G£, i. e. 49,8 % of GDP (ONS)

UK debt end 1998 : 410,2 G£, i. e. 46,7 % of GDP (ONS)

UK debt end 1999 : 405,7 G£, i. e. 43,7 % of GDP (ONS)

UK debt end 2000 : 400,6 G£, i. e. 41,0 % of GDP (ONS)

UK debt end 2001 : 385,5 G£, i. e. 37,7 % of GDP (ONS)

UK debt end 2002 : 402,9 G£, i. e. 37,5 % of GDP (ONS)

UK debt end 2003 : 441,1 G£, i. e. 38,7 % of GDP (ONS)

UK debt end 2004 : 487,9 G£, i. e. 40,4 % of GDP (ONS)

UK debt end 2005 : 529,4 G£, i. e. 42,3 % of GDP (ONS)

UK debt end 2006 : 573,3 G£, i. e. 43,4 % of GDP (ONS)

UK debt end 2007 : 618,4 G£, i. e. 44,2 % of GDP (ONS)

UK debt end 2008 : 750,3 G£, i. e. 52,0 % of GDP (ONS)

http://cluaran.free.fr/debt.html

 

 

Interesting view here http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/09/why_banks_are_riskier_than_hed.html

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buctootim

buctootim

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Interesting that you raise Robert Peston. I blame him for the severity of the UK recession. All his talk at the time about how bad it could get and how we could be in for a 30's style slump must have been worth at least a couple of percentage points. Funny how he never saw it coming, did he?

 

So the banks didnt have an impact on the recession but Robert Peston did. Interesting analaysis.

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Whitey Grandad

Whitey Grandad

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No, not the one which enables you to disappear into voodoo economics, but the comparative point about 97 and 07.

 

Nothing of the voodoo about it:

 

http://uk.answers.yahoo.com/question/index?qid=20080917194649AAazgnj

 

http://www.moneyexpertise.co.uk/what-has-caused-credit-crunch.html 'The credit crunch cannot be said to have been caused by any one aspect; those who suggest that the current crisis has been caused solely by the ‘evils’ of fat cat bankers are painting an overly simplistic picture.'

 

The current (September 2010) view amongst economists is they still do not understand exactly what happened to cause the Credit Crunch, but that they expect to be able to keep debating it for years to come.

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Whitey Grandad

Whitey Grandad

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So the banks didnt have an impact on the recession but Robert Peston did. Interesting analaysis.

 

Please read what I said.

 

All commercial activity, be it banking, buying a new car, investing in new machinery, moving house, is based on confidence. Anything that undermines that confidence, that dissusades someone from making these choices, will reduce economic activity. The difference between 2% growth and 2% recession is very small and it only needs people to make their car last one year longer before replacement, or go without a holiday, or decide not to move house just yet and very soon you will get a 4% difference. Alarmist like Robert Peston would be well advised to keep their traps shut if they don't know what's going to happen.

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buctootim

buctootim

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All commercial activity, be it banking, buying a new car, investing in new machinery, moving house, is based on confidence. Anything that undermines that confidence, that dissusades someone from making these choices, will reduce economic activity. The difference between 2% growth and 2% recession is very small and it only needs people to make their car last one year longer before replacement, or go without a holiday, or decide not to move house just yet and very soon you will get a 4% difference. Alarmist like Robert Peston would be well advised to keep their traps shut if they don't know what's going to happen.

 

Replace Robert Peston with the banks and we agree. The global banking industry was on the verge of collapse because of massive losses on speculative investments - self inflicted wounds. That evaporated confidence, made people hoard money and reduced world trade. The banks made this recession - Robert Peston commenting on it is an irrelevance - unless his words are taken as gospel in the US, Japan, Germany, China et al. Reporting train crashes and causing them are two different things.

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Verbal

Verbal

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Nothing of the voodoo about it:

 

http://uk.answers.yahoo.com/question/index?qid=20080917194649AAazgnj

 

http://www.moneyexpertise.co.uk/what-has-caused-credit-crunch.html 'The credit crunch cannot be said to have been caused by any one aspect; those who suggest that the current crisis has been caused solely by the ‘evils’ of fat cat bankers are painting an overly simplistic picture.'

 

The current (September 2010) view amongst economists is they still do not understand exactly what happened to cause the Credit Crunch, but that they expect to be able to keep debating it for years to come.

 

The credit crunch was a liquidity crisis. Liquidity comes from the international banking system. The banks themselves got hooked like cheap junkies on derivatives. You could have an argument about what 'caused' the sudden flight from derivatives - but not that derivatives and similar financial instruments were piling bad debt on top of bad debt as they spiralled ever upwards in international trades. A bank-stoked bubble.

 

Not one of those links you quote demonstrates the point you keep pushing beneath the surface, that Labour's 'overspending' substantially caused the crisis. So let's get back to tim's comparative point about debt in 97 and 07.

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Whitey Grandad

Whitey Grandad

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Replace Robert Peston with the banks and we agree. The global banking industry was on the verge of collapse because of massive losses on speculative investments - self inflicted wounds. That evaporated confidence, made people hoard money and reduced world trade. The banks made this recession - Robert Peston commenting on it is an irrelevance - unless his words are taken as gospel in the US, Japan, Germany, China et al. Reporting train crashes and causing them are two different things.

 

I would say that the banks triggered a recession that was inevitable. Reporting a train crash that has already happened is different from speculating on what might happen. Remember the toilet roll and sugar runs from a few years ago? Shouting 'fire' in a crowded night club is irresponsible.

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Whitey Grandad

Whitey Grandad

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Not one of those links you quote demonstrates the point you keep pushing beneath the surface, that Labour's 'overspending' substantially caused the crisis. So let's get back to tim's comparative point about debt in 97 and 07.

I'm not clear whether you are you saying that the overspending did or did not cause the crisis. Personally, I don't believe that it did, but it has certainly left us poorly equipped to deal with the consequences.

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Verbal

Verbal

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I'm not clear whether you are you saying that the overspending did or did not cause the crisis. Personally, I don't believe that it did, but it has certainly left us poorly equipped to deal with the consequences.

 

The point I keep coming back to is that tim has highlighted the contrast in government debt between 97, when it was proportionately HIGHER after eighteen years of Tory 'competent' governments, and 07, when it was LOWER after ten years of 'profligate' Labour governments. It rather undermines the received wisdom trotted out repeatedly here and elsewhere...

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Verbal

Verbal

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Meanwhile, back at Spin Towers, Labour starting to get twitchy already...can only be a matter of time before Mandy comes to the rescue of another ailing Labour leader...

 

http://www.thisislondon.co.uk/standard/article-23915147-dont-say-coalition-say-tory-led-labours-spin-chief-tells-media.do

 

;-)

 

So can YOU answer tim's point? I've given up with grandad.

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