Financial Meltdown (The World)

[canuck]

and bradford and bingley

[BoD]

The banking industry is probably more heavily regulated than any other. Also remember that most people in investment banks do not earn a huge amount of money. That said, I have no particular problem with paying people who make a lot of money huge bonuses, but what does need to be looked at is how the compensation relates to risk.

[Kooky]

and bradford and bingley

Hardly big news for the rest of the world, but I just read that Santander is buying them. They seem to be buying all the old building societies up; my money in Jersey is now with them.

[Tas]

I've not a problem with people being rewarded for creating wealth and business that creates jobs and flow on effect etc etc I do actually get it. But there's stuff that goes on with CEOs that get golden handshakes kiss off's when they've royally fucked up big time that says to me there is something wrong - and in the topic being discussed here, which is a bail out by government funds for basically the shyte stuff with tax payers monies, then executive remuniration aint something that should go unaddressed.

[BoD]

It's hard being a trader..

Year 1/2: Join Bank A on a big fat guaranteed bonus - no incentive to do anything much. But no downside for taking a loads of risk. If it works out, get even bigger bonus
Year 3 : No guarantee, so have to do some work. Put on some nice 10 years trades stuctured so that you take the profit up front. Make loads of money - get big bonus
Year 4 : Leave to go to bank B - with a new guarantee
Year 5 : Markets collapse. Trades put on at Bank A lose loads of money, but its OK as have a guarantee from Bank B

[baloo]

The banking industry is probably more heavily regulated than any other.

While I can't disagree, I can't help but think that Banking has grown into something it shouldn't. Looking at purely domestic banking, it's one of the foundations of society. A place to store our money and a place to borrow some if we have a need. There really should be some further control on what your local bank can sell Mom & Pop over the counter, and badger them to do so. Some of the products sold over the last few years are quite difficult to comprehend and I'd bet for the most part even the person selling them doesn't understand what they are selling. Surely there needs to be more regulation there. Getting the consumer to sign a 15 page document full of legal jargon that basically says "We're not responsible for what we sell you" is hardly fair.

This credit crunch came about primarily from selling big housing loans for people who couldn't afford it. It drove the major economies in the recent years. Banking, Building, Consumer Goods, Services all ran riot because people were getting access to money they shouldn't have.

I really don't think it will hurt to go back to the days when credit was something that was given after you could convince people that you were good for it. 20% minimum deposit and proven savings record worked in the past, I reckon similar restrictions should be put in place again.

The banks were chasing the almighty profit. The effect on society at the time was a booming economy driven by credit which kept society happy and their governments happy. While the root cause might be banks greed, everyone was in on the game and got what they could out of it.

[Spike]

HOW TO SUPPORT THE US ECONOMY

Economist Dr. Marc Faber concluded his monthly bulletin (June 2008) with the following:

''The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala.

If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part ."

[BoD]

Agree about the misleading selling of structured products. Calling the Lehmans 'mini bond notes ' bonds is misleading in the extreme. How many 'mom and pops' had any concept of the risk they were actually taking.

[BFG]

Spike - you are an economic guru.

Well done...

[Lichtgestalt]

and bradford and bingley

Hardly big news for the rest of the world, but I just read that Santander is buying them. They seem to be buying all the old building societies up; my money in Jersey is now with them.

They had to be bailed out earlier this year. Tw of the smaller building societies have been bought by Nationwide (after the government asked them to do so). Wachovia seems to be in trouble as well adn they were one of the potential candidates to take bits of Lehman and/or Morgan Stanley

[Spike]

Spike - you are an economic guru.

It has been said...but not often.

[avatarless]

does anyone have details on what happened with Fortis, exactly? Taken over by three countries and hardly a whisper on the details. Morrolan?

[baloo]

Wachovia gone. Citibank taking them over, Fed guaranteeing some of the toxic debt and in return getting a stake in Citibank.

[daffodil]

http://news.bbc.co.uk/2/hi/business/7641733.stm

So, no Federal bail-out after all.

[Zephyr]

Very interesting. Stocks have plummeted once again so any of you have any predictions of where this mess is headed?

[Burbage]

Anybody know what deposit point is guaranteed in Australian banks? if any?

[Fat Bob]

Hmmmm.....at what point did the mortgages become "bad debt"? In order to prevent them going "bad debt", why didn't they just keep the interest rates low in order to allow the mortgagee to continue paying something? And of course, stopping this access to the money in future.

Or am I being too simple?

[Morrolan]

Anybody know what deposit point is guaranteed in Australian banks? if any?

none, i think...

be ready for the worst few days in the financial markets since the 1930's and probably even worse than that.

time to put your money in gold, if you haven't already.

stock up on food and ammo, too.

[Burbage]

Mortgages become bad debt when the value of the property drops below the amount that the banks need to recoup to break even.

The mistake is that banks gambled money on handing out mortgages on the basis that property values never went down. But property values did go down.

That's what I understand.

[skank-la]

''The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala.

If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part ."

]

Hate to rain on your parade but here in the states the prostitute is probably Mexican , Vietnamese or Thai & the brewer is now owned by a Belgian or UK based group.

[Burbage]

Anybody know what deposit point is guaranteed in Australian banks? if any?

none, i think...

So where do I hide my bullion?? A British bank?

[skank-la]

So where do I hide my bullion

Real Estate (the true inflation hedge), cash, gold

[Burbage]

Yes, I'm waiting for residency at the moment so I get a few extra thousands off the Aussie Gov. Question is, how long can I wait. As long as the bank is OK I should wait, since the real estate market will probably drop further in the short term.

[Morrolan]

none, i think...

So where do I hide my bullion?? A British bank?

a mattress would be your safest bet right now...

[Morrolan]

does anyone have details on what happened with Fortis, exactly? Taken over by three countries and hardly a whisper on the details. Morrolan?

a simple buy-in in order to shore up confidence and prevent a run on the bank by depositors, which would crash it.