Originally Posted by
Phantom
Lending is the life blood of any economy, and borrowing is not a sin, without lending/borrowing/ overdrafts none of us would have the computers to visit this Forum, or motor cars, or housing, or shops or leisure centres etc etc etc. - just think about it?
As far as interest being charged, how many people are happy to pay for a solicitor or an accountant, or for food or mobile phones, or a pint of lager, knowing that the supplier charges a percentage on top of the cost price as a profit, yet complain about banks charging a percentage to make a profit- a charge which often is far far lower than the profit margin on many goods!
As far as the financial crisis is concerned, the banks did not expect to be bailed out, and had it not been for Gordon Brown lacking the ability to think 'outside of the box' , they may not have been.
He was already well aware of the fragility of the UK economy and that it would mean a collapse in the U.K., if the financial crisis in the US was to spread, and he, along with Alastair Darling, panicked, & reverted to type by throwing money at the problem, (our money by the way ) instead of perhaps trying to manage the situation.
The US Treasury dept. interfered' some will say 'intervened', in the massive US 'top up' mortgage market ( where borrowers basically had borrowed the deposit on their homes and which inflation had normally covered over a period ) and they would normally remortgage their property to cover both loans with enough equity still left in the property to give the remortgage lender comfort, but all of a sudden, remortgaging was not available so the US borrowers could not re-mortgage these top up loans to lower rates when the loans came to maturity, which traditionally they had been able to do
Now, not only were they stuck with the two loans ie top up and mortgage, but they couldn't afford to pay the New 'much high rates/payments on the original top up loans, so they were in deep trouble and falling behind with their payments , and repossession became the name of the game with the result that a whole bunch of toxic mortgages were created 'in an instant’ , from what were AAA rated mortgages, many of which were held as assets by British Banks on a 'swop' basis.
The US Government created this situation , some say justifiably, others say through ignorance, but not repeat not U.K. banks.
The effect of this US Government intervention was that several US lenders had their AAA credit rated loans ( which other lenders inc some in the U.K., were using as security, as mentioned above ) down valued overnight to sub- prime, which meant that the other lenders inc. British Banks were "shafted", by virtue of the security they 'bought ' in good faith, at AAA rates, now being rated as ZZZ ( or Sh1t, Sh1t, Sh1t, as it is known in financial circles !
Secondly, Gordo and the UK Government Treasury Team, caused even more panic in the financial markets by running around like headless chickens, and the domino effect quickly began in the banking sector, with the government not just 'not knowing' but 'frankly' not understanding what to do, & as already mentioned, they panicked even more, very quickly resorted to type, & did the only thing they knew "use taxpayer's money", in this case, to bail out the banks which were likely to topple, rather than perhaps letting one or two go down, and waiting for the results, but no, panic it was !
Where were the Tories ! Well out in the cold of opposition for a full 13 years or so before the crisis , although to read some reports you wouldn't think so - yes, it was a full 13 years before they could stop the rot, and blaming the Tories for shortages, food banks ( which Labour introduced) the weather , anything and everything in fact, when Labour was in power for 13 years, and left the incoming Government without funds, is completely & utterly brainless.
Senior MP
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