But this financial meltdown will affect the whole world, even if it was a few snake-oil salesmen in the US that started it.jimv1 said:There's a whole thread 'collapse of the US economy imminent' a few pages back.
It probably deserves a bump.
So the media led us to the Lehman crisis?! :shock:Ravenstone said:I think it's all media led.
The current Lehman crisis, apparently more to do with the owner awarding himself pay rises the company couldn't afford, and him refusing to sell the company for a reasonable figure, because he wanted more money.
No - the Credit Crunch.rynner said:So the media led us to the Lehman crisis?! :shock:
I don't think so!
The Credit Crunch came from too many banks, etc, investing in US sub-prime mortgages. (see above). This left many of them holding millions in effectively worthless stock, and those that were most exposed (eg, Lehman) went to the wall.Ravenstone said:
http://www.ft.com/cms/s/0/1d66b916-7d82 ... ck_check=1The Financial Services Authority has activated rarely-used powers to allow the Nationwide Building Society quickly to push through its mergers with the smaller Cheshire and Derbyshire building societies without seeking approval from their members.
The mergers, announced on Monday, will see both the Cheshire and the Derbyshire absorbed by the Nationwide by the end of the year, much faster than typical mergers between building societies. Both mergers are making use of special powers in the Building Societies Act that enable the FSA to approve a building society merger without a vote by members if the watchdog feels the deal is in their best interests.
Graham Beale, Nationwide’s chief executive, said the Cheshire and the Derbyshire had approached the lender about a possible merger after the boards of both societies separately concluded they were likely to face continuing financial difficulties from the housing slump and credit market turmoil.
“This has been driven by the boards of those two organisations,” he said. “The FSA have been aware of the dialogue and we needed their support in terms of approving the structure of the transaction.”
The deals are evidence of the difficulties that the credit crunch has caused among building societies, which are facing a squeeze due to the increased cost of raising funding in the wholesale markets, intense competition for retail deposits, and the slowdown in the housing market which is leading to rising bad debts. Unlike publicly traded banks, building societies are owned by their members and can find it harder to raise fresh capital to cover losses.
The enlarged Nationwide will have assets of £191bn, retail deposits of £122bn, 1,000 branches and 15m members. It plans to keep the Cheshire and Derbyshire brands and branch networks, though will absorb the staff of both head offices over time, potentially leading to job losses. The Derbyshire employs 470 people at its head office, while the Cheshire employs 356.
The Derbyshire’s approach to the Nationwide was triggered by the society’s realisation that it was likely to record a loss of £17m in the first half of the year, and that further losses were likely unless conditions in the markets improved. The Cheshire, which recorded a £10.5m pre-tax loss in the first half after a commercial property loan went bad, also concluded that a merger with a larger lender was in its best interests.
Nationwide said the mergers reduce its core Tier 1 capital ratio – a key measure of balance sheet strength – by 34 basis points, but that it expected to rebuild its capital reserves by the end of the year through the retained profits of the enlarged group.
Mr Beale said the Nationwide had not received approaches from any other building societies, and was not in talks with any other lender. “It’s important that Nationwide is not the lender of last resort in the sector,” he said. “But we do think in the current climate it’s responsible to maintain a strong and healthy building society sector.”
Under the Building Societies Act, passed in 2001, the FSA is allowed to give its approval to a deal that is already under discussion without a vote by members. The watchdog has only once before used those powers, to approve the merger between the Gainsborough and Yorkshire building societies, which was already under way when the FSA was created.
The members of Cheshire and Derbyshire will not receive any cash distribution as a result of the deal.
Lehman is quoted on the stock exchange - it doesn't have "an owner."Ravenstone said:Lehman, according to one report I heard, was due to the owner awarding himself the massive pay rises the company couldn't support, and refusing to sell the company for a realistic figure, choosing rather to hold out for a figure far higher than the company was worth.
That's the 'ego' thing again.ted_bloody_maul said:I'd have thought that the amount the CEO paid to himself, although unjustifiable, would be small beer compared to the overall amount of cash transacted in the name of Lehman Bros. I have heard him taking flak for holding out for a higher figure, though.
Well, Jeremy's political leanings aside, I've been pretty much asking the same question - how could this have ever worked? Answers, anyone?rynner said:Never fear, Ol' Petrol Head will explain all, in his usual pithy style:
Seriously, if I set up a business called Arse and went around buying outstanding loans on the nation’s never-never-land three-piece suites, I wouldn’t get very far before someone with a soothing voice and a corduroy jacket put me in a padded room for the rest of time.
http://www.timesonline.co.uk/tol/drivin ... 742406.ece
(Bolds mine)Thirty years we've had, of unfathomably wealthy bankers and dealers being justified as part of the free market.
So they boasted: "I've just got my summer bonus and spent part of it on a small African nation which I burnt down for a laugh," or went to restaurants that charged a thousand pounds for meals such as "asparagus boiled in panda's tears" or bought cars that ran on liquified diamonds, and it was all proof we lived in a free society in which we were paid what we were worth and couldn't rely on state handouts. Then the minute their scam falls apart, they're straight on to the Government squealing "Can we have a free state handout please, our bank's gone bust." They're like spoilt students who go back to their Dad for more money because they've blown a year's allowance in one week. But this soppy government will go "You already had fifty billion quid, what have you done with that? Well alright, here's another fifty billion we were saving for kidney machines, but this time be careful."
It's so obscene you get comments such as the one yesterday that went "The money men have made fools of us. In the years of their dominance they insisted the markets were the highest judges and must be left to rule. Now the markets are signalling their downfall, they're running sobbing to governments and taxpayers, begging for our money."
And that piece of class-hatred came from Max Hastings in the Daily Mail. Because the explanation for the current crash from people like that is they were right to demand an unregulated free market, as society could only be run efficiently if the world's finances were put in the hands of these bankers. But then it turned out these bankers were more interested in their private wealth than in the good of society as a whole – and fair's fair, no one could possibly have anticipated that.
So, as Gordon Brown has become so friendly with Thatcher, maybe he can put her to use. He should tell her she's about to make a speech at the Conservative conference, but fill the room with city executives, who'll be told "You can't go on paying yourselves more than you earn. We can't allow those who can't stand on their own two feet to sponge off the state."
Then they should all be sent down the job centre. At first they'll complain "There's nothing for me in there. I trained for two whole hours to get my qualifications as a parasite and there's no parasite jobs going at the moment anywhere." Then, just as people who claimed benefits when they were working have to pay the money back, all the bonuses they received for boosting their company's shares will have to be returned, now the shares are worthless. And if they haven't got it they should be herded into a new social category called "pension slaves", in which they spend the rest of their lives doing errands for all the people whose pensions they've ruined.
Instead the politicians and businessmen will all join together in saying: "It seems that everything we've been saying for 30 years has turned out to be shite. In these circumstances, it is imperative that those people who became immensely rich out of creating this shite should be compensated heavily. It is also of great importance than we pay no attention to anyone who warned us this was bound to end in shite, as the only people trustworthy to get us out of it are those that put us in it. Carry on everyone."
Clarkson's piece was just a humourous intro to a car review - you're not meant to take it seriously!wembley8 said:The joke of course is on us - Clarkson probably wrote his column ion less time than it's taken me to write this, and will have been paid several thousand pounds for it. Now where's the econimic sense in that??
The great crash of 2008
by James Buchan
14 comments Print version Listen RSS The world's financial institutions are gripped by fear, yet policymakers can do nothing. They are ignorant of how banks now work and have to take poacher-turned-gamekeeper Henry Paulson at his word
Of all the phantoms conjured from the financial depths in the past ten days, the most ghastly appeared on the dark Wednesday, 17 September, when interest on the short-term obligations of the United States government, the one-month Treasury bill, turned negative and became a penalty. Such terror had overtaken the markets that they were willing to suffer a loss on their money in the hope that, in the deep bosom of the US Treasury, some of it would be kept safe.
Yet the terror of that day was not just to do with loss: money lost, job gone, wife fled, house foreclosed, sailboat beached. It was an elemental panic, such as overran the financial markets on 19 October 1987, the day the Dow Jones Industrial Average fell 23 per cent. It was a recognition that the world is not as we have been told and that the conception of value that lies at the root of modern society is, and has always been, a fiction.
In this panic, there is no reality in the sense of actual existence to prices and Lehman Brothers Holdings can be worth $15bn on Monday and nothing at the weekend. The world is held together only by instances of agreement between two or more people. It is an education that everybody should pass through, and my generation has done so twice, in 1987 and 2008. It is as if the gods of financial markets have been reading Hegel, and learnt that "through repetition, that which at the beginning appeared as merely accidental or possible, is confirmed as a reality".
http://www.newstatesman.com/business/20 ... son-public