A Load of Bankers

Well, financial meltdown is Here. And it looks like the honest taxpayer will have to foot the bill.

Question time last night was interesting (of what I saw at any rate) and had a good speech by Chuck "Lib Dems when they were popular" Kennedy where he basically said "Yes, it sucks that we have to bail out the banks. (Oh Lib-Dems, you fools, your lust for power robbed you of your chance at opposition. Compare him and Nick Clegg, pah, but that's a different rant) It really bugs me that, in order to keep money moving and everything else running we have to bail out millionaires who have cocked the whole thing up" and I agree with him mostly on this.

However, what I cannot forgive is how badly this has been handled by the current government. I've heard many reasons about how we got into this state but here's my unqualified and unfocused rant of the major factors.

All was going well, perhaps too well, sadly banks from the very top to the very bottom thought that the astronomical rise in house prices and mortgages combined with low interest rates couldn't end. Some may have known but largely the housing crash came from believing their own line of BS. Problems were showing when houses became so expensive that first time buyers dried up. See housing is like a chain, sort of. If you own a house, and want a better one, you have to also sell your house. Problem is that people start expecting more, as do estate agents etc. end of the day the first link, namely the first time buyer, couldn't get on, and so sales stall (I do realise its more complicated than this) sadly many of the banks, particularly the ex-building societies like Halifax, Northern Rock and Bradford and Bingley, relied quite heavily on mortgages. This slowdown adversely affected their prices.

However this was not all, there were also these City Traders, bankers etc, who swore blind that if left free of regulation they wouldn't do legal, but underhand things that may ruin the economy for short term gain. They of course did, as the type of person who becomes a stock trader is usually a vicious killing machine in a suit with a very flimsy ethical code and as a result needs to be watched like a hawk as to them, ruining an economy is collateral damage.

However, the real damage, at least in the UK, which I believe could have lessened the effects over here, was to bail out Northern Rock. It sent the wrong message, it told every CEO of banks, and city trader that they could take the big punts on other peoples money, because the Government would cover their behinds. I'd have let Northern rock go bankrupt, made sure all savings were protected, but let it go and have its assets bought by whoever wants them. Then used its fall as a reason to regulate the financial sector more heavilly. The shock that there was no safety net may have been enough to save HBOS or Bradford and bingly.

Of course if we're bringing in new legislation, then I'd like a few other caveats in, because its is frankly disgusting that the CEO of HBOS, the captain of the sunk ship, will be claiming his £2 million bonus. In the grand dictatorship of Pie Man, the pot with his Bonus, salary etc, and those of senior board members, would be fair game should your bank go belly up. That would mean that the bill for protecting savings and paying off frontline staff would come from that, then the assets and finally the tax payer.

Finally, one more Culprit. Us, for forgetting that this happened before and can happen again, for believing that there is any sort of Risk free investment. Seriously, I'm an HBOS shareholder, if I'd really wanted the cash from those shares, I'd have sold them. High. Someone was saying that their shares had dropped from £14 a share to less than £2 and that this had impacted on their nesteg. Well yes, but that's what shares do. They go up and down, and can become worthless.

Similarly the thing people kept saying during the property boom was "You never loose money on property" which is plum bollocks. You can pay too much for a property. What you won't loose out on is if you buy a home. Because if you have a home you can live in it, and keep living in it until the market reaches a stage where you cans ell it on and hopefully have enough put by to buy a better one when required. Yes, its common sense, unless you can play the market or run a bank, there are no fast bucks. The less you look for them the more stable you'll be.