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The BullÌý permalink
When Greece defaults what then?
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Message 1.Ìý
Posted by jordan (U14284744) on Monday, 19th September 2011
Most experts are now saying that Greece will default and with the German weekend election results it looks more likely it will happen sooner rather than later..Britains exposure to the eurozone debt is some what considerable.It is estimated that the overall exposure of the British banks is around 430 Bn or 19% of G.D.P.. What have British banks been doing by buying upeurozone debt in the first place?Irealnd Portugal and Spain look like having ten to twenty years of hard times. These bankers sure got the world in one hell of a mess. Derek
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Message 2
Posted by Poorgrass (U12099742) on Monday, 19th September 2011
There will be a little panic and no doubt some financial market traders and so-called experts will be running about like Chicken Licken expecting the sky to fall in. And then they'll move on to the next country to have another little panic..
I can remember when a lot of South America defaulted years ago. The sky didn't fall in then. -
Message 3
Posted by malfunction (U1523018) on Monday, 19th September 2011
Not often I agree with you Derek, but I do when it comes to bankers. I'm not sure British banks have being buying Eurozone debt since the crisis started.
BTW, your moniker is jordan, but you sign off as Derek. Is your name Derek Jordan? -
Message 4
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
Not for the first time Derek your hyperbole is ridiculous.
What debt would you like British banks to buy and why on earth wouldn't they have bought eurozone debt? It's hardly like they have been stocking up in the last few months. Also, when Greece defaults British banks are only exposed to about 7bn, which is chickenfeed in the general scheme of things and much less than banks in other countries. Unlike you seem to believe, Greece defaulting doesn't mean that Germany or The Netherlands for example won't honour their debts.
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. -
Message 5
Posted by NorthernGal (U2344632) on Monday, 19th September 2011
Indeed they got us into a mess, and they are getting away with it.
This isn't just about Greece, when they default, what happens to the rest of the PIIGS; I think that is what keeps the Central Bankers up at night.
There is no way the PIIGS can repay the debt they owe, and all the austerity measures will not help. Austerity results in a shrinking economy.
Those who did not conduct due diligence in lending should be taking a serious haircut and not be allowed to keep the rest of us in a hostage situation. -
Message 6
Posted by fat_kid (U1705916) on Monday, 19th September 2011
I'm not a big fan of Greek cuisine myself.
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Message 7
Posted by jordan (U14284744) on Monday, 19th September 2011
My name is Derek,Jordan is the name of my great Dane dog who went to greener fields a few months ago. Derek
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Message 8
Posted by jordan (U14284744) on Monday, 19th September 2011
Not for the first time Derek your hyperbole is ridiculous.
What debt would you like British banks to buy and why on earth wouldn't they have bought eurozone debt? It's hardly like they have been stocking up in the last few months. Also, when Greece defaults British banks are only exposed to about 7bn, which is chickenfeed in the general scheme of things and much less than banks in other countries. Unlike you seem to believe, Greece defaulting doesn't mean that Germany or The Netherlands for example won't honour their debts.
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. Ìý Being a banker E.R. does not mean you should fell guilty all the time and feel you are being attacked, because it’s far from the truth. The whole global meltdown was the fault of greedy bankers mostly in U.S. Europe was a victim as was many banks all over the world. The outrageous bonuses that where paid to many of their Ex., was and still is in my opinion very close to criminal acts. Anyway we are worlds apart on this one but its good to see you are still talking to me. When you see Youth unemployment in Spain at 48% in U.K. close to half a Mill, what a price the youth of the world had to pay to the Criminal banking industry. Just look at the latest crimes that happened in the Swiss bank they did not even know how much they had lost. Regulate them again it’s the only way to keep them honest and under control. Derek P.S ITS one in the morning and I must get to bed so I will reply to your reply tomorrow! -
Message 9
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
I don't feel a shred of guilt Derek merely frustration at your fixation with bankers and your ridiculous blaming of bankers for every economic ill on the planet. You're at it again with your youth unemplyment nonsense.
I've never not been speaking to you. -
Message 10
Posted by auldhairy (U14258268) on Monday, 19th September 2011
The International Monetary Fund (IMF) has told Greece it needs better tax collection and deeper spending cuts, not higher taxes, to avert its crisis.
The warning comes as Greece prepares for further funding talks with the IMF, the European Central Bank (ECB) and the European Union.
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Message 11
Posted by NorthernGal (U2344632) on Monday, 19th September 2011
Edinburgh Ranger,
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. Ìý
I am speechless. Exactly how do you come by that statement? Is it not the job of bankers to evaluate risk? -
Message 12
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
Edinburgh Ranger,
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. Ìý
I am speechless. Exactly how do you come by that statement? Is it not the job of bankers to evaluate risk?Ìý Banks will suffer as a result of a Greek default as would be the case with any investment made by any person or entity when the investment goes bad. It is not the fault of banks that Greece has been living beyond its means for decades and cannot impose sufficient budget cuts to stave off a default on its debts.
Derek cannot see past banks as to blame for every economic ill on the planet. Judging by your past posts you hold similar views. -
Message 13
Posted by Poorgrass (U12099742) on Monday, 19th September 2011
Yes, if bankers are so clever why were they lending to Greece before the crash? They allowed the "bad" debt to build up and didn't look further than the end of their greedy noses. And then after the crash they jacked up the interest rates Greece had to pay making its debt unserviceable - just about the worst thing that they could possibly do considering that they had allowed the debt to build up to that level. They should have taken action years earlier before it became a serious problem.
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Message 14
Posted by NorthernGal (U2344632) on Monday, 19th September 2011
Edinburgh,
You evaded the question. Is it not a banker's job to evaluate risk? -
Message 15
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
Edinburgh,
You evaded the question. Is it not a banker's job to evaluate risk?Ìý The question has no relevance to the debate. However, to answer your question, no, it is not a banker's job to evaluate risk, it is the job of certain bankers to evaluate risk. -
Message 16
Posted by NorthernGal (U2344632) on Monday, 19th September 2011
Edinburgh Ranger,
What a silly response.
The question has no relevance to the debate.Ìý
Again, I am speechless.
However, to answer your question, no, it is not a banker's job to evaluate risk, it is the job of certain bankers to evaluate risk.Ìý
If you are a banker, you should be ashamed of yourself. You know full well that no financial institution can exist without evaluating the risks associated with their transactions.
This is why bankers are so disliked, they seem unable to show any contrition for the mess they are partly responsible for creating. -
Message 17
Posted by malfunction (U1523018) on Monday, 19th September 2011
However, to answer your question, no, it is not a banker's job to evaluate risk, it is the job of certain bankers to evaluate risk.Ìý Surely whether a High St bank is lending £500 or a merchant bank is lending £5 million, the bank has to do a risk evaluation. Even at the lowest levels, the bank will access a potential borrower's credit record from a service like Experian, and will tailor the loan to reflect the risk. What Northern Wreck were doing lending 125% of house valuations I do not know, but even there they would have been evaluating potential mortgagees.
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Message 18
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
Edinburgh Ranger,
What a silly response.
The question has no relevance to the debate.Ìý
Again, I am speechless.
However, to answer your question, no, it is not a banker's job to evaluate risk, it is the job of certain bankers to evaluate risk.Ìý
If you are a banker, you should be ashamed of yourself. You know full well that no financial institution can exist without evaluating the risks associated with their transactions.
This is why bankers are so disliked, they seem unable to show any contrition for the mess they are partly responsible for creating. Ìý It was a perfectly correct response given that the deabte was about what would happen if Greece defaults.
Indeed, which is why I said that it's the job of certain bankers to evaluate risk.
Bankers are so disliked because a very small number of bankers behaved recklessly, another very small number of bankers failed to rein them in, some bankers earn fabulous sums of money and the general public are envious and ignorant. -
Message 19
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
However, to answer your question, no, it is not a banker's job to evaluate risk, it is the job of certain bankers to evaluate risk.Ìý Surely whether a High St bank is lending £500 or a merchant bank is lending £5 million, the bank has to do a risk evaluation. Even at the lowest levels, the bank will access a potential borrower's credit record from a service like Experian, and will tailor the loan to reflect the risk. What Northern Wreck were doing lending 125% of house valuations I do not know, but even there they would have been evaluating potential mortgagees. Ìý I perhaps should have added "within a bank" after "it is the job of certain bankers" but to be honest I thought it was obvious that's what I meant.
Every transaction is evaulated from a risk perspective by various credit and risk panels. What some people can't seem to grasp is that they will never always get it right, never have done and never will. -
Message 20
Posted by Poorgrass (U12099742) on Monday, 19th September 2011
I do not expect them to get it right every time, but I do expect them to see serious risks building up before they get to a dangerous level. And I think that with places like Greece it must have been obvious that it was dodgy long before the crash.
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Message 21
Posted by NorthernGal (U2344632) on Monday, 19th September 2011
Edinburgh,
Bankers are so disliked because a very small number of bankers behaved recklessly, another very small number of bankers failed to rein them in, some bankers earn fabulous sums of money and the general public are envious and ignorant.Ìý
Go ahead and continue to misread the mood of the public, when they come for you with pitchforks, then maybe the light bulb will go on. It is exactly that type of response by bankers that have your profession so hated. -
Message 22
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
I do not expect them to get it right every time, but I do expect them to see serious risks building up before they get to a dangerous level. And I think that with places like Greece it must have been obvious that it was dodgy long before the crash.Ìý That's perfectly reasonable but I don't think you appreciate how safe sovereign debt typically is compared to other investments, that you don't get rich on this type of lending and that the banks won't have been lending in any great amounts since the risks became known or at least will have been charging more to account for the risk. Of course you referred to charging more as greed, which is rather odd given that it jars with your description of Greek debt as dodgy. The dodgier your credit rating the higher the cost of borrowing. Nothing to do with greed.
It's a difficult situation and really isn't much different to a failing company. It's easy to say that you should simply cease lending if a company starts failing but if you do then you are accepting a 100% loss on your lending to date. Much better sometimes to actually lend more as part of a restructure in the expectation that the restructured company will recover and you will recover a greater part of the overall debt than you would by simply cutting your losses and bankrupting the company initially. Once again, you don't always get it right. -
Message 23
Posted by Edinburgh_Ranger (U1590150) on Monday, 19th September 2011
Edinburgh,
Bankers are so disliked because a very small number of bankers behaved recklessly, another very small number of bankers failed to rein them in, some bankers earn fabulous sums of money and the general public are envious and ignorant.Ìý
Go ahead and continue to misread the mood of the public, when they come for you with pitchforks, then maybe the light bulb will go on. It is exactly that type of response by bankers that have your profession so hated.
Ìý I'm not misreading the mood of the public but I've no intention of pandering to ignorant, ill informed and envious people or accepting blame for the actions of a small minority of banker simply because I happen to share a generic job title with them. -
Message 24
Posted by auldhairy (U14258268) on Monday, 19th September 2011
I'm fed up,
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Message 25
Posted by malfunction (U1523018) on Monday, 19th September 2011
I'm not misreading the mood of the public but I've no intention of pandering to ignorant, ill informed and envious people or accepting blame for the actions of a small minority of banker simply because I happen to share a generic job title with them.Ìý It might only have been a very small number of bankers, but they caused distress and grief for millions of people. I can sympathise with your view a little on sovereign debt, but the real trouble came with the toxic debt of sub-prime loans to people who clearly couldn't pay them back, and the sale of these loans, re-packaged, to other banks who didn't know what they were buying.
I'm kind of curious - has the banking crisis from 2008 onwards had an affect on the livelihood of bankers? I don't mean your High St staff, or even the back office people, because clearly it has in their case. I'm talking about the actual dealers and traders who made the decisions that put us in this mess. The view from the general public is that they have got off virtually scot free - the worst probably being a reduction in their huge bonuses for a year or two, whereas in the real world, millions of people have lost their jobs, houses, and security because of them. -
Message 26
Posted by BryanLuc (U12989423) on Monday, 19th September 2011
Derek cannot see past banks as to blame for every economic ill on the planet. Judging by your past posts you hold similar views. Ìý
Funny that the Governor of the Bank of England holds similar views
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Message 27
Posted by jordan (U14284744) on Tuesday, 20th September 2011
Hold on to your money,woke up to the news that Italy has just been down graded. Derek
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Message 28
Posted by auldhairy (U14258268) on Tuesday, 20th September 2011
Italy has had its sovereign debt rating cut by Standard & Poor's, the latest move in a deepening European debt crisis.
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Message 29
Posted by malfunction (U1523018) on Tuesday, 20th September 2011
S&P is doing to Italy what Berlusconi does to his harem.
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Message 30
Posted by jordan (U14284744) on Tuesday, 20th September 2011
Forget about the debt crisis, I have just come home and stuffed up tonight’s dinner! Lamb shanks never cooked them before so I preheated the oven to 170de cut up all the veg’s threw them into a big pot, quick fried the shanks until brown threw in lots of port splash of Irish and some Balsamic vinegar and lots of spuds out of the garden. Then I looked up how to cook lamb shanks!!! Like any good Irish banker would do. Well we shall see in two hours time. Derek
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Message 31
Posted by malfunction (U1523018) on Tuesday, 20th September 2011
Derek,
What did you pay for the lamb shanks? Just want to compare it to what we pay here - probably having the same on Saturday. -
Message 32
Posted by jordan (U14284744) on Tuesday, 20th September 2011
2 shanks 8$ also got two lovely t bone stakes 8$ not sure what the exchange rate is at the moment. Derek
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Message 33
Posted by jordan (U14284744) on Tuesday, 20th September 2011
Five pounds twenty two.Derek
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Message 34
Posted by malfunction (U1523018) on Tuesday, 20th September 2011
Two shanks here would cost about £7. Twenty years ago, they were considered cast offs, and cost bugger all. Then some TV chef got hold of them, and they have risen in price ever since.
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Message 35
Posted by _ShropshireLad_ (U10844552) on Tuesday, 20th September 2011
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. Ìý
You're forgetting Goldman (and JP Morgan) arranging loans with derivatives which kept said loans off the books, meaning that Greece was not technically over its EU borrowing limit:
"Greece and Goldman Sachs"
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Message 36
Posted by JB on a slippery slope to the thin end ofdabiscuit (U13805036) on Tuesday, 20th September 2011
What's a Greek earn?
---about a half of what he gets paid -
Message 37
Posted by malfunction (U1523018) on Tuesday, 20th September 2011
What do you call Greeks paying taxes?
-----another tale in Greek Mythology. -
Message 38
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
I'm not misreading the mood of the public but I've no intention of pandering to ignorant, ill informed and envious people or accepting blame for the actions of a small minority of banker simply because I happen to share a generic job title with them.Ìý It might only have been a very small number of bankers, but they caused distress and grief for millions of people. I can sympathise with your view a little on sovereign debt, but the real trouble came with the toxic debt of sub-prime loans to people who clearly couldn't pay them back, and the sale of these loans, re-packaged, to other banks who didn't know what they were buying.
I'm kind of curious - has the banking crisis from 2008 onwards had an affect on the livelihood of bankers? I don't mean your High St staff, or even the back office people, because clearly it has in their case. I'm talking about the actual dealers and traders who made the decisions that put us in this mess. The view from the general public is that they have got off virtually scot free - the worst probably being a reduction in their huge bonuses for a year or two, whereas in the real world, millions of people have lost their jobs, houses, and security because of them. Ìý I completely agree with your first sentence. The difficulty I have with your second point is that, contrary to popular opinion, British banks were not bankrupted as a result of toxic sub-prime debt from 'casino banking'. This basic fact is overlooked time and again by those eager to bash the bankers. The British banks were comfortably able to cope with their sub-prime related losses. What some couldn't cope with was the systemic paralysis in the wholesale funding market. That's why it was banks whose operating model recklessly relied far too much on wholesale funding (HBOS, NR and B&B) that failed. These were retail banks with little or no 'casino banking', which is why the Vickers reforms would not have prevented the financial crisis. RBS was a different case and fell due to its purchase of ABN Amro, which was a ridiculous purchase and left its finances in a very precarious position when the financial crisis struck. If the desire is truly to prevent UK banks from being too big to fail then the only solution is to split them up properly not a half hearted ring fencing, which I doubt will ever see the light of day.
I could write reams on this topic but don't have time to do so and I'm sure nobody is interested in reading it. Some UK banks made huge errors in their choice of business model and all did not monitor risk effectively. The people responsible for this were very few in number and did not include every banker earning huge bonuses.
I can't speak for all the banks but in the case of my employer the answer is yes but that yes has to be heavily caveated and my comments only refer to this particular bank. As mentioned previously, those responsible were actually very few in number. People responsible lost their jobs but when you were an extremely highly paid executive in the first place there's a limit to how much it affects your livelihood. The part that galls me is that some of these people were subsequently employed by other large companies so the effect on them was minimal if anything at all. It's my opinion that the biggest failures in UK banking were the boards responsible for the operating models followed by the risk functions who failed to do their job. You might find it odd that I'd not place the traders/deal makers higher but the truth of it is that those guys are paid to do deals and it's the job of the risk people and board to ensure that risk is managed over the whole business. The problem wasn't individual deals which went bad, it was the fact that there were so many risky deals and lots of them went bad. So, in summary, I would agree that those responsible have got off virtually scot free but would also argue that many being accused of just that weren't guilty in the first place. Furthermore, I don't know how you would penalise those responsible short of draconian and retrospective legislation which I can't see as a good thing no matter how much they deserve some sort of sanction.
I have no problem with seven figure bonuses and don't see why anyone else should have a problem with them but what I do agree with is legislation to ensure that there is a clawback mechanism if the deals subsequently go bad. A 3 year clawback period seems reasonable to me and it should encourage longer term thinking and better scrutiny of deals proposed.
As said earlier I could post much more but I'll leave it there. -
Message 39
Posted by Poorgrass (U12099742) on Tuesday, 20th September 2011
>People responsible lost their jobs but when you were an extremely highly paid executive in the first place there's a limit to how much it affects your livelihood. The part that galls me is that some of these people were subsequently employed by other large companies so the effect on them was minimal if anything at all.<
Yes, didn't Fred the Shred gets another highly paid job almost straight away? And although it's not banking I heard that the CEO of BP who was in charge during the Deepwater Horizon disaster has also got another job. I think that aspect of it is a bit "Alice in Wonderland" that there seems to be one law for the very top level that despite the most dismal performance usually immediately get other jobs (not that they need them with their large pensions), and another for workers at lower levels that get fired when they foul up often without references. -
Message 40
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
Bankers have absolutely nothing to do with the problems in Greece and it's really about time you grasped that. Ìý
You're forgetting Goldman (and JP Morgan) arranging loans with derivatives which kept said loans off the books, meaning that Greece was not technically over its EU borrowing limit:
"Greece and Goldman Sachs"
Ìý I was referring to UK banks but in fairness I didn't make that clear.
I don't think that qualifies in any case. The fundamental problem in Greece, as indicated at the beginning of the linked article, is that they have been living beyond their means for decades. That's not the fault of banks and the "kick the can down the road" approach is no different to that used by the EU, US or UK governments (PFI anyone?). It's also only fair to point out that everybody knew Greece was at this sort of caper in order to qualify for the euro but the politicians ignored it because the euro is, and has always been, a political project not an economic one. Banks can legitimately be blamed for plenty but the woes of Greece are not their fault. -
Message 41
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
Derek cannot see past banks as to blame for every economic ill on the planet. Judging by your past posts you hold similar views. Ìý
Funny that the Governor of the Bank of England holds similar views
Ìý I don't see anything in that article saying that the banks are to blame for every economic ill or hinting at such a view. That you do is no surprise whatsoever. -
Message 42
Posted by Poorgrass (U12099742) on Tuesday, 20th September 2011
>The fundamental problem in Greece, as indicated at the beginning of the linked article, is that they have been living beyond their means for decades. That's not the fault of banks <
Sorry but if you're a banker and you have a customer that is quite clearly living beyond his means, isn't it common sense to restrict further lending to him or make it conditional on him taking steps to get his finances in order before debt builds up to a dangerous level? So why didn't they take action before, not let him build up massive unpayable debts and then screw him over by jacking up his interest rates so that the default becomes inevitable. As far as I can see the banks have been utterly reckless and totally incompetent in this affair. -
Message 43
Posted by jordan (U14284744) on Tuesday, 20th September 2011
We are in fighting form tonight!. I hear a report out of China tonight that some Chinese banks are refusing to deal with European banks. Now if this is true it could be the start of another melt down. Derek
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Message 44
Posted by hotmousemat (U2388917) on Tuesday, 20th September 2011
Edinburgh_Ranger
I would question whether you could ever say that something like the banking crisis is somebody's fault. It implies that an individual is capable of having an expertise and an overview that would enable them to exercise control, yet there must come a point where a situation is so complex that no such individual could exist.
Like many people, before the crisis came I had a sense that things couldn't carry on this way forever. But there was never any point where I as an individual was presented with a choice that would have enabled me to change things. And might this not have been the case for everyone? That even though you are Chief Executive of some major bank, in practice you spend your time making decisions within the framework of how things work now. You are not given the space to reinvent the entire industry.
Rather than seek villains I think our real problem is that as the ebbs and flows of the entire world is linked together within single markets then situations must inevitably complicate themselves beyond the ability of humans to control them. Splitting the banks is an attempt to simplify the industry, but I think it will fail. The complexities - and thus the unpredictability and instability will just accumulate somewhere else.
To put it another way, has anyone constructed an accurate economic model for the world? If they haven't, then why would we expect an activity that reflects the entire world, like international banking, to be able to control itself? -
Message 45
Posted by NewEssexWoman (U9776561) on Tuesday, 20th September 2011
Italy has had its sovereign debt rating cut by Standard & Poor's, the latest move in a deepening European debt crisis.
Ìý
Can anyone eplain why anyone should take any notice of these self-appointed credit agencies? After all, these were the very same people who rated all the packaged sub-prime deals as triple A where as, in reality, they were complete junk.
Who are these credit agencies responsible to and who pays their fat pay cheques? -
Message 46
Posted by Poorgrass (U12099742) on Tuesday, 20th September 2011
We are in fighting form tonight!. I hear a report out of China tonight that some Chinese banks are refusing to deal with European banks. Now if this is true it could be the start of another melt down. DerekÌý If they are, they're playing a very stupid and dangerous game. As you say it could trigger a meltdown, and China could find itself the owner of a mountain of bad debt in the USA and Europe with its export markets to the west collapsing. The world is too interconnected now for China to escape the consequences of any meltdown.
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Message 47
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
>The fundamental problem in Greece, as indicated at the beginning of the linked article, is that they have been living beyond their means for decades. That's not the fault of banks <
Sorry but if you're a banker and you have a customer that is quite clearly living beyond his means, isn't it common sense to restrict further lending to him or make it conditional on him taking steps to get his finances in order before debt builds up to a dangerous level? So why didn't they take action before, not let him build up massive unpayable debts and then screw him over by jacking up his interest rates so that the default becomes inevitable. As far as I can see the banks have been utterly reckless and totally incompetent in this affair.Ìý This is a sovereign state we're talking about not an individual or a company and you cannot make any meaningful comparison. A state gets its funding from a multitude of sources not just banks and it's not a single bank's job to ensure the sensible borrowing decisions of an entire country. However much you try to blame a bank, they didn't make Greece live beyond its means for decades and they didn't force them to borrow more money as opposed to making spending cuts. -
Message 48
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
Edinburgh_Ranger
I would question whether you could ever say that something like the banking crisis is somebody's fault. It implies that an individual is capable of having an expertise and an overview that would enable them to exercise control, yet there must come a point where a situation is so complex that no such individual could exist.
Like many people, before the crisis came I had a sense that things couldn't carry on this way forever. But there was never any point where I as an individual was presented with a choice that would have enabled me to change things. And might this not have been the case for everyone? That even though you are Chief Executive of some major bank, in practice you spend your time making decisions within the framework of how things work now. You are not given the space to reinvent the entire industry.
Rather than seek villains I think our real problem is that as the ebbs and flows of the entire world is linked together within single markets then situations must inevitably complicate themselves beyond the ability of humans to control them. Splitting the banks is an attempt to simplify the industry, but I think it will fail. The complexities - and thus the unpredictability and instability will just accumulate somewhere else.
To put it another way, has anyone constructed an accurate economic model for the world? If they haven't, then why would we expect an activity that reflects the entire world, like international banking, to be able to control itself?Ìý Not an individual but I believe you can pin it down to a few hundred individuals who bear primary responsibility.
I most definitely do not agree with your comments regarding the Chief Exec's position. They can and do have the ability to change how their business operates. Yes, it's within a wider framework but we have a couple of classic examples in the UK, namely Northern Rock and HBOS, where management made a conscious decision to pursue a fundamentally different funding model to fuel expansion of the business and this directly led to them failing when the financial crisis struck.
I don't agree with your contention that situations must inevitably complicate themselves beyond the ability of humans to control them. I would argue that the basic banking model worked just fine, the problem was that certain very important people within the system failed to do their jobs properly. I imagine you would take this as proof of your point but I take the view that the failings were basic in nature, not overly complicated, and therefore well within the bounds of expected performance. -
Message 49
Posted by Poorgrass (U12099742) on Tuesday, 20th September 2011
But I would argue that the lender does have a responsibility (both to himself and his shareholders) to take a serious look who he/she is lending money to, whether it's a sovereign state or an individual. I know that bankers have a partial excuse in that the ratings agencies they use for advice utterly and dismally failed to see the risk building up before the crash, but it was nonetheless the banker's and lender's responsibility to weigh up the risks and decide to whether to lend or not. In this case, led by the incompetent ratings agencies the banks followed like sheep,and kept on lending when they should have been asking questions. The excuse of "well, everybody else was doing it, guv" ultimately doesn't wash. There has been far too much of that throughout the entire finance industry.
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Message 50
Posted by Edinburgh_Ranger (U1590150) on Tuesday, 20th September 2011
Why are you just blaming banks? Everybody else continued lending to Greece too. Banks provide only a fraction of a sovereign state's borrowing requirements. Also, why do you seem unwilling to place any blame at all on Greece who continued to borrow when they knew they couldn't afford it?
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