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20 years and 4 banking gaints collapsed





shenyl
The most recent is the Lehman Bros Bank and Merill Lynch - Just yesterday.

Not too far ago - Two other banks, including Baring (UK) of 100 over years history.

Why all these are happening?

My general observation is that this working generation has little fear and never really faces hardship to gain the moral weightage needed to be serious about risks in life.

We can only observe that under the current working generation, hundreds of years of development and progress are lost due to high risk ventures.

Some may argue that its is the market pressure to take higher risks, but in my daily experiences I have seen enough of young high risk takers and many appearing in newspapers over their various high risk acts.

I am not blaming the working generation, but Americanization and American culture has definitely been responsible for inculcating this type of risk taking.

Now even AIG is said to be in trouble, and this will definitely affect many including myself ( Insurance policies I thought will be very secured).

Do wish that many will re-look at our moral standing in regards to taking risks, which could affect not just ourselves but many others.

Hope this is news and with introspection. With regards.
Liu
As an American, I can say that the lifestyle for many here, atleast in the California is short term thinking. They aren't thinking about the future which they should be. And now, when they find themselves in a heap of shit they can only blame themselves. Lehman shouldn't have put all their eggs in one basket ditto with Merril.

These are all happening because too many idiots are buying things they can't afford.
ocalhoun
Liu wrote:


These are all happening because too many idiots are buying things they can't afford.

Exactly! People don't ask themselves if they can afford things anymore, they just ask themselves if they can get credit approval.
liljp617
There's plenty of blame to go around. It deals with a hell of a lot more than just the people...
Liu
liljp617 wrote:
There's plenty of blame to go around. It deals with a hell of a lot more than just the people...

Like what? Animals and plants?
liljp617
Liu wrote:
liljp617 wrote:
There's plenty of blame to go around. It deals with a hell of a lot more than just the people...

Like what? Animals and plants?


The government SHOULD place restrictions on banks for what kind of loans they can just hand out. The tax system in this country is flat out absurd....even the experts don't understand it, how can the layman? The banks themselves should be more responsible. They shouldn't be talking to customers in a salesman tone when talking about loans. They're not selling loans and trying to convince people to take your loan like a car salesman is wrong.

I'm not saying the people who borrow are off the hook, I'm saying other things should be done outside of just blaming the people (as in the American citizens). It does have a lot (well everything) to do with people borrowing what they can't afford, but this meltdown didn't start last year, it's been going on for 30 years and the government didn't bother to step in when people were getting into things they didn't realize. They let it go to shit so their rich friends could come in and make money.
kevbailey
Bad idea for the US gov to help them out. It sets an awful precedent. "You deal with risky business transactions, and we will still help you out." What is to stop this from happening again in about 50 years from now once the economy has settled down? I can't see anything.
coolclay
I agree, unfortunately there are many many causes to these bankruptcies. Our economy is going down hill super fast, most American people have been brainwashed into borrowing money for everything, we are sending all our money to China, so many other reasons.

I certainly don't think the gov. should be bailing anyone out. Play with fire your gonna get burned.
paul_indo
The world economy seems to be so volatile these days.

I have no debts and pay cash for everything I buy, If I can't pay cash I can't afford it.

I own a house, a car, a motorcycle and all the usual stuff all bought with cash.
shenyl
Good to have people who could logically look at the problem, logically look and learnt from the problem. I am glad for you all who look and see the problem and will even better the solution to it.

Seriously, this American culture is fast catching on in Asia.

I could not believe this myself, as I am a firm believer in "do not owe anyone anything", but when I saw how my 21 years old son spent all his saving and whatever is given to him, I realised how this culture is fast catching on in Singapore and Asia.

Yes, I do see the problem, I do live away from the problem, but I saw also people who just could not see the problem, even when they are in it. This is really sad.

My best wishes to all who see the need to live within our means.

With regards.
ganesh
As is the opinion of the majority of the posters in this thread, the American must learn to plan for the future. It is really bad to see people running their lives from paycheck to paycheck. On top of that, they have a big credit card bill which is only given the minimum due payment. Most of the people invest on short term things without worrying about how their 'investment' would affect them in the future. If the people themselves are like this, it is no surprise that the banks and lenders headed by these types of people lead their institutions to doom and ruin.

The Feds are setting a bad precedent by providing them with the taxpayers money to bail these institutions out of their wrong investment decisions. Would these institutions provide the taxpayer with money if they make high profits? Only shareholders benefit in that case. So why should the taxpayer alone come in during this situation to bail them out?

What is your opinion?
deanhills
I did the Canadian Securities Course in 1996, a very intense course on stocks and shares, as well as world of finance. We learned all kinds of theories for predicting movements of stocks, and found that none of it worked, when it did for all the time before, as trends in that portion of the nineties were not moving in the way they were supposed to. To me then I felt that someone was fiddling the books along manipulation at very high levels of finance, interest rates and baling out people lines.

So maybe someone decided not to bale out people anymore? Or someone is cashing in as there are always people who cash in when others are going down? All of this is still confusing to me and just does not make any sense.
ocalhoun
liljp617 wrote:

The government SHOULD place restrictions

I get very uneasy hearing talk like that. It would be much better to find a solution that does not involve yet more government restrictions.
shenyl
There is an article on 23 Sep 2008 on Straits Times Singapore, that talks of Japan in the 1990s, when their Finance departments encourages housing loan companies to go into real estate.

These small housing loan companies are subsidiaries of big banks - including Bank of Japan. Their role is housing loan, not real estate investment.

With government encouragement, billions are pour into real estate investment, turning them into Big Time Investment companies.

Then well and behold - the real estate prices plunge as they enter economic recession.

All these real estate companies has to fold up.

The government was adviced by the Dr. Benarke (US Fed chief) then to bail out the ailing banks.

It took 6 years before they acted, and the bail out begins. Allowing the banks to cut losses as they liquidate their subsidiaries.

4 years later - the economy recovers, the banks repaid FULLY THE LOANS + HIGH INTEREST.

Looking back, it is good investment and avoided a drastic prolong recession.

Dr. Benarke is precisely applying this advice, hoping the bail out is a good investment with high returns and to cushion a recession.

All the best to the wise Dr. Benarke - may the investment proves positive.

With regards.
deanhills
ocalhoun wrote:
liljp617 wrote:

The government SHOULD place restrictions

I get very uneasy hearing talk like that. It would be much better to find a solution that does not involve yet more government restrictions.


Excellent point, and I was thinking just that way when I read postings in the Economics Forum. There could not be stock exchanges more regulated and monitored than those in the United States. The SEC is a Watch Dog that is used as a template for Securities Commissions all over the world. Just look at the US Securities Exchange Commission (SEC) Website at http://www.sec.gov/. For people to deal in securities, including those buying securities there are millions of regulations, so it really boggles the mind how things like these can still happen.

It reminds me of that little book "Animal Farm" and how when the pigs took over and started posting rules, for every rule, there were specialists in loopholes creating more and more rules. People can get so wrapped up in rules that eventually it completely defeats the purpose of why the rules had been created in the first place. For instance at the SEC when they do investigations, they have the power to comb through bank accounts, i.e. subpoenae banks for accounts that were involved in some of the off-shore investment schemes that have gone under due to dishonest practices. I.e. X scoundrel could be investigated for his dealings in certain investment schemes, and then SEC then has the power to look at the banking accounts of those people who had invested in the scheme. And then next thing that happens, SEC can cross-reference once they have that data in databanks. So people who thought they were investing in great confidence off-shore, probably do not realize how vulnerable they are. For me these millions of regulations are actually complicating regular people's lives, invade their privacy, and those for whom the rules are intended always seem to be a million miles ahead.

Ocalhoun is right, there has to be a better way than more regulations! Perhaps we need to simplify those regulations, cut right through the chase and get rid of the padding around it.
Kelvin
yes it is very scary how financial giants such as these can actually collapse without warning. And this is probably just the tip of the iceberg where over a trillion dollars in debts will either determine the collapse of the world economy or a close shave with the aid of the US government. Pray that it is not a global economy downturn or we will be looking at the making of the next great depression.
ocalhoun
Kelvin wrote:
or we will be looking at the making of the next great depression.

A more or less worldwide one, too. I remember considering to myself, trying to think of something that I could invest in that would not only survive a US economy crash, but actually improve because of it: a safety investment (a life raft, if you will), but I couldn't think of anything! A total failure of the US economy would be bad news for almost any industry in the world.

((Thank you for reminding me... *starts spin-off thread*))
deanhills
ocalhoun wrote:
A more or less worldwide one, too. I remember considering to myself, trying to think of something that I could invest in that would not only survive a US economy crash, but actually improve because of it: a safety investment (a life raft, if you will), but I couldn't think of anything! A total failure of the US economy would be bad news for almost any industry in the world.

((Thank you for reminding me... *starts spin-off thread*))


Agreed, definitely worldwide. All of us have been wondering about how people can live on debt like they have, and the economy could still be sound. Where I am in the Middle East and specifically in Dubai, plenty of lending going on to large construction industry. People took to contracts and bank loans for large construction projects like fish to water, doing it the "modern" "big world" way, and already there are problems cropping up here too, and I can imagine banks in Dubai, as well as everywhere in the world, are watching what is happening in the United States with bated breath. I am! Think the world is so much connected, that whatever decisions that are taken by the US Government will definitely have a rippling effect through the world with Canada first. What is that saying about when the United States sneezes, Canada catches a cold?
riyadh
why won't it happen...honestly ppl in the US spend more than they earn...there's a reason why they're going thru a credit crunch...most ppl have a house which is is mortaged and very few ppl pay it off and those who do are old by the time they're done...ppl need to be less greedy and spend what they earn...and to me this is god's way saying that what the US is doing to the to the world is not right justified in any way...i personally think that the US should not stick their noses into other ppl's business...rather they should mind things at home
afreedi
Quote:
The Dow Jones Industrial Average was off 229.2 at 10601.8 points while the S&P 500 fell 27.8 to 1133.3.

Stocks were hit after manufacturing data showed new orders at US factories falling 4pc in August, the sharpest contraction for two years. Analysts had forecast a 2.5pc decline.

In London, the FTSE 100 reversed early gains as traders were spooked by news from the US and the European Central Bank’s decision to keep interest rates on hold at 4.2pc. The FTSE 100 was down 24.9 at 4934.7 in late afternoon trading.

Banking and financial shares edged up, led by HBOS – up 13pc to 169p – on renewed confidence that the merger with Lloyds TSB will happen.

Marks & Spencer was another big riser, up 12pc to 222p, after unveiling better-than-expected trading figures and a clampdown on costs.

Mining and energy stocks remained under pressure underlining investors' concern that whatever Congress does, the global economy is facing slowdown. Cairn Energy fell 8.1pc and miner Vedanta 10.4pc.

Source - http://www.telegraph.co.uk/finance/markets/3123562/Dow-Jones-hit-by-economic-woe-and-bailout-fears.html
[MOD - quote tags and source added - Bikerman]
Bikerman
Couldn't resist adding this offering from another place.
Quote:
Following the problems in the sub-prime lending market in America and the run on Northern Rock in the UK, uncertainty has now hit Japan .

In the last 7 days the Origami Bank has folded, the Sumo Bank has gone belly up and the Bonsai Bank announced plans to cut some of its branches.

Yesterday, it was announced that the Karaoke Bank is up for sale and will likely go for a song, while today shares in the Kamikaze Bank were suspended after they nose-dived.

While the Samurai Bank is soldiering on following sharp cutbacks, the Ninja Bank is reported to have taken a hit, but they remain in the black.

Furthermore, 500 staff at the Karate Bank got the chop and analysts report that there is something fishy going on at the Sushi Bank where it is feared that staff may get a raw deal.
atlane
oneday countries will pay for us' bad decision
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