Could anyone explain what caused the collapse of some American Banks and why this has destabilised the world economy?
The way I see it, the US banks (like the UK banks) simply loaned too much money to people that could not pay it back. The have loaned the money to so-called NINJAS (dunno if it’s spelt right), people with no job and no assets. This has had a delayed reaction but has triggered a worldwide banking and stock market crisis. It seemed to start in the US, but it is now gathering momentum and we certainly haven’t seen the worst of it yet.
I also believe that the top banking ‘fat cats’ and their share holders have ‘creamed’ too many profits without the fore-thought of putting assets or moneys aside to fend off future troubles. We saw the CEO of Lehmanns bank on TV earlier who is believed to have been paid $500 million, but denied it and said it was more like $250 million. Still a HUGE sum, and if he is typical of all the bank CEO’s, then I’m affraid this probably hasn’t helped the current crisis.
It seems that the USA is most to blame, but the UK and everyone else are certainly not blameless. The UK govt and finance industry knew there was a crisis looming over 12 months ago, but simply seem to have sat back and do nothing really!
In a nutshell, greed and corruption by banks and institutions that lend money.
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Greedy bankers making stupid loans that could never have been repaid and now we all suffer because of it.
No one can lend anything, so no one has anything to spend. tis means no one can get work to make stuff because no one wants to buy it.
When the US economy sneezes, the rest of the capitalist world gets a cold.
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If you check the history of before Adolf Hitler came to power the same thing happened there was a crash in the stock markets which lead to the wall street crash, i believe the cause is Tony Blair as we had 10 years of goodness though borrowing money and now we are in debt!!
Why is Gordon Brown getting the blame because it is not his fault Blame tony blair!!
The banks lend out too much money with all the credit cards and now because of inflation people can not pay it back!
Look up the history of the failure of the stock market and the Wall Street Crash and you will see we are going through the same thing now! We just need to hope that someone like Adolf Hitler does not come into power again!!!
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The culture of corporate greed & excess. Companies now want 100 percent profit, plus money on top for their overheads.
The victims of this are us honest hard working folk, who are being expected to bail the greedy rich out of their troubles, despite them still having plenty. We get squeezed, they get fatter.
Capitalism has failed. There is nothing wrong with making money from goods & services. It falls down when you try to make money from money, through shares, unit trusts, futures etc.
These idiots play with our livelihoods just to get the big bonuses and do not care whether we end up in poverty or not.
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The banks wanted to increase their revenues so they gave out too many loans.
Some people bought some overpriced housed they could not afford.
Then they stopped paying their mortgages.
Then the banks that they borrowed money from had less money coming in so they could not provide as many new mortgage loans.
Then the home prices started to drop because people could not get loans as easily.
Also the banks cannot provide loans for other things like cars, vacations, furniture, etc.
When people cannot borrow money businesses cannot sell things as easily.
Then production and prices are reduced until the price drops enough for people to pay without having to borrow money.
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It’s part of the normal economic cycle under capitalism, a system which is driven by greed. In particular the problem now has been caused by the failure of governments to regulate the markets, believing that the markets can best regulate themselves. Banks have failed to act conservatively and cautiously and these are the consequences of the greed and stupidity of those running the banks. It will get worse before it gets better.
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The way I see it, the US banks (like the UK banks) simply loaned too much money to people that could not pay it back. The have loaned the money to so-called NINJAS (dunno if it’s spelt right), people with no job and no assets. This has had a delayed reaction but has triggered a worldwide banking and stock market crisis. It seemed to start in the US, but it is now gathering momentum and we certainly haven’t seen the worst of it yet.
I also believe that the top banking ‘fat cats’ and their share holders have ‘creamed’ too many profits without the fore-thought of putting assets or moneys aside to fend off future troubles. We saw the CEO of Lehmanns bank on TV earlier who is believed to have been paid $500 million, but denied it and said it was more like $250 million. Still a HUGE sum, and if he is typical of all the bank CEO’s, then I’m affraid this probably hasn’t helped the current crisis.
It seems that the USA is most to blame, but the UK and everyone else are certainly not blameless. The UK govt and finance industry knew there was a crisis looming over 12 months ago, but simply seem to have sat back and do nothing really!
References :