Rant
Rant:
the media are mostly to blame IMO; anyone catch panorama the other day? a Dummed down, subjective view of how traders and bankers are all to blame for people struggling to keep up with their mortgage payments, an old boy who lost 2/3rds of his savings from the downturn in HBOS shares etc... a woman who lost her Job in a support role at Lehman...
... it's the popular media that exaccerbate the problem; traders + bankers, as a general rule, are easy targets for popular culture - always have been, always will be.
the fact that
a) It's mostly the governments fault, both US and UK
b) the same popular culture attaches a level of popularity / attractiveness to those who exhibit conspicuous consumption; this weeks new shoes, see what the hot celebs are wearing (affluenza I think it is known as), "bling", Cable TV, 40 inch HDTV's etc... (if you want to see what I mean, just go to your nearest dodgy area; more satellite dishes that you can shake a stick at) and so on - the problem is that its the morons who fall for such things are usually not in a position to afford it, so they put it on their credit card. They spend so much on TV etc that they are so engrossed in the Jeremy Kyle show that they forget to get off their **** and get jobs. Ergo they cant afford to pay their credit card bill.
c) Sorry grandad, but you shouldnt have bought the shares if you couldnt accept the risk (we'll breeze over the diversification issue). Tough. NS&I have been around for long enough for you to have heard about them, under any and all of their guises. Same for you lady; people lose jobs - that is the problem with having one and taking it for granted. Yes its unfortunate, but you are not entitled to any special treatment.
d) And as for people struggling to keep up with mortgate repayments; well, the same goes. When you signed on the line, you agreed to accept the risk that mortgage payments are subject to change. If you didnt understand it, then tough again. Dont know what LIBOR is? well, seeing as it kinda determines how much you are going to pay for your house, you should have bloody found out!
e) None of the above has got anything to do with me, or any one group of bankers / traders. Sub prime mortgages are a by product of legislation that went through in the Clinton era (AFAIK, Bush made a few attempts to stop it, but congress turned them down). They were inevitable, and a by-product of political correctness, which in turn is a result of the victim culture we have created ourselves.
f) for decades "people" (a massive generalisation) have been living beyond their means, simple as. Now the bill has arrived, defaults are occuring up and down the country. Because "people" were spending so much borrowed money, interest rates had to rise to curb inflation. Higher inflation + interest meant people had less "real" money, to spend, so much so that they couldnt afford to cover the payments on money they had already spent. Barclaycard are less likely to get your money than they were, any fool can see that. Abbey National are less likely to get your mortgate payment that they were before, because the size of the payment hads gone up relative to your income. Therefore the credit worthiness and projected income are going to be less for barclaycard and Abbey National as a cumulative result of excessive consumer soending. Result - "credit crunch".
...seem to go unmentioned.
"Sub-Prime", "Bad Credit" are not products of the imagination of traders / bankers who fancied bigger bonuses, they are the product of the 80's - 00's culture. End of.
One last thing, (seeing as Im on a rant I'm going to whether you like it or not), "Bonus Culture". On this issue I will give some ground, benchmarking results in a bull market mean fantastic payouts for some Beta returns; yes, largely unjust. However, it p1sses me off when the press slam the packages of top bankers and CEO's of banks because of their "Bonus". "Bonuses" are not what people imagine them to be - it is, infact, part of the package. You would be very hard pressed to find someone capable of running some of these organisations on a six figure salary alone; a "bonus" isnt a "suprise", it is part of the renumeration package that is half expected, half an incentive. Furthermore, don't give me sh!t because I'm earning more than you. It doesnt matter if you think I deserve it or not, you havent got the foggiest what it is I actually do. Me getting good money doesn;t come at your expense - unless you were on the other end of one of my deals, in which case you had BETTER know what you are doing, so it serves you right.
(on a side note, watched "trawlermen" last night about fisherman - struck me as a profession quite similar to trading, a nice analogy - same mix of knowledge; understanding; experience. Fisherman, though, are not labelled as compulsive gambers , are they!!).
(feel better for that).
