Boris

I'd agree. Brown ditched the key question which was how to make the country fairer. He tried to have high investment without sufficiently creating reserves - because this would have been unpopular.

 

And that in a nutshell is what is wrong wiht politics in this country.

They are mostly career politicians that create policies to keep themselves in a job rather than to do what is best for the country.

 

Not sure we can call the US debt fraudulent Hornmeister. The basic problem was that the US government(Clinton I think) decided that banks should lend money to everyone to buy houses, irrespective of their credit worthiness (or at least on very lax terms). Now the banks packaging up those mortgages into tradable securities wasn't the best idea, but we can't get away from the fact that if a bank lends money to someone who can't pay it back, then it's going to create a problem when they default in vast numbers!

 

The UK was in a serious mess due to our massive public spending and debt - before the global crash. Well before the toxic debt in the US became an issue, knowledgeable financial advisers/consultants were trying to move their clients from UK stocks to bonds/cash, to consolidate their gains and to ease the effect of what they thought was going to be a UK slump. Of course, with stock prices still rising this was a difficult "sell" and many clients preferred to leave things be, hence suffering the 40% drop in investment and pension funds over the next few years. Indeed, in a way, the global crash happened at a very opportune time for Labour who conveniently found somewhere to place the blame for their own mismanagement.

 

My understanding is that banks over pushed mortgages gambling that that housing prices would continue to rise. They didn't. the Housing bubble burst and hence there was no liquidity or security for the loans. These bad debts were packaged up into funds sold as good debt, the banks then betting against those funds doing well. That's the fraudulent bit.

Essentially it was government policy in the states I think it was Clinton, that was the trigger by over promoting home ownership.

Needless to say we were ill equipped to prevent it and more seriously had no insurance policy for dealing with the fallout.

The government didn't bail out bankers, they bailed out our savings and pensions. Bankers are getting bonuses when they make profits, which are essential to paying off the bail out and improving bank stock prices so that when the government sell off their share they get our money back. Of course this assumes that they handle the sell off correctly rather than do another post office with it.

 

I do think there is a massive problem that people have in this country about sounding ‘rich’ or as you put, being ‘toffs’. If someone said the same negative comments about someone sounding common or poor, many including myself would be incredibly angry and there would be an incredible backlash.

Of course your point may just be that someone who came from a more well-off background than some of us on here, may not be able to understand the day to day challenges of working on the poverty line, which I’m sure is true. True of most politicians I would assume. As long as you are not saying that these ‘toffs’ do not care about the poor, or want them to do well, because I would say that is unequivocally incorrect.

The global financial crisis was caused by American banks giving mortgages to those who couldn’t afford it. That was not in our control. BUT Gordon Brown’s deregulation of banks led to an incredible pattern of uncontrollable borrowing that meant we were hit so much harder than we needed to be.

The purpose of banks is to make money, they make the country a lot of it, but as a group, they will push to the edge of the limits they are set. That is why the regulations need to be there. I don’t know if you watch Formula 1 but it is fairly similar, teams push within the limits (and sometimes exceed them). You cannot take these away or you get cars that are too fast and powerful that they lose control.

We have a large deficit and the choice is twofold. Imagine you have run up a massive credit card bill which you are struggling to repay. You can live on baked beans and water for a couple of months and pay back what you owe immediately. Or you can do what Labour want us to do, which is take out more loans to pay for the current debt, and push the problem later into the future.

I would love to be on the left. I work for the NHS and I really wish their policies worked. Even though Ed Milliband has absolutely no grasp of economics.

Google how well the economy does and what the levels of debt are under each government however and it is clear that the Conservatives know how to run the economy better. And when the economy is better, pretty much everything is better.

 

Well the packaging of mortgages into MBS happened before they went "bad". The problem was due to these packages being regarded as of solid credit worthiness when in reality they were a risky propostion due to the lax rules on the underlying mortgages. The banks in general didn't make any money out of this. All that happened is mortgages were made which shouldn't have been and when the defaults began so did the pain.

 

Now we have that the banking crisis was not a 'banking crisis'. The right in this country live on nothing, but ideology and hot air.

 

:]]. :]]

 

You're both a in the right area; under Clinton (Democrat operating under a Republican controlled Congress), the US banking industries were deregulated to allow for poorer families to obtain mortgages that were ordinarily not be approved under the regulations of the time. That deregulation allowed the banks to provide mortgages at outlandish rates; we're talking more than 4-5 times higher than market average for families who tended to be among the lowest income borrowers.

These families could often have afforded the houses at normal rates, but the interest on the exorbitant mortgages these banks could now push out was crippling. As I'm sure any home owner can attest to, interest payments on a mortgage are an enormous part of your monthly obligations at the best of times; the enormous rates low income families were being subjected just set them up for failure.

But the banks were looking at the insane interest they were getting on these loans and rubbing their hands. They sold off some of the future earnings on this interest (essentially taking some upfront payments while other American/foreign banks speculated on the long term interest) as financial investment packages while still maintaining ownership of a good portion of the future interest for themselves.

For a time, the US market boomed at more people could finally buy a house. In the short term, this was great; however, it created a bubble that burst once these families couldn't keep up with payments anymore. The spiking market pushed up property taxes (which might make up 25-30% of your monthly payment on average in the US), further increasing liabilities on monthly payments to levels that households using subprime mortgages simply couldn't keep up with. Compounded with "predatory" mortgages like ARMs and Balloon loans, the impact was enormous.

So the defaults started, then the foreclosures. Initially it wasn't an issue; a few defaults are expected. But it just kept cascading from there and, thanks to the number of foreign bank who had bought into this subprime debt, a global fallout ensued. The US bore the brunt of the hit, of course, because it had the largest percentage of the debt. In contrast, heavily regulated countries like Canada were practically untouched. Canadian banks have been buying up a bunch of US banks recently, notably BMO, who are exploding in this country right now. Many US banks are ripe for takeover and the Canadian banks came through everything virtually unscathed by comparison.

None of this excuses Brown's deficit spending, of course, but there is no denying this fallout has a massive impact on the majority of countries where banking was deregulated to the point of allowing speculation on these skyhigh mortgage rates.

Obviously the subprime crisis has been a massive bone of contention over here, so there has been a lot of discussion and analysis. The irony still remains that a significant percentage of the households who defaulted wouldn't have done so under market average rates (as the FHA mortgage plan has showed).

 

Don't forget how we got here.

Unfortunately there isn't one good party nr a natural leader amongst them. Miliband, who claims the torys are full of Eton millionaires has a £2.5m house with a 400k mortgage and is believed to have earn a further £300k outside of his £130k a year salary. Cameron is a PR puppet and the lib dems are about to be obliterated.

At least in the 60's and 70's the leaders, no matter how controversial we're leaders and not PR spin muppets

 

Spot on.

 

Of course Tories run the economy "better". It's plain common sense.

Capitalism works "best" in terms of monetary profits, a booming stock market and fabulous dividends to share holders when it exploits the hardest and cruellest. When it can pay the least in overheads (such as workers' wages), pay the least in taxes towards society and extract every filthy ha'penny it possibly can in profits.

A softer capitalist government like Labour increases overheads through outrages such as the minimum wage (remember how that was going to devastate UK business?), corporate tax increases (guaranteed to drive our dear and beloved exploiters and billionaires away!) and increased social spending.

How can the stock market and its super-intelligent, formula one driving (tee hee) brokers and bankers possibly thrive under such impossible conditions?

So if you want the economy to do "well", vote Tory.

If you want an end to the whole rotten stinking capitalist system that's not only ruining so many lives around the world, but is also holding back human development and wasting the planet's irreplaceable resources, then campaign for socialism.

 

I'll vote for anybody who hasn't done PPE.

 

Clive - government spending at the moment is about 43% of GDP (and has been at that level for about 15 years). Outside of London we have entire communities heavily reliant on the public sector for their employment.

Hardly hardcore free market capitalism is it?

 

I like Clive's post, but it's not necessarily the case that the most exploitative wins. It depends on the commercial area. Certainly some countries more equal and with better social services, such as Germany and Sweden compete well with the UK.

The UK model is highly dysfunctional even for capitalism.

 

Mike I'd invite you to ask yourself why it is that Upper Class people so not wish their children to be educated with, or (generally) even marry yours.

Class goes beyond individual worth. There are lots of fantastic people in every class and the Upper and Middle classes are no exceptions. They also have some tremendous virtues, values and strengths.

But sharing is not one of them and they intend to stay on top. Sadly this leaves many other people with a mountain to climb to survive let alone reach their potential.

Any upper class person who devotes their life to 'good work' and helping others is deluding themselves if they don't recognise that the system that benefits them is the one that causes the hardship.

 

Could not disagree with you more. This is absolute *******s.

 

I could not agree with you more.

 

Moose - the upper class pay for private education not because they want to separate from the rest of us, but because educational outcomes are better in private schools. You will be amazed to learn that other classes can actually pay and get the same private education service! I know plenty of families who forego exotic holidays so they can give their children the best possible chance of a good education.

The best part of all this which should please even you? The private education payers get no rebate on their income tax, so they pay towards a service that they don't use thus paying twice and improving education for everyone.

Why you want to hammer these people I have no idea. Jealousy and resentment at a guess.

 

You are being purposefully daft. Average incomes in this country mean that private education is wholly beyond the means of most.

I'm not slating anyone individually, but this is undeniably how it is. Denying it involves preposterous contortions of logic. You may not like it, or feel that it's an unhelpful conclusion but that is how the world is. Peripheral mobility is almost meaningless.

 

Hey Jumbo! Our family goes without exotic foreign holidays. In fact we go without any type of holiday most years. Even then we can't afford private education. In fact, because we sweat for the minimum wage, we can barely afford to buy the uniforms for the state schools and struggle to pay for their school trips and activities. We certainly can't afford for them to take any private music lessons or sports clubs or anything else. Can't afford to take one of them to football more than once in a blue moon when there's a special offer on.

Although we're working class, we'd like our children (whom we think are just as important as yours) to have a good education and the best chances in life too. Unfortunately at the moment they're denied it, through lack of access to resources for want of money. All the best and finest and most educational is strictly reserved for the well to do.

Any suggestions for us?

 

I understand your point that many cannot afford private school fees, but private school pupils (disproportionately) pay for their place in state schools without taking it up.

This means a smaller class size for the state sector than there should and would be otherwise.

The fees they pay are taxed, giving even more money back to the government to put back into the system.

Private schools also give a certain number of scholarships each year to academic and hard working pupils who apply for them, and although this is growing, should happen more.

You are also wrong to say that private school pupils are solely from the upper classes, I know quite a few parents who took out loans, remortgaged their houses or did inventive things like rent a room in their house to foreign students, to pay for their children's education, due to a lack or decent schools in the area.

Parents do not send their children to private schools to avoid the working classes. They send them as education is the most important investment in your child's future, and smaller classes and greater resources and facilities provide better results.

Because of this, there is an overall net benefit.

 

As you seem to be openly admitting that private education is better than state education, one suggestion is for you to try and get state system to pull it's finger out. Less striking, less moaning, less about kids "rights" and more about self discipline, more accountability and responsibility from both pupils and staff, would be a good start.

 

Yes it's beyond many, but people paying for their kids to be educated doesn't impact anyone else. In fact it reduces strain on the State.

You disliking it when it doesn't impact others is simply jealousy.

 

And how do people paying for their kids to be educated privately make things worse for you?

In terms of your issues, we should campaign for State resource to be redirected away from the all consuming NHS management structure back towards education in my opinion. Government spending is huge - it's a question of what is the priority.

 

The state system is very good. This is why going to private school is not merely about education.

 

Some State schools are very good. But if a parent happens to be in an area where the state schools are poor, then you shouldn't be bitter if they decide they want to pay for private education.

 

It's worth noting that private schools offer a benefit that goes beyond education.

I have a friend who teaches at a very exclusive private school in this area, and she says the social benefits from the contacts they make at this school go well beyond anything you could ever hope to see at a normal school. A cursory look at the last names of the students is basically a who's who of the local creme de la creme, representing extremely important companies and social networks.

My friends are sending both of their kids there (they get a substantial discount as staff, but it's still expensive even then) because it's going to be a massive boost on their social prospects, not because of the educational benefits. Former students of the school essentially have their hooks into virtually every important company and industry in the area purely because of who the parents of their school friends/contacts are.

It's quite fascinating hearing about some of the internal politics at these schools.

 

Certainly true of the top ones, but I think you are exaggerating things. For every exclusive school you mention there will be a larger number of private schools which are simply made up the offspring of surgeons, dentists, accountants and small business owners. Not really a gold laden network - just a bunch of hard working people making sacrifices to give their kids a good start in life in an environment that is conducive to learning and discipline. It's unlikely to whisk you into Goldmans for a work placement on its own.

 

By the way Arakel - forgot to mention what an excellent post you made earlier in the thread. Very interesting and informative.

 

(about bank crisis)

 

Our window cleaner sends their child to a private school. The cost is easily met by the wife working as a dinner lady, and them both giving up their 20 cigs a day habit. He reckons they still have £1500 clear each year from that, which they spend on a foreign holiday.

For some, it is down to priorities, I guess. Some just moan about the opportunities others get, whilst others make the most of them.

 

It's just down to the fact I live over here and was buying a house slap bang in the middle of it all (and then re-financing when the rates went to all time historical lows - our mortage is 40% lower than when we first bought the house now!). I was very aware of what was going on in the market as a result.

 

It's a big 'so what' from me. Maybe they can send one, but it'll be some school canteen if they can send two. The cost of private secondary education is easily 20k per annum once all the extras are factored in.

I can perfectly understand why parents want to do the best for their kids, but that's not my issue. Just try for once ZZ try to rise above this petty individualism and acknowledge how the system works. The very wealthiest will simply find another more expensive school if they begin to become chockabloc with proles. Whilst it's a handful the schools can point to their 'inclusivity' but it's not their core business.

You must know that it is fanciful to suggest that it is a serious option for millions of people, whatever they do. Try to consider the behaviour of millions of people rather than one heroic window cleaner and ask why does it all mostly stay the same?