mick miller Posted February 2, 2017 Report Share Posted February 2, 2017 (edited) Whilst going through my daily economics fix I stumbled across this video by Professor Steve Keen. Now, some of you may not of heard of Steve Keen but he successfully predicted both the financial crisis and the slowdown/slump in China's economy. I kinda like listening to what Prof. Keen has to say, quite a lot of it makes sense however many PW'ers may not be so pleased with him as he directly links the financial crash of 2008 not to Blair, or Cameron but pinned directly to dear old Maggie and her deregulation of the financial markets (Big Bang). To be honest, the evidence pretty much supports that. Anyhow, I digress. Prof. Keen is a believer in Brexit it transpires and here's why... Short on time? Just watch the first few minutes. Edited February 2, 2017 by mick miller Quote Link to comment Share on other sites More sharing options...
AVB Posted February 2, 2017 Report Share Posted February 2, 2017 Big Bang was about one event - the removal of restrictions on the London stock market. Deregulation may have started with Maggie but accelerated through Blair/Brown. The biggest cause of the crisis was Clinton forcing banks in the US to lend to people who couldn't afford mortgages. The only way banks could cover this risk was to securitise the mortgage (bundle it up with other mortgages of lower risk and sell as a Security with a fixed revenue stream). And hence the growth in Securitised Products especially Mortgage Backed Securities. And the house of cards started to be built. The rest is history. Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 2, 2017 Author Report Share Posted February 2, 2017 Unlikely that Clinton made this decision alone, most certainly this was lobbied for; question is by whom? I like Prof. Keen. he's got a pretty different outlook on global economics to the usual suspects. It will be interesting to see if his predictions for Canada, Australia (and the other 11) meet the same sticky end of maximum debt and subsequent financial crisis. By interesting I do, of course, mean terrifying. Quote Link to comment Share on other sites More sharing options...
AVB Posted February 2, 2017 Report Share Posted February 2, 2017 I don't know much about him. However, I am always sceptical of academic economists who have published a book that they want to sell! I'm not saying he is wrong though. Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 2, 2017 Author Report Share Posted February 2, 2017 (edited) Wise to be sceptical, he's always worth a look though. Perhaps in a very simplistic way he uses the chart below to illustrate the change in debt to % of GDP following the deregulation. But doesn't use this one. Edited February 2, 2017 by mick miller Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 2, 2017 Author Report Share Posted February 2, 2017 (edited) Bring it back OT, I found it interesting that he viewed Brexit as the best alternative to the option of remaining and his belief that the EU will inevitably split, whether we stay or not. Having listened to some of his previous interviews I would have thought he would have favoured remaining in the EU. Edited February 2, 2017 by mick miller Quote Link to comment Share on other sites More sharing options...
wandringstar Posted February 2, 2017 Report Share Posted February 2, 2017 best thing that ever happened to the banks, government bailouts, and never have to pay interest on peoples money ever again. think how much they make in this practice, 8 years ago you could get 7 percent, now look at it, why would it ever go back to what it was? savings interest is all but a memory now. Quote Link to comment Share on other sites More sharing options...
AVB Posted February 2, 2017 Report Share Posted February 2, 2017 best thing that ever happened to the banks, government bailouts, and never have to pay interest on peoples money ever again. think how much they make in this practice, 8 years ago you could get 7 percent, now look at it, why would it ever go back to what it was? savings interest is all but a memory now. Utter tosh. It's harder to make money in a low interest rate environment. Also the regulatory regime post the crash is now strangling banks. Quote Link to comment Share on other sites More sharing options...
wandringstar Posted February 2, 2017 Report Share Posted February 2, 2017 are you a banker? I cant think of a more generous scenario than running your bank into the ground, then someone writes off your debts and off you go again. if its so hard to make money in a low interest environment, why not put up the rates? I know why. I don't think its tosh, its been 8 years now, and they are riding high, have you seen the arrangement fee on a mortgage? tell me how many billions they have made/saved by refusing interest. Quote Link to comment Share on other sites More sharing options...
AVB Posted February 2, 2017 Report Share Posted February 2, 2017 are you a banker? I cant think of a more generous scenario than running your bank into the ground, then someone writes off your debts and off you go again. if its so hard to make money in a low interest environment, why not put up the rates? I know why. I don't think its tosh, its been 8 years now, and they are riding high, have you seen the arrangement fee on a mortgage? tell me how many billions they have made/saved by refusing interest. What debts have been written off? How much has been paid in penalty fees for those Banks (such as RBS) who's shares got acquired by the government? And to answer the question why not put the rates up? Well I could but if I do that in isolation to everybody else (who are ultimately pegged to the base rate) then I would go broke in days. For example if I offer 10% interest rate on savings and 12% on loans. Then if everybody is offering 1%-2% then I get a lot of savers (liabilities) who I have to pay at 10% but no borrowers (assets) at 12% as they will go to another bank who will lend at 2%. I need a balance of savers and borrowers (liabilities and assets). The market sets the rates and the market is dictated by base rates. As for the cost of mortgage arrangement fees. Have you seen the interest rates you can borrow at. It is almost free. Quote Link to comment Share on other sites More sharing options...
Lloyd90 Posted February 2, 2017 Report Share Posted February 2, 2017 What's he saying about the housing market? I want to buy within the next year but some claim there is a big crash coming. Quote Link to comment Share on other sites More sharing options...
wandringstar Posted February 2, 2017 Report Share Posted February 2, 2017 what would you call it then, when the banks were on the verge of total collapse through their reckless lending and casino banking, and the government stepped in and rescued them with our money, if that's not some sort of debt write off, then what was it? They were rescued so they could continue, without the rescue, they would have gone under, which in a normal world, happens to other businesses. no point in giving it a different name. Quote Link to comment Share on other sites More sharing options...
oowee Posted February 2, 2017 Report Share Posted February 2, 2017 They were rescued to save the rest of us. Quote Link to comment Share on other sites More sharing options...
AVB Posted February 2, 2017 Report Share Posted February 2, 2017 What's he saying about the housing market? I want to buy within the next year but some claim there is a big crash coming. Look at it this way. Would I invest in property today. I wouldn't Would I buy a property to live in. I would. Regardless of any crash it's still your home and assuming you don't have to sell then it doesn't matter what it is worth. Quote Link to comment Share on other sites More sharing options...
wandringstar Posted February 2, 2017 Report Share Posted February 2, 2017 ive heard about a big crash coming, I think it needs one, to get the youngsters on the ladder. I don't subscribe to individuals or companies being allowed to own 100s of domestic properties. There should be a maximum amount any one individual or company can own. houses are for homes and people first, I am saying this as a capitalist not a socialist. Quote Link to comment Share on other sites More sharing options...
Vince Green Posted February 2, 2017 Report Share Posted February 2, 2017 The biggest cause of the crisis was Clinton forcing banks in the US to lend to people who couldn't afford mortgages. The only way banks could cover this risk was to securitise the mortgage (bundle it up with other mortgages of lower risk and sell as a Security with a fixed revenue stream). And hence the growth in Securitised Products especially Mortgage Backed Securities. And the house of cards started to be built. The rest is history. I would have a slightly different take on the history. After 9/11 The Fed feared a crash and pumped money into the economy to oil the wheels. That money ended up as dead money in the banks and the banks themselves lowered the bar to get it moved because holding it made them look like they were under performing. That's basically my recollection of events . Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 2, 2017 Author Report Share Posted February 2, 2017 http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article Quote Link to comment Share on other sites More sharing options...
keg Posted February 3, 2017 Report Share Posted February 3, 2017 what would you call it then, when the banks were on the verge of total collapse through their reckless lending and casino banking, and the government stepped in and rescued them with our money, if that's not some sort of debt write off, then what was it? They were rescued so they could continue, without the rescue, they would have gone under, which in a normal world, happens to other businesses. no point in giving it a different name. If there was a run on the banks and teh gtovt let them fold, the great depression would have seemed like a walk in the park. Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 3, 2017 Author Report Share Posted February 3, 2017 Apologies, I posted the wrong charts. The charts Steve Keen uses are specifically those for PRIVATE debt as % of GDP, which shot up after deregulation (I have been corrected) - it's the level of private debt in the economy (and money) that almost all mainstream economist fail to take into account or recognise as having a detrimental effect on the countries economy as a whole. Quote Link to comment Share on other sites More sharing options...
AVB Posted February 3, 2017 Report Share Posted February 3, 2017 Apologies, I posted the wrong charts. The charts Steve Keen uses are specifically those for PRIVATE debt as % of GDP, which shot up after deregulation (I have been corrected) - it's the level of private debt in the economy (and money) that almost all mainstream economist fail to take into account or recognise as having a detrimental effect on the countries economy as a whole. Any idea why that would be? Relaxing of lending is one reason but only a small part of deregulation has related to that. And lending restrictions have tightened up recently (Mortgage Credit Directive) as anybody who has tried to get a mortgage will vouch but doesn't seem to have an effect on personal lending. I think there are other factors to take into account other than banking deregulation. But I don't know what Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 3, 2017 Author Report Share Posted February 3, 2017 (edited) I can't remember the his specific argument but found this video which repeats his belief. 15:46 onwards. I'm not an expert on Economics, or for that matter, Prof. Keen either I just find some of what he discusses interesting from an alternative perspective to the mainstream, he can be a little bit of a doom-monger at times though! Edited February 3, 2017 by mick miller Quote Link to comment Share on other sites More sharing options...
Rewulf Posted February 3, 2017 Report Share Posted February 3, 2017 Utter tosh. It's harder to make money in a low interest rate environment. Also the regulatory regime post the crash is now strangling banks. My nephew is an investment banker in London,he says banks are loving this environment . Look at it this way. Would I invest in property today. I wouldn't Would I buy a property to live in. I would. Regardless of any crash it's still your home and assuming you don't have to sell then it doesn't matter what it is worth. Its not really a good thing to buy a property at a time of high prices,if there was a market crash (Im not saying there will be ) negative equity is not a pleasant place to be. Like you say ,if you need somewhere to live,then fair enough ,but if its the first rung of the ladder for you,due consideration should be taken to avoid extremely expensive future problems. The last market crash left plenty of people in terrible situations ,particularly those in flats/apartments where they had paid through the nose for a property,only to see it devalue by 50 % or more ,and never properly recover. Many of the repos were voluntary I was told. Quote Link to comment Share on other sites More sharing options...
wandringstar Posted February 3, 2017 Report Share Posted February 3, 2017 apart from the 1990s, has there ever really been a crash? a correction,yes, a rejection of idiots who manipulated gullible lenders, again yes, but an actual crash, no, I dont think so. Quote Link to comment Share on other sites More sharing options...
mick miller Posted February 3, 2017 Author Report Share Posted February 3, 2017 A new 'Keen' update - this one is easier on the eyes! Quote Link to comment Share on other sites More sharing options...
AVB Posted February 3, 2017 Report Share Posted February 3, 2017 My nephew is an investment banker in London,he says banks are loving this environment . Its not really a good thing to buy a property at a time of high prices,if there was a market crash (Im not saying there will be ) negative equity is not a pleasant place to be. Like you say ,if you need somewhere to live,then fair enough ,but if its the first rung of the ladder for you,due consideration should be taken to avoid extremely expensive future problems. The last market crash left plenty of people in terrible situations ,particularly those in flats/apartments where they had paid through the nose for a property,only to see it devalue by 50 % or more ,and never properly recover. Many of the repos were voluntary I was told. Investment Banks are less impacted by Low interest rates (because they don't take deposits or lend money) but who does your Nephew work for and what market is he in? Because, trust me, few are making money at the moment. Corporate Advisory - not many big deals going down Equity trading - margins are cut to the bone FICC - no volume in Fixes Income. Yields rising. Volatility in FX but low margin. Commodities is pretty dead. Quote Link to comment Share on other sites More sharing options...
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