cavanami Posted February 12, 2009 Report Share Posted February 12, 2009 If the idiot banks and gov would use a bit of common sense...hello banks, don't lend money to people that can not pay it back! Must be a difficult concept for bankers to understand. Hey gov...when you get reports of ponzi schemes, maybe investigate??? another difficult concept??? Link to comment Share on other sites More sharing options...
tartempion Posted February 13, 2009 Report Share Posted February 13, 2009 Well I guess it's the middleman's fault to make money on both parties sides (your house is worth more, you can borrow more, I get my commission anyway, the bank will get more interest out of the deal) Similar to Thai scams: buy Thai jewellery for 1kBaht, sell Europe/USA with 300% profit Just wonder when the Thai card house of excessive credit will collapse, you know these people buying motor bikes and paying back 200% in 48 months, loan sharks etc. Look at the thousands of second hand motorbikes and cars sitting at shops alongside Thai roads No buyers Link to comment Share on other sites More sharing options...
cavanami Posted February 13, 2009 Report Share Posted February 13, 2009 ...and the shops with the second hand motor bikes will not lower their prices! I just bought a 1 year old Honda Click and haggled like hell with a shop I had dealt with before and had a good relationship with...nope, maybe got the price down 1K baht, but the bike has been OK, so mai pen lai. Link to comment Share on other sites More sharing options...
buffalo_bill Posted February 13, 2009 Report Share Posted February 13, 2009 If the idiot banks and gov would use a bit of common sense...hello banks, don't lend money to people that can not pay it back! No banks will ever know if they get their money back , it is a system of hope and trusting if it is not asset backed credits . Which is why they invented rating companies to save the lenders from loosing it . The fundamental reasons for the current crisis were - the Reagonomics inflating the marketplace with cheap money and loosening control of the banking system - the rating agencies distributing high ratings for "asset back securities " and thus implanting value into doubtful papers . They are the real final culprits to my opinion . They created the confidence that the bankers needed to buy the papers because they were AAA in the documents. Link to comment Share on other sites More sharing options...
cavanami Posted February 13, 2009 Report Share Posted February 13, 2009 What I saw in the USA, some applies to buy a $300K house. They make say, $2000/month. There house payments are $1500/month, leaving nothing for food, insurance, maintenance, etc. When I bought my first house, I had to be making four times what my house payment would be in order to get the loan PLUS put some % cash down payment. Before the crash, 0% down and they never did the math to see that the person would never be able to sustain making monthly payments! Link to comment Share on other sites More sharing options...
HeartThais Posted February 13, 2009 Report Share Posted February 13, 2009 - the rating agencies distributing high ratings for "asset back securities " and thus implanting value into doubtful papers . They are the real final culprits to my opinion . They created the confidence that the bankers needed to buy the papers because they were AAA in the documents. The banks have no one to blame but themselves. The banks don't need credit agencies to rate products. The credit ratings are for their customers benefit as they usually want a third party to rate the products. The banks have their own rating algorithms and all have desks dedicated to "ratings arbitrage" where they used financial engineering to game the credit agencies to get higher ratings than they deserved. IMO, the actual causes were a combination of widespread fraud (by underwriters), excessive leverage to juice shareholder returns, and a compensation system that encouraged excessive risk taking. These are all things that should have been kept in check by the bank's risk mgmt function. Unfortunately, risk mgmt at most investment banks is the stepchild. Risk mgmt pays less than front-office positions and a lot of younger guys only take these positions to try and move into trading. The guys who end up in risk mgmt are really no match politically for the guys in sales & trading. Link to comment Share on other sites More sharing options...
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