Any1 in the UK feeling the credit crunch?

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It must be bed time by now in the USA

 

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craigie1977, you're missing the point about what this credit crunch is about and how it has sod all to do with commodities and inflation. The credit crunch or "back to normality" - as I call it - is linked to the property bubble of the last 10 years.

People with sh!te credit ratings were being flogged mortgage deals that banks and brokers knew would not or could not be paid back. Also 100% mortgages were also being dished out like candy too along with 6,7,8 x your salary and no deposits. The banks knew full well that they could not underwrite or insure against this risk so instead of saying "F*ck this we ain't lending this amount any more" they decided to "find other ways". You have to bear in mind that these tossers had already propped up and inflated the housing market, so if they did actually refuse to lend - out of common sense - then the market would have collapsed earlier resulting in previous lending being exposed to negative equity etc! So the banks found themselves in between a rock and a hard place. If they refused to lend anymore to sub-primes, chavs and people that just didn't earn enough then the bubble will burst, but if they continued to lend then just maybe...maybe..things might be ok but only if they could underwrite the debt!

Well it nearly worked...

So what they decided to do with those risky debts was to bundle them up into bonds etc and sell them onto to investment houses with the promise of a high yield. These investors took the bait for a while and things were good. Then all of a suddden - shock horror - the sub-primes couldn't pay back the debt, interest rates went up and mortgage fraud was exposed. Fear then entred the market and these bonds were rendered worthless - the banks couldn't sell them and investors couldn't sell them either! The money dried up as the risk was too great.

NOW the banks themselves have no option but to absorb the results of the bad decisions of the past! They have to now absorb the defaults, the non-payments as no-one will invest in their crap bonds! This is resulting in fewer mortgages being offered -as they have no money left due reckless lending in the hope of making a quick buck - and emergency funds being begged from central banks!

That is the Credit Crunch! Please don't confuse economic processes with what can be seen as the criminal activities of our financial institutions.

 

It was a funny article but also a bit of a con. They had the Prius going around as fast as it could, so it's 1.5 engine was being pushed to it's limits which is why it's economy was so poor. The M3 however was just idling. If the M3 had been caning it round the track with the engine properly loaded it would have done similar MPG as the supercars they featured at the start of the show. Probably about the same as the R8.

The Prius is a bit of a con in of itself though. They claim huge MPG figures with it, but in real world conditions it seems that it can only manage mid 40's which most diesels will trounce. Check this real world comparison test of the Prius vs a Jeep. link

 

I completely agree with what you are saying, most Banks have been irresponsible lenders and consumers have been irresponsible borrowers.

However, everything is interrelated, which was the point of my posts. It is not just one thing or another, rather the cumulative effect.

 

I blame the banks and Gordon Brown completly.

When I was at uni, I was hounded by banks to lend this amount and that amount and I wouldn't have to pay it back till I started earning and it would be affordable because I would get a good job after graduating.

I was naive when I went to uni and fell for all that BS and I ended up with a CCJ because of it.

Gordon Brown made the economy were things were going great but he didn't plan for when it wasn't great and because propert prices rose to a stupid level everywhere and people could afford these prices the country has gone tits up because of it because it wasn't sustainable.

Now we are paying for it and its time some of the banks are held responsible for bad lending habits.

 

Economic theory can explain market forces that are affecting food and oil prices i.e. global demand, speculation and taxes. No economic theory can explain the reckless behaviour of the finance markets in relation to home ownership. Therefore they are not interrelated - the well known cycle of food and oil price fluctuations has hit at a time when people and institutions have simply overstretched themselves. Common sense has been thrown out of the window in favour of the "I must get on the housing ladder at any cost" way of thinking. Some of us are now being affected by the pass on of the costs alongside rising mortgage costs!

Would things be different if the sheeple had simply refused to participate in the housing madness or if the banks were not so easy with credit? You bet your arse they would!

It's only now that I'm seeing the importance of living within your means! Hope for the best - plan for the worst!