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I hate that word. Like![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
courtcat79 said in her entry, it'd be good if the media could stop fucking scaring people and just report the news for once. And I'm not just talking about the balloon economy going pop either - but that's another rant for another day.
Also, protecting America? Please, people; you are not the only country on the planet that got hit with this. It's a global market; a whole lot of people the world over got screwed when a bunch of guys in suits decided to play a really fucked-up game of Monopoly.
Thinking about the economy and what-all happened, I'm trying to remember the really simplistic explanation I heard when all this started. Basically, so far as I can tell, financial institutions were generating income by selling off chunks of debt to other financial institutions, and then oops! Defaults happened and no one had the first idea of who was supposed to have what and there wasn't the money to back it up anyway. This whole idea of juggling bits of paper that are supposed to represent money but aren't really backed by viable resources strikes me as a very Confederate way of thinking. "We've got no money? Let's print more! Never mind that we haven't got the actual hard resources to back this money up; when we win the war, we'll have all we need to cover the deficit caused!" Except they didn't win the war, did they? With this investment banking nonsense, it's the same thing: "We need money now? Let's sell off a bit of this debt that may or may not be backed by actual money." You lose track, after awhile, of what's supposed to go where.
From what I can tell in the case of the UK, this wouldn't have been a problem when more of the banks were under regulation ... or at least, not a problem for the average joe on the street. Back in the day, an investment bank and a regular bog-standard bank couldn't operate from the same financial pool ... if I'm remembering right, anyway. This meant that if some shit like this did happen, people's actual money would be safe from the fallout and there wouldn't be bank runs or similar. However, that regulation was taken out of commission, and thus we've had a few building societies close down and others requiring mass government bail-outs, which isn't a solution to the problem for the people at large because the mistakes of a few guys in suits are still being dumped on the taxpayer.
Either way, the solution as I see it? Regulation of some kind. Things I'd like to see happening in the wake of this:
- Investment banking institutions being separated from banks doing personal and business accounts, so that the hit isn't on people at large.
- If a financial institution does get into some kind of trouble, there should be a mandate that the people running said financial institution must forsake their golden parachutes and six-figure bonuses for at least five years before the government agrees to bail them out. That would likely encourage said institutions to think very carefully about taking stupid risks with other people's money, mortgages and assorted debts. Seriously, how can someone even think something like, "Oh, hey, we just screwed with everyone's money and are driving people into the poorhouse in droves; let's give ourselves a massive bonus and ensure that we have a nice cushy six-figure nest when we get sacked for incompetence!"? And how does anyone let them get away with it?
- The solemn creed of everyone should more or less be, "Don't write cheques your arse can't cash". If you are not 100% sure that you will not lose out on an investment that involves other people's money? Don't do it. If you want to play that particular game of Russian roulette, do it on the stock market with your own money, not with someone else's mortgage.
I hate that word. Like
courtcat79 said in her entry, it'd be good if the media could stop fucking scaring people and just report the news for once. And I'm not just talking about the balloon economy going pop either - but that's another rant for another day.Also, protecting America? Please, people; you are not the only country on the planet that got hit with this. It's a global market; a whole lot of people the world over got screwed when a bunch of guys in suits decided to play a really fucked-up game of Monopoly.
Thinking about the economy and what-all happened, I'm trying to remember the really simplistic explanation I heard when all this started. Basically, so far as I can tell, financial institutions were generating income by selling off chunks of debt to other financial institutions, and then oops! Defaults happened and no one had the first idea of who was supposed to have what and there wasn't the money to back it up anyway. This whole idea of juggling bits of paper that are supposed to represent money but aren't really backed by viable resources strikes me as a very Confederate way of thinking. "We've got no money? Let's print more! Never mind that we haven't got the actual hard resources to back this money up; when we win the war, we'll have all we need to cover the deficit caused!" Except they didn't win the war, did they? With this investment banking nonsense, it's the same thing: "We need money now? Let's sell off a bit of this debt that may or may not be backed by actual money." You lose track, after awhile, of what's supposed to go where.
From what I can tell in the case of the UK, this wouldn't have been a problem when more of the banks were under regulation ... or at least, not a problem for the average joe on the street. Back in the day, an investment bank and a regular bog-standard bank couldn't operate from the same financial pool ... if I'm remembering right, anyway. This meant that if some shit like this did happen, people's actual money would be safe from the fallout and there wouldn't be bank runs or similar. However, that regulation was taken out of commission, and thus we've had a few building societies close down and others requiring mass government bail-outs, which isn't a solution to the problem for the people at large because the mistakes of a few guys in suits are still being dumped on the taxpayer.
Either way, the solution as I see it? Regulation of some kind. Things I'd like to see happening in the wake of this:
- Investment banking institutions being separated from banks doing personal and business accounts, so that the hit isn't on people at large.
- If a financial institution does get into some kind of trouble, there should be a mandate that the people running said financial institution must forsake their golden parachutes and six-figure bonuses for at least five years before the government agrees to bail them out. That would likely encourage said institutions to think very carefully about taking stupid risks with other people's money, mortgages and assorted debts. Seriously, how can someone even think something like, "Oh, hey, we just screwed with everyone's money and are driving people into the poorhouse in droves; let's give ourselves a massive bonus and ensure that we have a nice cushy six-figure nest when we get sacked for incompetence!"? And how does anyone let them get away with it?
- The solemn creed of everyone should more or less be, "Don't write cheques your arse can't cash". If you are not 100% sure that you will not lose out on an investment that involves other people's money? Don't do it. If you want to play that particular game of Russian roulette, do it on the stock market with your own money, not with someone else's mortgage.
