I just want to see any senior bank official taken away in handcuffs and sent to prison. It would make paying back those €30k that my family has never seen but stilll owes a lot less unacceptable.
Rubbish!! WE ALL did not do this.
But what WE ALL have to do now, is pay for those who did so ....
Have you in no way prospered from the boom period?
I agree, a society that punishes everyone for the mistakes of a few is a society that will continue spiraling from crisis to another, because the few that take the highest risks, will be encouraged to take on more risk.Millions will suffer for the mistakes of the few. And the few won't suffer enough.
I think the problem is that no banker actually broke a law. What they did was perfectly in the rules of the game called fractional reserve banking.I just want to see any senior bank official taken away in handcuffs and sent to prison. It would make paying back those €30k that my family has never seen but stilll owes a lot less unacceptable.
I slightly disagree with your rankings, here are mine and their reasoning:In the ranking of blame I think it runs:
1. Financial Regulator - Abject failure in his only role, kept telling us all was well in the months pre meltdown, what a fool.
2. Fianna Fail - Bertie with his "they told me not to worry" - do your bloody job man, its your business to get to the truth/facts. All they do is accentuate the economic cycle - fuel the boom and cut the gloom - good thinking lads
3. Bankers - ok its their job to make profit and shareholders wanted more and more, but they didnt achieve much profit in the end did they?, roll over loans like theres no tomorrow, credit committee - whats that?, personal fiefdoms with huge bonuses for paper profits and no accountability. Probably the worst run era of banking the world has seen.
4. Developers - in fairness to them they do what they do, buy land, build and sell. They were greedy in the good times and if they were let take their fall now then it would be fair enough.
If by capitalism you mean crony-capitalism or statism, then I agree. But the crisis is not a failure of free market capitalism, as our markets are not free from government intervention. The reason the whole financial system ran out of control and into a massive credit bubble is because those people investing most in banks, i.e. bond holders, put no restraint on the risks banks took (the way they normally do this is by asking for higher interest rates). The reason they did not do that is because they knew 100% that even if the risks were too big and the banks failed, governments would step in and guarantee their investments. Every one of at least the last 4 decades has seen a financial crisis, and every time governments have stepped in to essentially bail out bond holders. The crisis was a failure of preceding and present government interventions, not of free market capitalism, which would punish those that make the biggest mistakes most severely.So even apart from the recent recklessness, at the best of times you cant expect bankers and developers to self regulate and act for the good of the country, its regulators and policy makers (government) who are supposed to put the checks on unbridled capitalism, but we're taken a twisted view on that where we allow capitalism to truly run amok (no assistance when house prices spiralled beyond reasonable levels), but then FF volunteers us to pay for the clean up, twould make you sick.
) Central banks: Without the increase in the money supply and reduction in reserve requirements consumer price inflation and huge assets bubbles would not be possible. All that money commercial banks lent out originated in central banks, and banks can only lend out what is supplied to them
2) Government: Firstly for lack of control on the central bank. I know Ireland does not have any deciding control over monetary policy, but the Irish central bank is a member of the ECB and therefore can recommend a different monetary policy. I have searched the web for any reference to the Irish government or central bank actually advocating higher interest rates during the boom and didn't find a thing.
4) Regulator: not for missing this crisis, but for pretending that regulations can actually contain the financial industry;
The reason they did not do that is because they knew 100% that even if the risks were too big and the banks failed, governments would step in and guarantee their investments. Every one of at least the last 4 decades has seen a financial crisis, and every time governments have stepped in to essentially bail out bond holders.
What exactly do you mean by "no assistance when house prices spiralled beyond reasonable levels"? Is it maybe all the things government actually did to in the name of helping home buyers, like increase mortgate interest relief, reduce/abolish stamp duty, tax free real estate investment?
You could go back to the 1974 Kenny report that recommended ensuring that any benefit arising from rezoning/planning came to the State, and not to private developers.You could have had "use it or lose it" provisions (by lose it I mean lose planning permission/lose zoning/incur higher future tax rate - as opposed to seizing land) to get people hoarding landbanks to get them on the market. The demographic trend was always going to increase demand (baby boomers buying houses), the government should have seen to it that once the free market was failing (house prices gone beyond reasonable multiples of income) they would step in with measures such as the above to reduce the risks of negative equity, property bubbles and crashes.
More radical things would have been capping the value of land or property - thats a bit too left wing for my liking - but the above measures would probably have been sufficient.
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Making more money available doesnt necessary have to lead to a crash, its what people do with it that matters. A bit like a garage selling petrol shouldnt be curtailed because some people will sniff it and others will make petrol bombs.
Agree with your other 2 points on government but on the above, realistically Ireland is not going to shape ECB policy. OK they should have had the wisdom to have their say but I dont think they would have gotten their way.
You're being overly kind to him there. Did he not have the bould McWilliams in his face?, did he not watch "Futureshock" a few years back? If, for some reason, systemic risk to the system had never dawned on him up to then well there were a few reminders publicly available. As to the effectiveness of regulation, I think it can be effective if the political will is there and the regulator is given "teeth".
Isnt it now the time to correct that trend, "them 'em a lesson" if you will.
I agree that government interventions caused increased demand from speculators. But the main reason for prices of houses going through the roof was the demand from individuals.I agree with what you're saying here. What I was referring to was things like the Bacon Report(s), one the key planks of which was to disallow a tax break for interest on investment property. The bubble was grown to a fair extent by speculators. If speculators were driven out of the housing market by no interest relief, higher stamp, higher 2nd property tax that we now have, no tax relief properties to shelter rental income,then the market would have been primarily left to homeowners (or at least the competing speculator would be well disadvantaged, levelling the pitch and keeping the price down).
You could have had "use it or lose it" provisions (by lose it I mean lose planning permission/lose zoning/incur higher future tax rate - as opposed to seizing land) to get people hoarding landbanks to get them on the market. The demographic trend was always going to increase demand (baby boomers buying houses), the government should have seen to it that once the free market was failing (house prices gone beyond reasonable multiples of income) they would step in with measures such as the above to reduce the risks of negative equity, property bubbles and crashes.
More radical things would have been capping the value of land or property - thats a bit too left wing for my liking - but the above measures would probably have been sufficient.
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