Thread: Credit crisis

Originally Posted by jockeys

I'm not saying the banks are blameless... they are, in fact, guilty as hell.

But the individuals taking out loans they couldn't afford to pay back are equally culpable.

I thought I'd just point out something as a person who surrendered his home to the banks a while ago.

Sometime it isn't what you borrowed but the way circumstances have changed. My wife lost her job of over ten years and I lost my job of five years, both at the same time. This was five years into a thirty year mortgage. We tried to sell before we started missing payments but the market had dropped so fast that we would have had to show up at closing with more than twenty thousand bucks to pay off the note (and this on a note with an original value of only $120,000 equal to the value of the house at time of purchase). The two of us now unemployed just didn't have that laying around so it made more sense given market conditions to default. Had market conditions continued the trend they had shown for more than my entire lifetime, the home would have sold for at least what we paid or it would have been worth while to scratch and save to keep it.

By the way I am a college graduate, who did well in finance classes, and I am not an idiot.

By doing things the way I did I still have what is considered "good" credit and I expect that now that my savings level is coming back up, and I am employed steadily again I will have another mortgage in less than a year, as long as there are still solvent banks issuing loans.

Originally Posted by Bruno

People are shrugging their shoulders and say 'Meh... Americans...' Sorry but this is the general feeling.

Several banks lots money because they carried part of those loans, downstream. But they only carried a little (measured in millions) and the total loss is not having that big of an impact.

Also some local no-risk investments were guaranteed indirectly by Lehman, so theoretically that backing is gone.
But the banking legislators are looking into it, and because it were the initial banks who made the no-risk promise, it is likely that they will have to uphold any possible no-risk if there is a need for it.

All in all the direct hit was extremely limited because banks in Belgium (most of western europe really) are conservative in the way they do investment business.
Of course there will be some long term impact because the US economy has an impact on the global economic climate, but for now, the impact is limited.
And of course, there will have been people who invested their saving directly in Lehman or whatever, and they're out of luck. But they are definitely not many here. Belgians are traditional and conservative in their financial actions. We are savers, not gamblers. And the Year 2000 dot-bomb brought the dreamers back to reality.

Pretty much the same here. There's some stuff going on. But nothing earthshattering.

Well there's no way we can say its had little effect here. There was a run on Northern Rock a while back after which NR got a HUGE government bail out (though not quite 500 billion ) and today we have news that Bradfor and Bingley are to be nationalized:

BBC NEWS | Business | B&B nationalisation is confirmed

Good stuff!

In Europe as well.

Dutch-Belgian bank and insurance giant Fortis NV was given a 11.2 billion euro ($16.4 billion) lifeline to avert insolvency as part of a wider bailout plan agreed to by Belgium, the Netherlands and Luxembourg, officials said Sunday.