There are many who puzzle at my constant attacks on the banks, particularly central banks. Many blogfriends humour me, most ignore these posts. [I suggest you cover the children's eyes before reading on.]
When I suggest that "sub-prime lending" is simply a euphemism for an appallingly socially destructive phenomenon perpetrated on the weaker members of society by cynical, sardonic greedy vultures displaying utter indifference to the social collapse which is the only possible consequence of this unsustainable policy, I'm putting it mildly.
It is Sunday, after all so I shan't follow up with Andrew Johnson's "viper" epithet.
Just look at this:
Easy credit may leave thousands of teenagers unable to pay their bills, as new figures show that people who apply for credit in the lead-up to Christmas are most likely to default on repayments.This is simply wicked. Unscrupulous, power dressed men and women have been allowed to run riot in society and turn Christmas into a season of debt and delayed misery.
A cocktail of poor financial literacy and savvy marketing means that young people without assets or stable employment are racking up tens of thousands of dollars in debt, leaving them facing defaults or even bankruptcy.
In the past three years, the highest number of credit applications in any month has been November — 9.2% compared to the monthly average of 8.3%. Along with December, November leads to the highest number of defaults (3.1% of applications compared to an average of 2.7%), according to figures from credit reporting agency Veda Advantage.
One debt collector said he knew of a major bank that had extended thousands of dollars of credit to customers, knowing they would struggle to pay the debt. "There are people who get limits who quite clearly ought not, and my understanding is the banks have a policy of 'extend credit, get the money out' and just wear the default rate," he said.
"Some of the poor credit of the people was a bit frightening — people even given credit when they're unemployed."
They should be rounded up and transported to Elba or similar, at their own expense. Whatever happened to decency, to the old Arthur Lowe type of bank manager who refused to lend if your collateral was not up to scratch?
Where did integrity go?
They'd probably have a very nice time on Elba, which is beautiful, as I've mentioned before. Of course it's wrong to offer credit to those who can't pay it back but everybody needs to lighten up and forget their troubles for a week or so at this time of year. And as long as Christmas is commercialised people will find ways of spending money they haven't got . Personally the only way I can cope with not having money is to spend some! Now, there, there, go and have a whisky, James...
ReplyDelete"Where did integrity go?"
ReplyDeleteShouldn't some of that integrity be on the people that borrow themselves out of pocket? or is it simply the people that allow them to borrow that have to have it?
I get letters offering me credit cards at least once a week, from banks I don't even deal with. But then I have a credit rating someone could check.
ReplyDeleteThings have changed if teenagers can get credit because my children could not get credit cards until they graduated University then everyone was falling all over themselves to offer credit.
That said people should take some responsibility for their actions.
You could have a point here, I don't have any credit cards or debt myself but a lot of my friends do. Student or not. The vast majority of my friends all have credit cards and more than a few of them have thousands of pounds of debt. Most of them, like myself, are only employed part time and can't afford these cards. Banks make them far too easy to obtain.
ReplyDeleteMy son, when he was still in school, attended a jobs fair and was offered a credit card by a bank. He signed up for it as they were giving something away free (Railcard or something) but is anything more ridiculous than offering a schoolchild with no income a credit card?
ReplyDeleteAnd don't get me started on student loans!
I agree James, but...
ReplyDeleteSomething has to be done to educate the young that they can't always 'have'.
That in life often you have to go without. Life is not perfect and we can't all be rich superstar celebs, etc, etc.
There's a trend starting in San Diego for judges to throw out repossession proceedings on the basis that the legal paperwork is not in order.
ReplyDeleteI don't agree with bailing out the loans, due the Moral Hazard this would create, but if the financial institutions buying and selling the mortgages have failed to cross the Ts and dot the Is on their contracts, then more power to the people.
http://bigpicture.typepad.com/comments/2007/12/another-loan-se.html
http://sandiegopredatorylending.com/
Regards,
JMB
So we seem to be agreed the lending body is quite criminally wrong but the young need educating and there needs to be a bit of common sense as well.
ReplyDeleteI could not live without my visa card BUT I repay it in full every month. That way I have the convenience but don't actually pay any interest.
ReplyDeleteJames Barlow.
ReplyDeleteThe rocket scientists that slice and dice everything these days forgot the simple law that if you want to repossess you got to show the mortgage document.
Impossible.
Tough shit, I say.
Sellers of loans on commission, finance house resell, insurers don't know what they're insuring, Moodies et al call it prime, nobody takes responsibility for their actions anymore.
Tough shit.
Started a couple of weeks ago with Deutz bank paper.
$1000 per month bought freehold of $1m.
Now the teaser is gone it costs $4000 per month min.
The sellers knew what they were doing!
Tough shit.
"So we seem to be agreed the lending body is quite criminally wrong"
ReplyDeleteAs far as I can read here, you're the only one agreeing to that point James.
Businesses are in business to make money, ethical businesses make money just like the unethical ones; customers :)
Correction, LN - you're the only one refusing to see, in line with your blanket defence of the government.
ReplyDeletewelsh: does not say anything about the lenders being criminal
ReplyDeletejmb: does not say anything about the lenders being criminal
oestrebunny: does not say anything about the lenders being criminal
liz: does not say anything about the lenders being criminal (although ridiculous was used)
rob: says "I agree" but does not say he agrees with criminality, although that may be construed
James Barlow: does not say anything about the lenders being criminal
uber: does not say anything about the lenders being criminal (after you posted that everyone agreed that the lenders were almost criminal)
anon: even though he/she will not use a name, still doesn't say anything about lenders being criminal
Not sure what got you going James, but I don't blanketly defend any government and I am, according to my brief survey of the comments, not the only one to not label the lenders as criminal
I think they are criminal!! So there.
ReplyDeleteOK, how about personal debt relief for the UK? They wrote off all those Third World debts didn't they? Well why not have a D-Day here and wipe out all personal debts in the UK? I am sure the average UK citizen should not be treated worse than Robert Mugabe.. This makes perfect economic sense doesn't it?
Excellent idea, Mutley.
ReplyDeleteIt's a great government idea Mutley. Most western countries could erase debt by the simple act of accounting it :)
ReplyDeleteCountry A owes debt to country B of x, yet at the same time gives aid to country B of y. Shouldn't that be (in accounting) a payment on debt instead of aid?
Also when 2 countries (one western) owe each other money, it is counted as debt to each instead of a cancellation of debt.
James: still mad at me?
Why would I be mad at you, m'lord?
ReplyDelete