to think that this is still news because UK borrowers are still being blamed for the depression?

[thirdhill]

"It was British banks, not British borrowers, that crashed our economy"
or is everyone happy to say unsustainable debt was down to British households, which is why we're paying for it, and therefore depressing the economy?

If you're happy, why have we now got a second economic dip?

YABU The economic situation has been caused by a variety of factors and cannot be put down to one alone.

I see you have trouble with charts and figures, ealir

I thought it was the banks supporting the sub prime lenders in the UK which caused a global recession?? Also, it was the banks who lent money out to anyone who wanted a loan, regardless of their ability to repay it so surely it's the banks fault for encouraging irresponsible borrowing? People should have had more self restraint though so borrowers are not completely off the hook.

Not really, the problems in the banking and financial sector are a large contributing factor to our economic problems as the link demonstrates but its not the only one and to claim otherwise is very blinkered.

So, ealir, how about you tell us a little about the unblinkered picture. While you're at it, could you explain to which "one factor" you alleged your antagonist was eluding?

I still don't see why the people in America who took out NINA mortgages on low rates who then couldn't pay the increased rates, could have just been kept on the discounted rates they had at the start? Surely that would have cost less than this fiasco? Or having govt help for NINA mortgage holders, like a kind of HB instead of giving the money to the banks?

If the banks had used a modicum of common sense they would not gave lent the money in the first place. Unfortunately some people have absolutely no financial awareness and will take out a ridiculous loan at a terrifying APR to buy a shiney new car or exotic holidays just like firms like Ocean Finance suggested.

The banks seem to want everything their own way - irresponsible lending (so they can get their bonus), the whole banking system underwritten by the tax payer and finally blaming everyone else for the recession (depression?).

ealir, I think it must have been this you object to?

"Ben Broadbent, the former Goldman Sachs economist who now sits as an external member of the Bank of England?s Monetary Policy Committee, last month gave a speech in which he showed our largest banks got into trouble in 2008 because of their bad loans made to the rest of the world, not their UK lending"

or was it something else?

I think some borrowers have to take some of the blame as well, albeit with the tacit approval of the banks. Banks were lending 7x income mortgages interest only on 110%ltv, but people were still taking them out, even though they might not be able to pay them back if house prices dropped, or they lost an income or their circumstances changed for any reason (illness, babies, job loss etc).

Then people would remortgage houses which had "risen" in price and then spent the money on holidays, cars "loan consolidation", in my opinion not accepting that this was borrowed money, not actual money.

Having said that, I don't think apportioning blame is all that healthy, the problems are there and blaming the banks or individuals isn't going to fix it anyway.

I agree with ealir, the banking and fincial crisis and its consequences are playing a significant role in the economic misery that we are suffering but there are other factors at play. Some are domestic (in our control) and some are international (out of our control) such as poor macroeconomic management, a large current account deficit and the turbulence in the Eurozone to name just three.

except we don't really know what exactly it is ealir is saying. We might find ourselves in complete agreement, if only we knew what it was we're agreeing with.

The banks have to take most of the responsibility for over lending and other financial advice given. Of course, the individual must take some responsibility in some cases but not all.

Banks lend money after referring to an individual's credit file where they can assess the individual's credit worthiness and form a decision as to whether this individual is already over committed or is likely to be with the addition of further lending. Through greed, banks simply ignored this information and continued to lend money. 0% balance transfers on credit cards were a temptation to many and mortgages being offered at 5.5 times a person's salary. They knew that a slight shift in the economy would cause these people and the country problems as a result however through greed and bad management they persisted.

thirdhill- I don't particular disagree with anything in the article, its more the premise that it was "the banks crashed the UK economy", the banks are without doubt partly responsible for the problems but a situation as complex as the current economic one cannot be caused by only one player/factor so using discourse such as that is wrong and Unreasonable in my opinion.

and why are there banks in entire economic zones who were somehow immune to toxicity in this global market? Who refused to take on these transactions? Who therefore not only didn't need a bail out but would have survived even if the market infected by toxic transactions burned? I pity these banks who should otherwise be reaping the gains of their decision taking.

thanks ealir for replying

These banks who took the right decisions, and we who face a deeper depression than the 1930s, we are the ones who are living with the down side of incompetent state intervention.

I'm not necessarily against intervention. It's the determined ignoring of expert advice that perplexes me. One might almost say there were vested interests involved, to warrant the level of apparent incompetence.

What's wrong with a big mortgage multiplier? I took out a 6x income (temp job) mortgage in 2006. Have never defaulted, even when I lost my job. My mortgage is £100s cheaper PCM than if I rented it.

But the govt would rather subsidise high private rents through hb than help mortgages, even though it'd be cheaper, it's crazy!

And don't forget, we're not just talking about individual borrowers. Banks were also lending phenomenal amounts in leveraged finance to businesses - again, the economy was growing, China was taking off and businesses were able to borrow large amounts of money to expand, issue debt etc etc (both small companies and huge corporations) - these loans were then bought and sold and when the economy began to slow down, some banks were left with huge amounts of debts which companies couldn't begin to repay.

There's nothing wrong with a big mortgage multiplier if you can afford to continue paying if your circs change, obviously. But some people can't afford to continue paying, hence, default.