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Next Financial Crisis - what Crisis

#61
One of the causes of the collapse was the bundling up of sub-prime mortgages into complex financial instruments with other investments and then being traded (sold on and then re-bundled and sold on again) so that the security of the underlying investments was unclear. These packages were marketed as low-risk investments and purchased by various banks and financial institutions.
Sub-prime mortgages weren't "blended" with other assets. Investors want to allocate within portfolios, so they like single asset type instruments in order to dynamically weight those portfolios. They were traded, because without liquidity there is no market, and no buyers.

I agree with your point that "turbo" CDO's created assets that were almost impossible to price accurately, and the notional portfolio benefit (i.e. by using CDOs with underlying assets from different jurisdictions) was found wanting as asset correlations increasesd to 1.
 

MrBane

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#62
I'll be honest - I'm quite a fan of financial meltdowns. Mainly because I don't live like a **** and miles out with my reach.

I remember a story during it all about a new build estate empty after everyone had been evicted, bar a couple who were a taxi driver and a hair dresser.

The pair of them had bought the house for somewhere over £340k and were hanging on for dear life.

A taxi driver and a hair dresser.

Not suggesting for a second that their income won't be that high, but, well, I am.

We got some really good deals when it all went tits up and invested a bit. I know that Scottish Canals for example.bought an absolute fuckton of property along the Clyde as it all went to shit. They're now sitting on a portfolio worth millions.

The only people to blame, really, really, really blame, are the people who don't do their own research and take the maximum offered. For our second house, we did the maths based on an interest rise of a couple of percent and then worked back to a comfortable level.

Most folk don't even consider the impact a rise of 1% could have never mind 2 or 3.

Hey-ho.

That's why I have a stock of Irn Bru bottle tops. One day they'll come back into circulation.
 
#63
My apologies-I wasn't aware that I was limited to my number of replies on your thread.



I think we can add 'petty' to that summary.

. . . anyway, this is neither the time nor the place for such spats-the field is yours, chap. You've 'won'. Huzzah.
Well as long as you're not bothered, dear.
 
#64
This is an excellent article on the UK pensions debacle:
This is money

I've never lived outside my means other than a short period in 1988 when the interest rate rose to 15% and my parents loaned me a couple of thousand (which I later paid them back).

I've been putting money into pensions since the late 1980s and will be able to retire age 62 -- which I intend to do as most of my family don't seem to make it past 70.

House is paid for, cars are paid for and the only reason that I'm still working is to see the kids through university without digging into savings.

Edited to add -- and so that I don't have to spend my declining years living in a bedsit in the red light district of Nottingham
 
#65
I'll be honest - I'm quite a fan of financial meltdowns. Mainly because I don't live like a **** and miles out with my reach.
Hey-ho.
That's why I have a stock of Irn Bru bottle tops. One day they'll come back into circulation.
Pretty much what crossed my mind, but not in a smug way...insofar SWMBO & I after 45 years odd each of wage slaving have 5 pensions between us..including the State's. We ain't rolling in it, but suffice to say have comfortable % surplus each month...all bills paid and getting out and about. Does not bother me my car is 25 years old and hers is 16, or the living room telly is not HD4.,

We still live an our ex local authority house we bought 25 years back which SWMBO has made very nice and so far...all credit to SWMBO...her teacher's retirement lump sum is still just lying there doing nothing after 3 years.
It's also lying actually depreciating in real terms given crap rates but I cannot get her to sort that.

Our son has saved 50% of his Army wage for 10 years now.... with his eyes on having a decent first home with as small a mortage as possible so we plan just to give him the rest and buy it outright. All credit to him, he is nobody's fool with matters of finance...wonder where he got that from!
That's him sorted though he does not know it yet.
I don't want him suddenly getting complacent.

Money never really hit our hot buttons and having a lot more than we need now makes absolutely zero difference to our health or just getting a good night's sleep. I think it's because we lived on just enough for decades, and saved a bit for our (now) advancing dotage, and brought up by parents often on the breadline, or sometimes below it. No Welfare emergency loans or food banks...you did what you had to do, did without non-essentials. I cannot recall feeling hard done to as kid...it was what is was and it was all you knew. Never went hungry, always good clothes and a good home.

As it happens, we went shopping with young neighbours (with 2 kids) yesterday to Smiths, the big toy warehouse. As can be expected, the trolley quickly filled with January's Landfill shyte, and then came out "The Plastic" Now, there's a PCP Merc 180 of their's outside, and her Audi A2 in the driveway. They do have decent enough jobs, but shall I say more used Ford Fiesta level?

The upshot was, they ended up actually arguing about which cards were maxed, which had some left, and how to jiggle the payment. Two things happened...we left them to it rather embarrassed and went next door to the M&S canteen, and secondly one of them, somehow ( after they joined us) proudly "explained" they'd figured how to buy some with one card, then split the trolley load with another.....just. It makes you wonder how these people can sleep at night. They are not intellectually challenged, just...well I'm not quite sure to honest.
There are hundreds of thousands of Brits going pelters with their plastic fantastic today and it will continue escalating up until Xmas Eve....and beyond. It's a bit scary.......when will the bubble burst again?
Will "we" ever learn?

Edit:
Something rang a bell, then I spotted this:
Credit card holders warned spending could be ‘frozen’ under new rules
 
Last edited:
#66
Pretty much what crossed my mind, but not in a smug way...insofar SWMBO & I after 45 years odd each of wage slaving have 5 pensions between us..including the State's. We ain't rolling in it, but suffice to say have comfortable % surplus each month...all bills paid and getting out and about. Does not bother me my car is 25 years old and hers is 16, or the living room telly is not HD4, we still live an our ex local authority house we bought 25 years back, and so far...all credit to SWMBO...her teacher's retirement lump sum is still just lying there after 3 years.

Money never really hit our hot buttons and having a lot more than we need now makes absolutely zero difference to our health or just getting a good night's sleep. I think it's because we lived on just enough for decades, and saved a bit for our (now) advancing dotage, and brought up by parents often on the breadline, or sometimes below it. No Welfare emergency loans or food banks...you did what you had to do, did without non-essentials. I cannot recall feeling hard done to as kid...it was what is was and it was all you knew. Never went hungry, always good clothes and a good home.

As it happens, we went shopping with young neighbours (with 2 kids) yesterday to Smiths, the big toy warehouse. As can be expected, the trolley quickly filled with January's Landfill shyte, and then came out "The Plastic" Now, there's a PCP Merc 180 of their's outside, and her Audi A2 in the driveway. They do have decent enough jobs, but shall I say more used Ford Fiesta level?

The upshot was, they ended up actually arguing about which cards were maxed, which had some left, and how to jiggle the payment. Two things happened...we left them to it rather embarrassed and went next door to the M&S canteen, and secondly one of them, somehow ( after they joined us) proudly "explained" they'd figured how to buy some with one card, then split the trolley load with another.....just. It makes you wonder how these people can sleep at night. They are not intellectually challenged, just...well I'm not quite sure to honest.
There are hundreds of thousands of Brits going pelters with their plastic fantastic today and it will continue escalating up until Xmas Eve....and beyond. It's a bit scary.......when will the bubble burst again?
Will "we" ever learn
?

My bold precisely this gives you an idea of just how large our debt problem is & when you see the criminally high interest rates these so called "pay day" loans are, often in the thousands of % APR, it makes you question the sanity of people who use them.
Household debt in UK 'worse than at any time on record'
snip "British households spent around £900 more on average than they received in income during 2017, pushing their finances into deficit for the first time since the credit boom of the 1980s.
The Office for National Statistics said the shortfall amounted to nearly £25bn – equal to almost a quarter of the NHS budget – and the overspend was mostly paid for with borrowed money, though households also ran down savings.
The figures pose a challenge to the government, which was warned last year that Britain’s consumer credit bubble of more than £200bn was unsustainable. A dramatic rise in debt-fuelled spending since 2016 has also taken place against the backdrop of the Brexit vote, which triggered a rise in inflation at a time of weak wage growth.
Analysts warned that a squeeze on household incomes from benefit cuts, lacklustre wages and high inflation would continue to force poorer households to borrow more to pay basic bills
."
 
#68
Pretty much what crossed my mind, but not in a smug way...insofar SWMBO & I after 45 years odd each of wage slaving have 5 pensions between us..including the State's. We ain't rolling in it, but suffice to say have comfortable % surplus each month...all bills paid and getting out and about. Does not bother me my car is 25 years old and hers is 16, or the living room telly is not HD4.,

We still live an our ex local authority house we bought 25 years back which SWMBO has made very nice and so far...all credit to SWMBO...her teacher's retirement lump sum is still just lying there doing nothing after 3 years.
It's also lying actually depreciating in real terms given crap rates but I cannot get her to sort that.

Our son has saved 50% of his Army wage for 10 years now.... with his eyes on having a decent first home with as small a mortage as possible so we plan just to give him the rest and buy it outright. All credit to him, he is nobody's fool with matters of finance...wonder where he got that from!
That's him sorted though he does not know it yet.
I don't want him suddenly getting complacent.

Money never really hit our hot buttons and having a lot more than we need now makes absolutely zero difference to our health or just getting a good night's sleep. I think it's because we lived on just enough for decades, and saved a bit for our (now) advancing dotage, and brought up by parents often on the breadline, or sometimes below it. No Welfare emergency loans or food banks...you did what you had to do, did without non-essentials. I cannot recall feeling hard done to as kid...it was what is was and it was all you knew. Never went hungry, always good clothes and a good home.

As it happens, we went shopping with young neighbours (with 2 kids) yesterday to Smiths, the big toy warehouse. As can be expected, the trolley quickly filled with January's Landfill shyte, and then came out "The Plastic" Now, there's a PCP Merc 180 of their's outside, and her Audi A2 in the driveway. They do have decent enough jobs, but shall I say more used Ford Fiesta level?

The upshot was, they ended up actually arguing about which cards were maxed, which had some left, and how to jiggle the payment. Two things happened...we left them to it rather embarrassed and went next door to the M&S canteen, and secondly one of them, somehow ( after they joined us) proudly "explained" they'd figured how to buy some with one card, then split the trolley load with another.....just. It makes you wonder how these people can sleep at night. They are not intellectually challenged, just...well I'm not quite sure to honest.
There are hundreds of thousands of Brits going pelters with their plastic fantastic today and it will continue escalating up until Xmas Eve....and beyond. It's a bit scary.......when will the bubble burst again?
Will "we" ever learn?

Edit:
Something rang a bell, then I spotted this:
Credit card holders warned spending could be ‘frozen’ under new rules
Oh it’s just debt! Bit early for Xmas shopping though, better off waiting until December for the deals.

We have a Christmas fund set up, every month my cheque has a certain amount of funds transferred to it, and at the end of October the Credit union transfers it into the savings account. Does reduce the Holiday stress!
 
#69
Oh it’s just debt! Bit early for Xmas shopping though, better off waiting until December for the deals.
I agree, but our superstores eg Tesco have been displaying the usual vomit inducing Xmas tat eg choc santas & reindeer and these infernal £5.00 plastic tubs of confectionery since the beginning of August.
As usual, the Lemming brigades of Plastic Fantastic tossers react seemingly with a will, and willingly.
It's all very pathetic in my opinion, and financially lethal.
Then again, big families probably need to spread this idiotic fest over 3 months/wages...which I daresay are also serving cumulative credit card debts already.
 
#70
I agree, but our superstores eg Tesco have been displaying the usual vomit inducing Xmas tat eg choc santas & reindeer and these infernal £5.00 plastic tubs of confectionery since the beginning of August.
As usual, the Lemming brigades of Plastic Fantastic tossers react seemingly with a will, and willingly.
It's all very pathetic in my opinion, and financially lethal.
Then again, big families probably need to spread this idiotic fest over 3 months/wages...which I daresay are also serving cumulative credit card debts already.
The Xmas stuff is not out quite yet. The big focus is on Halloween at the moment. We are trying to limit our spending to about 850 this year. The kids have a $250 limit. They get nice things but we don’t go overboard.
 
#71
The Xmas stuff is not out quite yet. The big focus is on Halloween at the moment. We are trying to limit our spending to about 850 this year. The kids have a $250 limit. They get nice things but we don’t go overboard.
Good lad!
Is your new house to be ready?
 
#72
I never understood this obsession with credit . I have the usual plastic but have never paid any interest. My only worry if there is another crash is that my pension pot will get wiped out. There do seem to be a lot of people with new cars and expensive holidays all on credit. I would not be able to sleep with that much debt.
 
#75
I never understood this obsession with credit . I have the usual plastic but have never paid any interest. My only worry if there is another crash is that my pension pot will get wiped out. There do seem to be a lot of people with new cars and expensive holidays all on credit. I would not be able to sleep with that much debt.
Happened with one of my private pensions. Fortunately my works pension was ring-fenced, as was SWMBO teacher's, as obviously the States were. Instead of getting around £600.00 a month, it pays out £714.00...every bloody September only. And that kicked of with Sun Alliance 24 years back who flogged it to Aviva. It just bombed...nothing I could do.
 
#76
A five year old can predict there will be another financial crisis - these thing are cyclical, it's just the severity and scope that differs.

What's more worrying is why that moron Brown is still deemed relevant.
And treated as if he has some idea on how to prevent the next global meltdown.
 

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