Falklands : Credit Crunch Victims Urged to Smell the Cold Coffee
Submitted by Falkland Islands News Network (Juanita Brock) 02.10.2008 (Article Archived on 16.10.2008)
The credit crunch we now experience was built on dreams and instant gratification – you can have that “home” you can drive away in that car right now!
An Editorial by J. Brock (FINN)
The credit crunch we now experience was built on dreams and instant gratification – you can have that “home” you can drive away in that car right now! And the banker that negotiated the loans and convinced people to borrow was the flim-flam man. As things turned out those loans were disasters ready to happen as many people who hadn’t a hope of paying the bank back were granted dreams that very quickly turned sour.
Collaboration between traders and speculators helped to fuel – pardon the pun – the whole crisis and first to fall victim were people who fed their families instead of paying the mortgage. Others who could barely pay the bank back also ran into difficulties when rising crude, hydrocarbons product costs, food and every day expenses became too much for limited incomes. And they, too, began to falter on their loans.
To cover losses lending organisations increased interests, also generated new cash by selling more mortgages to people who couldn’t afford them – sound familiar? Selling people instant gratification when they really needed a good dose of reality has turned the American Dream into a nightmare.
The domino affect continued with people who were “comfortable” now struggling for cash to feed the ever voracious banking black hole. We have woken up to smell the cold coffee – it’s cold because it’s too expensive to heat the water.
Yes, in 2006 and in 2007 there was pain at the pump and people simply filled their SUVs and got on with it. Currently people are downsizing and using less hydrocarbons products, demand has decreased but the savings people realised have been eaten up by collaboration between traders and speculators jacking up crude prices and ultimately gasoline and heating fuel prices.
Banks that went bust lent money unwisely (rogue lending) and the practice backfired - big time. Nick Leeson of Barings Bank went to prison for six years for rogue trading and yet rogue lenders got golden handshakes. You don’t recover the economy by using the same method that got you in the mess in the first place – that’s crazy.
The credit industry needs to be re-built and used as it was first intended. It makes no sense to accumulate debts that you can’t pay back. But I feel the person doing the lending shares more of the blame than those who “borrowed” bank funds. People are doing now what they should have done then – think before you buy or borrow.
We steel ourselves against e-mail fraud - where we are offered millions - because we know there is no such thing as a free ride. Now we should be wary loans that seem too good to be true. It’s up to the community to look after their money and if needed, be wise borrowers.