Tuesday, 8 December 2015

Economic Collapse

In 2008 there was an incident that has since been labelled the global economic crisis.

A lot of people have been blamed, the labour government at the time has been blamed and forced the then Prime Minister Gordon Brown out of the door.

The time scale is well known, Lehman Brothers collapses on September 15, 2008 and is not saved, at the same time Merrill Lynch [the bank I worked for] is sold to Bank of America which can only be described as a back room deal amidst fears of a liquidity crisis, Northern Rock collapses on 22 February 2008 and is saved by nationalisation [bad idea ~ another story] and does not need to be repeated here, however, is it happening again legally under Basel III and is it being ignored?

"Basel III" is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector.

Sub-prime mortgages, widely blamed for causing the 2008 financial crisis, are making a surprise comeback in the UK, with several new lenders launching home loans for people with poor credit histories. Lenders are targeting people who have faced serious financial problems including repossession and bankruptcy, as well as those with more minor blots on their records.

The problem is stricter rules on mortgages were introduced in the wake of the financial crisis, but this type of lending was not banned, checkout Basel III, and amid an easing in lending conditions and rising house prices, more companies are now starting to offer deals.

The regulatory process has an issue that cannot be easily resolved, they have stipulated that banks MUST keep enough capital to be liquid in form at the same time encouraging them to lend to business and domestic for economic growth purposes, but the banks have been placed between a rock and a hard place and no one has come up with a solution so far.

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