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Thread: Are we heading for another Financial Crash?

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    Guest Asht_200's Avatar
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    Are we heading for another Financial Crash?

    I heard an interesting interview on the radio the other day by Ann Pettifor who predicted the last crash in 2008

    Although this article is 2 years old, she still stands by it since her prediction for the last one was in 2003

    https://www.stuff.co.nz/business/mon...ing-the-sequel

    This also makes for good reading from Mervyn King

    https://www.theguardian.com/business...ys-mervyn-king



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    Guest DLowe's Avatar
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    Definatley heading for a big money f up.

    You only have to look at the streets over the last 10yrs, littered with cars people shouldn't be ale to afford,

    The terrace streets round here used to have a few low end bangers, now every house is fighting to park 2 new audis on rent.

    The cars are "worth" twice the house price, especially now the manufacturers are artificially swelling the price because people don't associate the monthly bill with the rip off ticket price.

    My mates just had a new RR sport, 9yrs since his last and it's pretty much double price for same car, wages have not doubled.

    People are so used to the instant buy it now pay later attitude lots ate only 1 or 2 months away from loosing everything if they end up out of work.

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    If the media start saying there is one looming then it will be a self fulfilling prophecy !

    I agree with the buy now pay later is out of control, they is a terrace house near me with a 458 Ferrari parked outside of it! I could almost guarantee its a grown kid living with mummy and daddy though. If I had kids that wouldn't happen on my watch

    Personally I think Borris is about to bankrupt the nation, HS2 is a massive over spend we don't need imo.

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    Oor Willy sideways14a's Avatar
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    I am hoping he builds this monster bridge near me, yeah we might all be bankrupted because of it but they will have to uprate the A75 to "Racetrack" status for the thing and i am all for that.

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    Just call all the poor areas with high unemployment "powerhouses" and talk about "potential" whilst undermining what manufacturing we have/had (diesel engines) and putting up trade barriers. it'll be fine.

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    Its going to be chinese money that builds the HS2. Unfortunately it will be chinese companies that reap the long term income/benefits.

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    Member sx rider's Avatar
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    The price of gold has increased a fair bit recently which could be an early indicator of an impending crash

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    Quote Originally Posted by DLowe View Post
    Definatley heading for a big money f up.

    You only have to look at the streets over the last 10yrs, littered with cars people shouldn't be ale to afford,

    The terrace streets round here used to have a few low end bangers, now every house is fighting to park 2 new audis on rent.
    Car finance is a different animal though.

    Miss your payments and some fella will come along, scoop it up and the car will be down BCA in time for the evenings auction.
    Fiance company get their money back quick and easy, with relatively little loss per defaulter.

    Takes ages to repo an entire home and sell it on, if the market goes belly up the banks have a pretty substantial loss for each person that defaults.

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    Guest DLowe's Avatar
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    Quote Originally Posted by R3K1355 View Post
    Car finance is a different animal though.

    Miss your payments and some fella will come along, scoop it up and the car will be down BCA in time for the evenings auction.
    Fiance company get their money back quick and easy, with relatively little loss per defaulter.

    Takes ages to repo an entire home and sell it on, if the market goes belly up the banks have a pretty substantial loss for each person that defaults.
    For me it's more the culture around it that will be the downfall, not the banks loosing money...

    People are now at the point where almost their entire pay check goes straight back out the door to banks and finance companies.

    Once they loose one thing the lot falls apart and then we end up with pay day loan situations and people getting desperate to maintain the life they think they deserve..

    What happens when 1000s of people a day are defaulting on their loans, it's probably a lot worse that a lot of little transactions go missing than 1 or 2 big bonds like how the sub prime market started.

    Must be like a ton bag full of sand, a couple of grains getting out the seams aren't noticed, but when the bag splits and it starts pouring out, it's very difficult to stop it getting bigger

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    Quote Originally Posted by DLowe View Post
    ...
    What happens when 1000s of people a day are defaulting on their loans, it's probably a lot worse that a lot of little transactions go missing than 1 or 2 big bonds like how the sub prime market started...
    Sub Prime was about lending to poor people who couldn't afford to repay the debt but got to live in houses rent free. It worked because the people lending the money then broke the risk off the loans and sold the risk on then borrowed money against the risk free loan book (known as leveraging) then lent that borrowed money to poor people and so on and round again.

    The people buying the risk didn't understand what they were buying was complete shit (I won't go into why its complicated) until it unravelled. That caused a crisis in confidence between the banks so they stopped lending to each other and the governments had to step in to get things moving again.

    There are a lot of parallels between sub-prime lending and PCP except that the asset is a vehicle not a house and there are some key financial differences. The level of defaulting is likely to be lower than for sub prime and the amount of leveraging has been limited by changes in the Capital Adequacy regulations so if it did go tits up, it probably wouldn't cause the same crisis of confidence.

    There is a difference in the lending life of a vehicle (3-4 years) being less than for a house (20-25 years) so I predict we will see something different with car lending. As PCP loans start to cycle and borrowers change up to a new car with another PCP loan, there will be a glut of 3-4 year old cars that will be really difficult to absorb into a second hand car market that is already saturated as people buy new cars on PCP instead of "settling" for a 3-4 yr old secondhand car.

    The collapse of secondhand prices will have two main effects. Firstly, it will increase the monthly cost of PCP deals as the balloons (final payments) will be reduced by the lenders to compensate for the lower end values of the cars. Secondly, it will make it much cheaper to buy a s/h car with a personal loan instead of a new one on a PCP deal so the number of new PCP deals will reduce and the car manufacturers will be in bigger trouble.

    The car manufacturers are too big and inflexible to adapt in a changing market and they will need bailing out by governments or they will go bust....or both.

    All of this though is nothing compared to what is going to happen in the next 15-20 years.

    What I am talking about is Pensions.

    Behind the scenes, one of the biggest and most widespread frauds ever seen is going on in plain sight and no one is doing anything about it. Companies large and small across the world are raiding company pension pots to fund halo/vanity projects, to artificially enhance balance sheets and P&L accounts and paying out profits that don't exist to owners/shareholders then leaving the employees to carry the can when the company goes tits up.

    This will increase the burden on the state to keep the employees afloat when they retire without a private pension. The bad news is the state cannot afford it. NI contributions paid by the current generation of workers is not being saved for the retirement of those workers, it is being spent on supporting the existing pensioners and there will be no money left to pay the current workforce's pension and less new money coming in as the workforce shrinks due to automation and the lack of manufacturing (particularly in the UK).

    This (combined with folks living longer) is why the pensionable age is going up but it is too little too late.

    Euthanasia anyone ?
    Last edited by Jonny Wilkinson; 21-02-2020 at 12:07.

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    Quote Originally Posted by Jonny Wilkinson View Post
    Sub Prime was about lending to poor people who couldn't afford to repay the debt but got to live in houses rent free. It worked because the people lending the money then broke the risk off the loans and sold the risk on then borrowed money against the risk free loan book (known as leveraging) then lent that borrowed money to poor people and so on and round again.

    The people buying the risk didn't understand what they were buying was complete shit (I won't go into why its complicated) until it unravelled. That caused a crisis in confidence between the banks so they stopped lending to each other and the governments had to step in to get things moving again.

    There are a lot of parallels between sub-prime lending and PCP except that the asset is a vehicle not a house and there are some key financial differences. The level of defaulting is likely to be lower than for sub prime and the amount of leveraging has been limited by changes in the Capital Adequacy regulations so if it did go tits up, it probably wouldn't cause the same crisis of confidence.

    There is a difference in the lending life of a vehicle (3-4 years) being less than for a house (20-25 years) so I predict we will see something different with car lending. As PCP loans start to cycle and borrowers change up to a new car with another PCP loan, there will be a glut of 3-4 year old cars that will be really difficult to absorb into a second hand car market that is already saturated as people buy new cars on PCP instead of "settling" for a 3-4 yr old secondhand car.

    The collapse of secondhand prices will have two main effects. Firstly, it will increase the monthly cost of PCP deals as the balloons (final payments) will be reduced by the lenders to compensate for the lower end values of the cars. Secondly, it will make it much cheaper to buy a s/h car with a personal loan instead of a new one on a PCP deal so the number of new PCP deals will reduce and the car manufacturers will be in bigger trouble.

    The car manufacturers are too big and inflexible to adapt in a changing market and they will need bailing out by governments or they will go bust....or both.

    All of this though is nothing compared to what is going to happen in the next 15-20 years.

    What I am talking about is Pensions.

    Behind the scenes, one of the biggest and most widespread frauds ever seen is going on in plain sight and no one is doing anything about it. Companies large and small across the world are raiding company pension pots to fund halo/vanity projects, to artificially enhance balance sheets and P&L accounts and paying out profits that don't exist to owners/shareholders then leaving the employees to carry the can when the company goes tits up.

    This will increase the burden on the state to keep the employees afloat when they retire without a private pension. The bad news is the state cannot afford it. NI contributions paid by the current generation of workers is not being saved for the retirement of those workers, it is being spent on supporting the existing pensioners and there will be no money left to pay the current workforce's pension and less new money coming in as the workforce shrinks due to automation and the lack of manufacturing (particularly in the UK).

    This (combined with folks living longer) is why the pensionable age is going up but it is too little too late.

    Euthanasia anyone ?
    ^^^** This

    THe Sub Prime fiasco was compounded by dodgy banks repackaging them as derivatives not letting the buyer know what was in them. The biggest arsehole doing this was “Royal Bank Of Scotland” and turned out they were the biggest victim when it cam to bailing them out.

    Jonny is right though. Pensions are what are really going to hit people. We haven’t discussed how it will affect your children or children’s children yet


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    The way they keep pushing the pension age up I don't think a lot of people will live to see the work based or government pension/benefits, that coupled with companies paying less and expecting more out of their staff meaning people are basically living at work/burning themselves out.

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    Quote Originally Posted by green_rs13 View Post
    The way they keep pushing the pension age up I don't think a lot of people will live to see the work based or government pension/benefits, that coupled with companies paying less and expecting more out of their staff meaning people are basically living at work/burning themselves out.
    You should work to live. Not buy into the US culture of live to work...


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    Pensions are a good indicator of financial market conditions. Since 2010 (when the gvmt changed to cpi as it had a lower % increase yr on yr) and set up the NEST pension scheme things have been looking dicey. The more large business goes under the more reduced pension payouts there are the more people have to be bailed out. Just look at the collapse of BHS and its £360m pension pot scandal all due to Mr Green withdrawing those funds as his personal dividends and leaving BHS and its new owners with insufficient liquidity when it all went tits up

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    Quote Originally Posted by MEL View Post
    Pensions are a good indicator of financial market conditions. Since 2010 (when the gvmt changed to cpi as it had a lower % increase yr on yr) and set up the NEST pension scheme things have been looking dicey. The more large business goes under the more reduced pension payouts there are the more people have to be bailed out. Just look at the collapse of BHS and its £360m pension pot scandal all due to Mr Green withdrawing those funds as his personal dividends and leaving BHS and its new owners with insufficient liquidity when it all went tits up
    Yeah but Green was a “c***”

    He didn’t even own BHS, his Wife did


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    Quote Originally Posted by MEL View Post
    Pensions are a good indicator of financial market conditions. Since 2010 (when the gvmt changed to cpi as it had a lower % increase yr on yr) and set up the NEST pension scheme things have been looking dicey. The more large business goes under the more reduced pension payouts there are the more people have to be bailed out. Just look at the collapse of BHS and its £360m pension pot scandal all due to Mr Green withdrawing those funds as his personal dividends and leaving BHS and its new owners with insufficient liquidity when it all went tits up

    That's nothing compared to what Carrillion did they stole 2.6 billion from the pension pot.

    The team at carrillion are true capitalists, rich people stealing from the poor, I bet they find it hilarious whilst on their jollys on a multi million pound yacht somewhere in the mediterranean, I would imagine the conversation is something like this, those stupid filthy peasants paid for my yacht and they are that stupid that most of them are still paying via one of my scam pension schemes even though it has no guarantees whatsoever, it's a good job the peasants are stupid we would be ****ed if they started investing their money in property instead.

    https://news.goldcore.com/uk/gold-bl...t-uk-pensions/

    It has always amazed me how it is legal for the rich to steal from the poor with such ease and with no consequences.

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    Quote Originally Posted by Asht_200 View Post
    THe Sub Prime fiasco was compounded by dodgy banks repackaging them as derivatives not letting the buyer know what was in them. The biggest arsehole doing this was “Royal Bank Of Scotland” and turned out they were the biggest victim when it cam to bailing them out.
    The RBS thing was a bit more complicated than that.

    They weren't the ones repackaging the risk on the sub-prime. That was a small number of US Banks. They did make it clear how the risk was repackaged BUT they applied pressure to the rating agencies that rated the derivatives so that they appeared less risky than they were.

    There were a small number of gullible idiots at ABN Amro (a dutch bank) who were courted and targetted as buyers of the derivatives and they took the derivatives onto their books without understanding the potential exposure they were underwriting.

    The guy in charge of RBS at the time (known as Fred the Shred) was a gung-ho acquisition merchant (and all round twat IMO) who forced through the purchase of ABN Amro by RBS without even the basic due diligence that should have taken place.

    The due diligence checks would have brought to light that ABN Amro were up shit creek without a paddle as a consequence of the position they had taken in the derivatives that were underpinned by US Subprime debt.

    When the shit hit the fan, Fred resigned from RBS and ran away with a massive pension that was part of a golden parachute deal he'd written into the contract.

    I know this because I was on the inside in 2008. Ironically, I was designing a derivatives risk management system.

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    Quote Originally Posted by Jonny Wilkinson View Post
    The RBS thing was a bit more complicated than that.

    They weren't the ones repackaging the risk on the sub-prime. That was a small number of US Banks. They did make it clear how the risk was repackaged BUT they applied pressure to the rating agencies that rated the derivatives so that they appeared less risky than they were.

    There were a small number of gullible idiots at ABN Amro (a dutch bank) who were courted and targetted as buyers of the derivatives and they took the derivatives onto their books without understanding the potential exposure they were underwriting.

    The guy in charge of RBS at the time (known as Fred the Shred) was a gung-ho acquisition merchant (and all round twat IMO) who forced through the purchase of ABN Amro by RBS without even the basic due diligence that should have taken place.

    The due diligence checks would have brought to light that ABN Amro were up shit creek without a paddle as a consequence of the position they had taken in the derivatives that were underpinned by US Subprime debt.

    When the shit hit the fan, Fred resigned from RBS and ran away with a massive pension that was part of a golden parachute deal he'd written into the contract.

    I know this because I was on the inside in 2008. Ironically, I was designing a derivatives risk management system.
    Sorry Jonny, you are wrong. RBS invented the repackaged mortgage debts because our banking laws allowed it.


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    Quote Originally Posted by LeonatLarge View Post
    That's nothing compared to what Carrillion did they stole 2.6 billion from the pension pot.

    The team at carrillion are true capitalists, rich people stealing from the poor, I bet they find it hilarious whilst on their jollys on a multi million pound yacht somewhere in the mediterranean, I would imagine the conversation is something like this, those stupid filthy peasants paid for my yacht and they are that stupid that most of them are still paying via one of my scam pension schemes even though it has no guarantees whatsoever, it's a good job the peasants are stupid we would be ****ed if they started investing their money in property instead.

    https://news.goldcore.com/uk/gold-bl...t-uk-pensions/

    It has always amazed me how it is legal for the rich to steal from the poor with such ease and with no consequences.
    Work for a Law Firm. Bankers are amateurs,

    Back in the 90s traders would kick IT staff when they were under the desk. Lawyers do far worse now.

    Prudential are doing quite well with pensions at the moment. I don’t work there but my pension is doing fine


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    Oor Willy sideways14a's Avatar
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    A trader kicks me under the desk i will make sure no one finds the body.
    Dont mess with IT staff, they can put kiddy dirt on your home pc and call the plod on you.

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