Should individuals who cause an economic crisis be sent to jail?

sprunt said:

You live in Darlington where a quick look at Rightmove reveals that a 2 bedroom house can be bought for about £50,000. In Dagenham in East London a quick check shows that the cheapest 2 bedroom property is £200,000 - how long do you think a young adult just starting their first job who'd grown up there would need to save for to afford it?

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I don't live in Darlington any more sadly. I live in Milton Keynes. My house cost me the figure you describe. I managed it. Why cant they?

I ma not saying it is easy or fun. It isnt. I am saying it is what you have to do.

433N said:

That's fair enough ... and you have Mark Carney on your team but I do think alarm bells should start ringing if you are 10 years into a low interest rate 'temporary measure' and the economy is still a basket case (of course, austerity hasn't helped either) and productivity is dire. At some point you have to wonder if you are working within the correct paradigm.

As I'm sure you know, the idea behind low interest rates is to stimulate investement and encourage spending to stimulate economy ; it is not to help people pay off the debt they couldn't afford in the first place. Further, all those younglings buying iPhones (shudders) is fine IF the iPhones are made here since it creates jobs and stimulates investment ... but they aren't. If we were still a manufacturing powerhouse as in Keynes day then, yes, it would be the right approach. I remain unconvinced that it is so clear-cut now.

Who is to say that if savers got more interest, it wouldn't be spent in ways that would stimulate the economy better than paying off mortgages and buying imported goods. Perhaps pensioners would spend it on more trips to Eastbourne, staying in family-run hotels, eating more home-made ice-cream, eating more carvery meals and having an extra round of Crazy Golf on the seafront?

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I am no economist but I think the reason the economy is hanging on is because of the low interest rates. Is business able to access cheaper capital for investment so that they can make things here to sell to us? As for productivity...................

I wouldn't trust the elderly to spend money and bail us out. They have had years to do so and have salted the money away in the bank rather than blow it on naughty weekends in Eastbourne

433N said:

The housing market is now artificially overvalued and excludes younger people who weren't on the housing gravy train at the time of the crisis. So you can argue that people have higher value properties and have been enriched as a result of the 'bailing out'.

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That generally only applies to the south. In most of the country, prices are lower in real terms than they were in 2008. In Scotland, the North and Northern Ireland, prices are actually lower in cash terms than 11 years ago. In Northern Ireland prices have dropped 21%. Taking inflation into account, prices have dropped 40%!

433N said:

No. Trade union leaders who call strikes which YOU judge to be unnecessary will not be imprisoned. Sorry 'bout that.

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So about as much chance of jailing TU leaders as bankers who YOU think have caused unnecessary economic crisis.

DarloRich said:

I am no economist but I think the reason the economy is hanging on is because of the low interest rates. Is business able to access cheaper capital for investment so that they can make things here to sell to us? As for productivity...................

I wouldn't trust the elderly to spend money and bail us out. They have had years to do so and have salted the money away in the bank rather than blow it on naughty weekends in Eastbourne

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I intend dying when I have just 1p left in the bank.

Judging this to perfection is the tricky bit!

DarloRich said:

I am no economist but I think the reason the economy is hanging on is because of the low interest rates. Is business able to access cheaper capital for investment so that they can make things here to sell to us? As for productivity...................

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This is a very interesting question and one which I was thinking of dribbling on about. It seems to me that the solution may be having two-tier interest rates ; one for business and one for personal customers ; with the former lower. It just doesn't seem easy to unbundle the two ; particularly without the kind of state intervention that governments (particularly Tory ones) shy away from.

Business have access to other forms of capital for investment such as through bond (or share) issues. Say a company issues bonds offering 3% when interest rates are 4% on cash, how do you incentivise people to invest in the company bonds at 3% rather than (the relative safety of) cash at 4% so that the business gets cheap money but individuals don't ?

radamfi said:

That generally only applies to the south. In most of the country, prices are lower in real terms than they were in 2008. In Scotland, the North and Northern Ireland, prices are actually lower in cash terms than 11 years ago. In Northern Ireland prices have dropped 21%. Taking inflation into account, prices have dropped 40%!

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Well if you average the movement of house prices across the UK they follow a curve like this:
https://eu.vocuspr.com/Publish/3544...69_423ebb2e-c51d-4053-b510-bd08dd514766_0.png
Interestingly, look at the price relationship with interest rates. Low interest rates are the direct cause of most house price inflation. It's the equivalent of the effect that printing money has on commodity prices.

furnessvale said:

So about as much chance of jailing TU leaders as bankers who YOU think have caused unnecessary economic crisis.

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1. I take it you didn't read up on recent legislation relating to strike action. Plainly, 'TU leaders don't call strikes' these days.

2. I don't think that I have passed comment on what I think is an unnecessay economic crisis nor whether bankers should be jailed or, indeed, caused them. If you would like a comment on that, I would say that the 2008 economic crisis was caused by the bundling and selling of 'bad' loans between banks and, unless the full nature of the badness of those loans was disclosed to the buyer (which they undoubtedly weren't), there would appear to be alot of room for criminal prosecution for a range of misdemeanours : fraud, obtaining money by deception, false advertising under the trade descriptions act etc... It is what you would expect in other walks of life, yet strangely, we have heard of few such prosecutions.

433N said:

Business have access to other forms of capital for investment such as through bond (or share) issues. Say a company issues bonds offering 3% when interest rates are 4% on cash, how do you incentivise people to invest in the company bonds at 3% rather than (the relative safety of) cash at 4% so that the business gets cheap money but individuals don't ?

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Not to mention the option of investing in some tech stock that promises to return millions (and may or may not do so, but by then it's too late).

Xenophon PCDGS said:

I see you make no mention of the number of retail jobs that have been lost over the recent years, with even large well-known retail giants of the high street such as House of Fraser, Marks and Spencer, British Home Stores, etc, not protected.

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I see you make no mention of the number of handloom weaving jobs that have been lost. Time moves on.

AM9 said:

Well if you average the movement of house prices across the UK they follow a curve like this:
https://eu.vocuspr.com/Publish/3544...69_423ebb2e-c51d-4053-b510-bd08dd514766_0.png
Interestingly, look at the price relationship with interest rates. Low interest rates are the direct cause of most house price inflation. It's the equivalent of the effect that printing money has on commodity prices.

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It would be nice to see this graph adjusted for inflation. Interest rates don't help but there was huge house price bubble in the 80s (mostly confined to the south) after which prices didn't recover in real terms until the mid 90s. Interest rates were in the region of 10% in those days. Interest rates are low across the developed world. Switzerland even has negative interest rates.

Xenophon PCDGS said:

You really should try to access the said RMT photographic image, with one or two of those individuals looking like the "missing link" in human race development. The RMT as I am often informed, are naught to do with the Labour Party and the RMT actions in those many strike days were not for the benefit of the NHS and welfare state (as you state above) nor for the rights of those people who travel to work by train (commonly known in certain union
circles as "collateral damage"), but were only for those who hold membership of their own trades union.

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I don't doubt your judgement of human evolution but suggest that there be real monsters out there that we should fear more readily, not necessarily because of how they appear in RMT photos but because they deceive us, we vote for them and their intentions are less than protective of the majority of ordinary people like you and me.

sprunt said:

I see you make no mention of the number of handloom weaving jobs that have been lost. Time moves on.

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What a heartless and supercilious comparison to make. The number of jobs lost in the retail industry in recent years, with all the financial strain on those so affected, is a matter for the 21st century.

radamfi said:

It would be nice to see this graph adjusted for inflation. Interest rates don't help but there was huge house price bubble in the 80s (mostly confined to the south) after which prices didn't recover in real terms until the mid 90s. Interest rates were in the region of 10% in those days. Interest rates are low across the developed world. Switzerland even has negative interest rates.

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The best that I can find is the RPI index but:
However, looking at the house price/interest rate chart, average UK house prices rose from about £50k to £230k which is around 4.6 times whereas general inflation rose around 2.8 times (100 pts to 280pts in 2018).

Xenophon PCDGS said:

Town centres were long the fulcrum point of any town since time immemorial and it is only in fairly recent times that the Houses of Mammon saw car ownership to lead to success of out of town retail shopping developments and since then, the last thirty years or so saw the internet use grow year by year and certain commercial entities saw a new market niche for internet shopping. I see you make no mention of the number of retail jobs that have been lost over the recent years, with even large well-known retail giants of the high street such as House of Fraser, Marks and Spencer, British Home Stores, etc, not protected.

I am 74 and suffered at stroke in July 2012 and have never driven since that date and my good lady wife is 77 and unfortunately in the first stages of a dementia-type affliction, causing her to stop driving immediately on the advice of her consultant, giving her Land Rover Discovery to one of my sons. We live, as many on this website already know, in an 18th century six-bedroom two story residence which originally was the land agents offices of a nearby stately home and we are two miles away from the nearest railway station and a bus stop. Indeed, I would love to have a barouche pulled by noble equine steeds as you suggest, but content ourselves that our village has a rather good executive taxi service that meets our daily needs.

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You and your dear lady wife are slightly younger than my parents. As a family we lived like you, in a rural area and the local town hadn't got any supermarkets at all, because they had yet to arrive on the scene. Groceries were delivered from the local village stores, as was bread and dairy from local amenities in the village. The first supermarkets in the nearest town centre didn't arrive with the motor car but because of market forces, relatively cheap home freezing and most of all, lower prices leaving the village stores and village bakery to go to the wall.
So now, deliveries are made to our door, whether from Tesco, Waitrose, Amazon or any other online retailer and in some ways, things have gone full circle, no?
I agree that Town Centres became market hubs for communities but now they don't need to provide this for shopping and towns need to adapt, less retail, more entertainment. My local market town used to be Hitchin. Hitchin went through the doldrums but now is thriving like never before. Shops still exist but are more niche and most footfall is for leisure activities where people meet and socialise, just as they would have done in your time immemorial.
The point I make to your post is that things change and rarely do they return exactly to how they used to be, if at all. Job markets come and go and yes, there will be many high street retail jobs that are no longer needed as before but plenty of delivery drivers clogging our roads.

I have elderly relatives who are ever facing challenges of getting their provisions and unlike yourself, internet as a means of securing home delivery is not an option. Moving from a family home that no longer meets their needs is a challenging consideration however.

On the original question of whether those that cause economic damage be given jail sentences? There are a few that probably deserve the focus of the law, maybe at the Hague rather than the Old Bailly springs to mind given illegal wars and arms trading. On the whole though, no, I don't think so as we will have voted for them. Greater accountability would be a good start however, not just for those who lie to us that we then vote for & choose to lead, but for those of us making the choices. For instance, if Brexit does turn out to create a real crisis in our country, how many who made this their choice will want to hold their hands up and concede that they made the wrong choice, opposed to choosing to look for someone else to blame?

Robin Edwards said:

I don't doubt your judgement of human evolution but suggest that there be real monsters out there that we should fear more readily, not necessarily because of how they appear in RMT photos but because they deceive us, we vote for them and their intentions are less than protective of the majority of ordinary people like you and me.

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Many of those who travel to work by train in all the TOC areas affected by RMT strike action would read what you say above and immediately state that they never voted in any RMT ballot for strike action. Deceit is a word you chose well in your posting above in RMT logic, notwithstanding those RMT now-infamous press releases, which only showed the immature lexocologically-phrased mentality behind such scriptwriting. The only thing that could be said about the wording of those press releases was that they brought forth copious amounts of laughter from those who read them.

Xenophon PCDGS said:

Many of those who travel to work by train in all the TOC areas affected by RMT strike action would read what you say above and immediately state that they never voted in any RMT ballot for strike action. Deceit is a word you chose well in your posting above in RMT logic, notwithstanding those RMT now-infamous press releases, which only showed the immature lexocologically-phrased mentality behind such scriptwriting. The only thing that could be said about the wording of those press releases was that they brought forth copious amounts of laughter from those who read them.

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Xen,
I have never worked on the Railways and am not familiar with the RMT so make no direct judgement of any individuals or the actions they feel necessary to take. Maybe someone closer to the RMT could maybe add balance and direct you to the 'monsters' that they judge in the TOCs?

What i do know is that I have worked in Tech industry for 40 years and have supported my union at each juncture, for past 25 years as an executive and as a member of what is now Prospect Union. I can honestly say that I have not met any such demons in my time. No monsters, no fist shakers, only good people wanting to the best for their members. In my view, without trade unions (I generalise), we are a poorer society, not in monetary terms but in terms of treating people fairly.

adrock1976 said:

When the global economic crisis happened back in 2008, instead of the government bailing out the bankers, should they have bailed out the people and sent the bankers who caused the crisis to jail?

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The economic crisis of 2008 was caused by a very complex web of circumstances. Including that our whole economic system is inherently somewhat fragile because it's so much based on people trusting in the stability of the system - and as soon as anything happens to disturb that trust, things start almost inevitably crashing down as people rush to protect their own money by generally withdrawing it and dis-investing.

Shall we try and go through the complex process of figuring out as best we can what happened and what might be done to make the economy more stable in the future? Nah! Far easier to just pick on a group of people we don't like coz we think they're rich ('bankers') and scapegoat them all by blaming them for the whole recession. And even better - then we can just call for them to be sent to jail. Nothing like a good dose of populism to solve all our problems - especially when we can find a conveniently unpopular bunch of people we can scapegoat and make out that they are the enemy.

I'm actually surprised glancing through this thread that no-one can see how close this awful suggestion is to the kind of thing that used to happen in - say - the Communist USSR or in Nazi Germany. Or for that matter, any of numerous dictatorships through history when the Government wanted some people to scapegoat for various problems.

Obviously, if you can show that specific individuals or organisations knowingly broke specific laws with unethical intentions, then by all means charge those individuals/organisations and put them through the usual judicial process (which has actually happened in a few cases). But just sending 'bankers' to jail because you think (almost certainly, incorrectly) that they somehow uniquely caused the whole recession is not justice, and is not how any decent society ought to work.

I'd recommend the film the Big Short (currently on Netflix) which for its running time does a decent job explaining some of the financial crisis particularly the synthetic CDOs/CDO squared products. "All the Devils Are Here: The Hidden History of the Financial Crisis" is a more detailed read on the crisis which I thought was reasonably accessible to a non-financial individual like myself. I agree with the posts earlier that there's a wide range of people responsible and ultimately many people are greedy, there's always going to be people who push the rules and behave unethically to make more money but you can't arrest someone who hasn't broken the law.

433N said:

I certainly don't believe that interest rates should have been suppressed so low for so long out of fear of people not being able to afford their mortgages.

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That's not the reason that rates have been kept low. Without access to cheap money many more businesses world have gone to the wall, much sooner.

While the end result would have been a lean economy the pain to get there would have been extreme to say the least.

Xenophon PCDGS said:

What a heartless and supercilious comparison to make. The number of jobs lost in the retail industry in recent years, with all the financial strain on those so affected, is a matter for the 21st century.

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It is of course a shame for those who have lost their job, but I'm under no obligation to do my shopping in a way that is both less convenient and more expensive to avoid that. It's obviously very easy for you in your six bedroom house to tell me in my one bedroom flat that I should do however.

DarloRich said:

I don't live in Darlington any more sadly. I live in Milton Keynes. My house cost me the figure you describe. I managed it. Why cant they?

I ma not saying it is easy or fun. It isnt. I am saying it is what you have to do.

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They can't manage it because house price inflation has massively outpaced wage inflation, so someone who could put together a deposit over five or six years 40 years ago would have no chance today, unless you expect them to live in an area that is regularly on fire. Your historical situation does not represent everyone elses current situation, don't be so insular.

al78 said:

They can't manage it because house price inflation has massively outpaced wage inflation, so someone who could put together a deposit over five or six years 40 years ago would have no chance today, unless you expect them to live in an area that is regularly on fire. Your historical situation does not represent everyone elses current situation, don't be so insular.

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That has happened in 2 years has it?

al78 said:

They can't manage it because house price inflation has massively outpaced wage inflation, so someone who could put together a deposit over five or six years 40 years ago would have no chance today, unless you expect them to live in an area that is regularly on fire. Your historical situation does not represent everyone elses current situation, don't be so insular.

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Better not to buy in the south anyway, even if you can afford it, as prices are clearly unsustainable. If you are a homeowner in the south, best to sell and rent, or move up north. Saving up £3,000 for a 5% deposit on a £60,000 flat up north doesn't seem that unrealistic.

radamfi said:

Better not to buy in the south anyway, even if you can afford it, as prices are clearly unsustainable. If you are a homeowner in the south, best to sell and rent, or move up north. Saving up £3,000 for a 5% deposit on a £60,000 flat up north doesn't seem that unrealistic.

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I am not sure that is good advice.

DarloRich said:

I am not sure that is good advice.

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It isn't. Though it sounds suspiciously like something a Tory MP might say to someone struggling to make ends meet on a minimum wage, zero-hours job in London/the South East.

DarloRich said:

I am not sure that is good advice.

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So you think current prices in the south are sustainable? Certainly, if I was interested in BTL, I would avoid London as yields are low. I would certainly not buy a house in Guildford for £400,000 when I could rent it for £1,300 a month.

A lot of older people could sell their house in the south, move up north and have a very comfortable retirement. Many could quit work early if they cashed in on their equity. Better now than in a few years time when the selling price might be 30% lower. House price crashes do happen and most people seem to have forgotten about the late 80s crash which left many in the south in negative equity for years. By the mid 90s, houses were a bargain.

radamfi said:

So you think current prices in the south are sustainable?

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No, of course they aren't. However there's no way you can make a blanket statement like "If you are a homeowner in the south, best to sell and rent, or move up north."

There are a lot of factors to consider. What if your employment ties you to specific area? What if you are a homeowner with no mortgage? Family ties?

najaB said:

No, of course they aren't. However there's no way you can make a blanket statement like "If you are a homeowner in the south, best to sell and rent, or move up north."

There are a lot of factors to consider. What if your employment ties you to specific area? What if you are a homeowner with no mortgage? Family ties?

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If you have to stay in the area then you can still rent. Indeed, you can live in places where you would otherwise be considered to be "priced out" from.

radamfi said:

If you have to stay in the area then you can still rent. Indeed, you can live in places where you would otherwise be considered to be "priced out" from.

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But why sell and rent? If you have a home that you like/love (e.g. a third or fourth generation family home) then it doesn't make (overall) sense to sell up.