On air: Don’t blame bankers – its our fault

_45448293_pigeons_b226_pa1 The issue of who’s to blame for the financial crisis is again hot in the news today. The IMF says its taking the blame for not warning the crisis was on its way. And in a major speech over the weekend, the Archbishop of Canterbury said blaming the bankers is far too easy and governments should take more responsibility. But are we missing the crucial point here? Could the biggest blame lie, in fact, with ourselves?
The Archbishop blamed governments for encouraging risk and a culture of borrowing, but, as he said in his speech, isn’t it us who kept electing those goverments?

British MP John Redwood has reacted to the speech. In his blog he says: “It’s a very one sided morality which condemns lending too much but does not condemn borrowing too much.”

Is our desire for bigger houses, cars and more and more things as much to blame as the people who enabled us to buy them? This blogger thinks so. In 2007 US annual household debt ballooned to 130% of income. In Australia the figure was much the same. At some point, doesn’t there need to be a some responsibility taken by the people who borrowed to the hilt?

There are plenty of people who say it’s unfair to blame those who took out loans they couldn’t repay, or even people who accidentally find themselves with a credit card bill they can’t pay off.

Are bankers and governments just easy targets because we don’t want to face up to the fact that we are the ones to blame?

89 Responses to “On air: Don’t blame bankers – its our fault”

  1. 1 Chad from Virginia
    March 9, 2009 at 14:31

    As I mentioned to a Cato lecture attendee, “no one made them securitize the mortgages.” But as I’ve mentioned to WHYS before, there is no single party to blame and any attempt to assign blame will only reveal how culpable the other parties are.

    Bankers lent too much, investment advisers repackaged the loans too much, consumers borrowed too much, developers built too much (commercial and residential real estate is tanking), commuters drove too much (raising oil prices), companies borrowed too much, regulators permitted too much, legislators abstained too much. In the end, eye for an eye leaves the whole world blind.

  2. 2 Bob in Queensland
    March 9, 2009 at 14:44

    Yes, there has to be an element of personal responsibility. However, call me an “old git” but I remember the day when banks wouldn’t loan money to people who couldn’t pay it back. Instead, encouraged by lax government regulation, banks actively chased people and offered them imprudent loans. Sorry, banks and governments get my vote.

  3. 3 Donnamarie in Switzerland
    March 9, 2009 at 14:49

    It’s not MY fault. My ex-husband and I always lived below our means, never beyond. We used credit cards when traveling, but repaid the charges in full every month. We bought mid-priced cars for cash and drove them until they fell apart, usually after eight to ten years. The only money we owe is the tag-end of the mortgage on the house we bought 21 years ago, a property that was well within our means.

    We are now separated and until the divorce is final I am living on a tiny pension. I have credit cards but only use them for catalog gift orders for my family back in the USA. My accounts are secured accounts, and the money is automatically repaid in full immediately.

    If everyone had been, and was currently, similarly responsible, there wouldn’t be a credit crisis. Perhaps everyone will learn a lesson.

    In the meantime, don’t blame ME!

  4. 4 Tony from Singapura
    March 9, 2009 at 14:52

    I agree that there is some degree of fault to be laid at the feet of the general population. I do note that a great majority of people dont have good personal financial management skills. Many people live it up on payday and by the end of the month are living on cup noodles and stale bread.

    One reform that could be considered is teaching personal financial management to school children. By the time that generation become working adults, a greater percentage will be more capable in managing their own finances than their parents generation.

  5. March 9, 2009 at 14:54

    People wanted the dreams more than the reality. They were told that if they didnt own they were not “wealthy”. If they didnt have more than 1 credit card they didnt have good credit. The problem is people wanted more than they could pay for cash and someone said ok, we will loan it to you. A two fold responsibility is needed. The banks could have, and should have said no, and we should not have asked. give us an inch and we’ll take a mile.

  6. March 9, 2009 at 15:00

    its everybodys fault ..greed has taken every aspects of society in all sections from the govermental level ,bankers level to individual level to earn more than what is nedded thus paving way for this financial catastrophe of this magnitude?
    remember great gandhijis words take only what you need absolutely and share the excess with others who dont have the luck to have it .
    this is the only solution for this global financial disaster rather than playing the blame game?
    its time everyone should excercise the choice to be the master in every situation without being a slave to every emotion and thought that impinge our mind?
    if government,bankers ,individuals havefollowed this message world would have been a wonderplace to live on

  7. 7 Anthony
    March 9, 2009 at 15:09

    It’s everyones fault, but hello… we’re American!!! We always have some sort or scapegoat to make us feel better :).

    But yes, there we’re some that are at fault more than others, which I feel would be a lot of those greedy bankers, since I saw it first hand working in a number of banks for years. I would think to myself “Really, is this guy really getting a line of credit, I wouldn’t loan this guy a pen… oh well, these guys must know better than me.”

    -Anthony, LA, CA

  8. 8 Dan
    March 9, 2009 at 15:18

    There is enough fault to go around. Regulators who were asleep at the switch, SEC hiring lawyers instead of people who actually understood the market, politicians who made laws without considering consequences or revisiting the outcomes and of course people who lived beyond our means, speculated on real estate and grossly lied on loan applications…..we all share the blame.

  9. 9 Katharina in Ghent
    March 9, 2009 at 15:18

    It’s one thing to ask for a loan, it’s another thing to give it (or get it). I don’t know if it’s still the case, but a few years ago TV, newspapers, even subway cars used to be full with advertisements for “refinancing” or “remortgaging your home”, basically offering already indebted people another loan.

    Banks used to be extremely diligent and give loans only to people who (almost) didn’t need one, but during the last few years they were hunting you down and pushing you to take a loan, or at least a line of credit (as it happened to me). I feel now sympathy for bankers. None what so freakin’ ever.

  10. 10 John D. Augustine - WI USA
    March 9, 2009 at 15:28

    “Our” fault? Hardly! Society is to blame. Society were the ones who believed houses were suddenly worth so much more. And society were the ones who were willing to pay that much more because society had done such a good job of making itself better off than it had ever been before.

    Oh, and you forgot to mention Alan Greenspan. I forget where I heard this analysis, but it’s no surprise it was only once. The story reported that anyone who understood what was happening, recognized that Alan Greenspan sent an unmistakable message in the speech where he announced he would begin dropping interest rates so drastically.

    I for one, don’t understand the global economy, so I can’t summarize the analysis, but its conclusion was that the real crisis was caused by banks who bundled sub-prime loans and sold them off to third parties who passed them on to investors looking for a better-than-Greenspan-offered rate of return. These investors also believed that credit rating agencies were providing them with an accurate assessment of risk.

    I suppose that’s a few more people to blame, but in the end, it does come back round to the consumers, who were only doing what they thought was in their best interest, an act which society regrettably applauds.

    It leaves me to wonder whether economics classes were the first to go before schools began cutting arts and other fields of inquiry to better prepare students for the more basic demands of “no child left behind.”

  11. 11 Bert
    March 9, 2009 at 15:42

    Oh, heck yes, it’s also the people’s fault. This is just like every other example of personal irresponsibility that people like to push off on “society,” or whatever faceless entity they can dream up. How very convenient. Blame “society,” so no one becomes the bad guy.

    This is just like pollution, depletion of natural resources, illiteracy, and any other ailment that afflicts us as a people. Of course we cause it.

    Granted, bankers had no business giving out loans so liberally. But personal ignorance, stupidy, and/or greed should not be so quickly dismissed either.

  12. 12 VictorK
    March 9, 2009 at 16:01

    As Redwood noted: if excessive private debt is now damnable, what about excessive public debt? And what about pursuing the most irresponsible economic course any government can take, printing money? The British government is to do this to the tune of some £75 billion. The same people who used to endlessly lecture Africa on something called ‘good governance’ are now following Mugabe’s Manual on Monetary Matters.

    Banks, government and the public all share the responsibility for this ‘crisis’ (actually, it’s a market adjustment), but only the public is being made to pay for it, in every sense of the word. We’re being forced to save the banks from the corporate failure that the market dictates should be their fate (and I believe that a collapse of enough banks – another market adjustment – would significantly improve economic liquidity), while the government – which failed in its responsibility to provide the appropriate regulatory framework within which the financial markets should have operated – shrugs its shoulders, shamelessly denies responsibility, and debases the currency while fueling inflation by creating phoney money.

  13. March 9, 2009 at 16:03

    The “blame” has plenty to go around. This is like parents blaming each other for their children growing up to be drug addicts.

    The government is responsible for allowing credit to be offered like candy. A government agency will kick your door in and haul you off to jail if you print fake money and circulate it. Yet they encourage “credit” institutions to do just that. They are also responsible for letting economies who subsidies their workforce with healthcare, higher education, and energy reimbursements compete in our market. This action left us all at a disadvantage to our competitors. We have to pay for these things.

    Financial institution are to blame for offering unrealistic products to a market that was ignorant of the reality. They bet that you would live 30 years healthy and employed. They also bet that you wouldn’t over extend yourself buying other people products. They also bet that the cost of living wouldn’t out pace salary growth. They lost that bet by enough margin that it broke them.

    The consumers are to blame for being unrealistic and ignorant of how they were living. In order to “keep up with the Jones’s”, they were willing to sacrifice their future and the future of their children. When you sign a 30 year mortgage, you are saying to the bank and anybody who depends on you that, “I promise to be healthy and employed for the next 30 years”. That is a promise nobody can make.

    Collectively all of them are responsible for not understanding what their actions would do to a “free market capitalist” economy. If the government didn’t allow it, the problem doesn’t exist. If the lenders didn’t offer it, the problem doesn’t exist. If the consumers refused to buy it, the problem doesn’t exist. But all three did.

  14. 14 archibald in Oregon
    March 9, 2009 at 16:08

    I agree with Dan, but, I will say that many of the practices that have left us in this mess, were instituted by those who stand to lose nothing as they walk away with substantial $$$ farewell envelopes in their pockets. Blame does not help fix, necessarily, but, it does assign greater weight and visibility to those responsible for inception and implementation of highly questionable actions.
    If we gloss over the specific culprits in favor of a diffused blame that falls on us all, we miss the chance to remove the elements and individuals who, undoubtedly, will do this again, in one form or another. This includes idiots who insist on living beyond their means in favor of fashion and status. I think the business community and the government at large is counting on short memories and continued ignorance to get them out of this. Lets disappoint, shall we?

  15. 15 Tom D Ford
    March 9, 2009 at 16:11

    The financial schemers hired physicists and top level mathematicians to create Derivatives, a new financial monster (think about Dr. Frankensteins man-created monster) and then when American Conservative Republicans learned about Derivatives they pushed trough a law in 1999 that prevented any Regulation and/or oversight of the new financial monsters.

    Financial schemers and American Conservative Republicans are to blame for our current Re-Great Depression.

  16. 16 Dave in Florida
    March 9, 2009 at 16:13

    I have absolutely NO sympathy for the people who bought homes that were beyond their abilities to pay-off. If that was not bad enough — then they used their house as an ATM for other loans in order to live beyond their means.

    I am not by any means the smartest guy in the world, but I had enough intelligence and common sense to know that I could not afford a $700,000 home on what I earn per-year. Sorry, but if I was able to figure this out — so were you. Either that or I am a lot smarter than I think I am.

  17. 17 Steve in Boston
    March 9, 2009 at 16:31

    The problem is that all the grown-ups have either died of old age or are in nursing homes.

    We have become a weak culture of adult children who don’t know how to take responsibility for ourselves. We look to someone else to be our daddy, and don’t know how to work hard enough to support the lifestyles to which we would like to become accustomed.

    At some point we have to be weaned off the teat of government and act like responsible adult individuals.

    In a news story this morning, Warren Buffet said “… people that behaved well are no doubt going to find themselves taking care of the people who didn’t behave well.”

    Well you know what? Not me. Not over my dead body. People who behaved badly and lived the good life off the credit card while I was paying my bills and going without, need to pay their own way.

    I’m with Donnamarie in Switzerland–don’t blame me, and damned if you’re gonna get my stuff.

  18. 18 Anthony
    March 9, 2009 at 16:40

    @ Dave in Florida

    YOU ARE 100% RIGHT!!! It’s financial Darwinism. Let those who thought they could afford that which they couldn’t suffer and learn their lesson right.

    -Anthony, LA, CA

  19. 19 Tom D Ford
    March 9, 2009 at 16:41

    There is a saying in the insurance industry that insurance is “sold”, not “bought”. That applies to this sup-prime crisis, these loans were pushed onto people.

    The bankers hired low-lifes to hustle people into these new loans and the bankers ought to lose out now because of their scheming and scamming.

  20. 20 Tom D Ford
    March 9, 2009 at 16:43

    There was no way that a borrower could have made a fully informed financial decision when he/she was up against top level physicists and mathematicians hired by the bankers to create these financial scams and schemes.

    When you think about it these are really Financial Crimes Against Humanity, and the bankers and their Conservative Republican protectors have brought the worlds economy to a stop. They have created homelessness and poverty and put numerous small businesses out of business, while creating joblessness among many millions of workers.

  21. 21 Marija
    March 9, 2009 at 17:04

    Thank you very much for the email and the article on the critical assessment of the crisis by the Archbishop of Canterbury.
    I agree wholly and essentially with Dr. Williams’s opinion. The development did go in the direction of satisfying the buyers even before they realise what they want. Satisfy, satisfy, satisfy, and nobody took heed of the expenditure and exhaustion of the planet and of more moderate people who know what they want. It is a sad sad truth that the unchecked development, the enticing progress and the ferocious needs have regulated the world down to its present state.
    Thank you very much.

  22. 22 Dr M Katme
    March 9, 2009 at 17:05

    Muslims over the world did expect that!
    The only safe prosperous way is to establsh: Banks with zero interest,Gold reserve(equal to paper money)..and having national banks not controlled by greedy few?

  23. 23 In singapore
    March 9, 2009 at 17:05

    What happen to the economist , I was warning investors of a bubble that is bigger than big. When prices goes up , a feeding frenzy by shark ‘s standard the investors are fiercer. A simple wisdom that the naive men of the 21st century don ‘t know about, ‘What goes up , must come down’.

  24. 24 devadas.v - Kerala, India (via email)
    March 9, 2009 at 17:07

    at all levels of consumerism and financial matters all should remember the great adage: “let choice be the master in every situation without being a slave to every emotion and thought that impinge the mind. The bankers,policymakers,and individuals strayed from this dictum and is paying the price for it with the present financial crisis.
    remember gandhijis words that it’s nice to share the excess with those who haven’t had the luck ?

  25. 25 Mary, Harrisburg, Oregon
    March 9, 2009 at 17:08

    Yes, we consumers are to partly to blame for what happened. Do not, however, shoulder us with the total blame. We didn’t do this on our own. We had help in the form of legislation passed in the US.

    I was searching for sources to cite in this email, when I came across this article on the AlterNet website: “$5 Billion in Lobbying for 12 Corrupt Deals Caused the Multi-Trillion Dollar Financial Meltdown”
    An excellent primer for the causes of the meltdown.

    I am sick and tired of blaming the victim mentality that is creeping into media reporting of this crisis. Yes, as I said before, we are partly to blame. Most of the blame can really be laid at the feet of government and the banking industry.

  26. 26 John in Salem
    March 9, 2009 at 17:08

    It doesn’t matter who is most to blame – we all had a hand in it.
    And while the politicians and the pundits sound like a flock of geese the rest of us tread water, clinging to our myths and wondering if Western capitalism itself was just another reality show and we all somehow got kicked off the island together.
    Tune in next week….

  27. 27 Ron
    March 9, 2009 at 17:08

    Nothing could be more ludicrous than that proposal!
    Anyone who has made any effort to understand this situation can easily see that it was pure unadulterated greed in the financial institutions that are totally responsible. And it is driven solely by those institution’s compensation schemes …. NOBODY ELSE. They masterminded every bit of it.
    Borrowers were totally victimized by the greedy sharks ….. the archbishop is an idiot on this topic!!!! And should not be given any ear by the public.

  28. 28 Elizabeth
    March 9, 2009 at 17:08

    I think everyone is to blame. The bankers and hedge-fund managers/brokers for giving out bad loans and bad speculations. The governments for allowing the bankers and hedge-fund managers/brokers to do all of it and for, in some cases, encouraging it. The populace for buying into it and living beyond their means. Everyone has a share in the blame and cause. Everyone also has a share in the rebuilding.

  29. 29 Vetri
    March 9, 2009 at 17:10

    The answer to this question can partially be uncovered when we realize that Bankers, government officials and common people are not separate entities. Rather they are closely intertwined in the context of the larger socio-political and the economic structures and henceforth the ongoing crises clearly shows us that mere blame game is not going to help us get out of the mess that we have created in the name of economic boom and prosperity.

  30. 30 baaroo
    March 9, 2009 at 17:16

    Does the cost of the wars in the east have even the slightest contribution to the financial melt down?

  31. 31 Fred in Portland OR
    March 9, 2009 at 17:19

    I don’t argue that the blame should be shared, but if the economy has collapsed because of bad credit, too much credit then why am I still getting dozens of offers for credit cards and home equity loads every week?

    It seems that the financial industry still has a lesson to learn, just look at the constant boil on the economy that is AIG.

  32. 32 Morf
    March 9, 2009 at 17:23

    In a sense, we all contributed to the mess, yes, of course the banks and investment companies multiplied our debt with their credit default swaps and other manipulations, but our whole cultural shift toward maxing out our credit cards and personal debt drove us all off this cliff. it wouldn’t have happened without all of us.

    Now, those with cash can centralize the wealth even more.

    Will we learn from this? Probably not. We’ll almost certainly replay this nightmare fifty years from now.

  33. 33 ecotopian
    March 9, 2009 at 17:26

    A good summery of what has caused the meltdown:


    It really is the fault, at least here in the States, of government and business. Yes, people did borrow more than they could pay back. There were other, more important factors, that have caused this meltdown. These people wouldn’t have been targeted for those loans if the changes in the system hadn’t been made. It is something that I rarely hear anywhere. It is easier to blame the victim then to do some digging to find out what really happened.

  34. 34 August in US
    March 9, 2009 at 17:27

    How can you blame the people who took out the loans? How are they to know better when the public education system has been woefully inadequate in the teaching of math and economics? If you don’t teach people how credit really works, of course they will be duped.

  35. 35 Angela in Naples
    March 9, 2009 at 17:28

    One of the on-air contributors just said that it’s too easy to declare bankruptcy in America, and that it is SOP for graduating medical students to declare bankruptcy to wipe out their student loans. Sorry, I know he said he had personally helped a family member through this, but it is almost impossible to get student loans discharged in a bankruptcy proceeding. Perhaps his family member declared bankruptcy some years ago, when it was indeed easier. I have just helped a family member through it, and believe me, it is no longer so easy and is quite a wrenching experience.

  36. 36 Lena
    March 9, 2009 at 17:30

    I completely disagree with the person who said that it is easy and acceptable to declare bankruptcy in the US. It is still very much frowned upon. I know many people who have recently finished medical school since my son is a doctor. I don’t know anyone who declared bankruptcy to wipe out medical school debt. I think this statement was extremely misleading. I think bankruptcy is very much frowned upon and makes your life difficult for years afterward. I don’t know anyone who thinks it is an acceptable thing to do.

  37. 37 Dave
    March 9, 2009 at 17:33

    This is dave from oregon. I bought my house in 2003 as a first time home buyer in my early 20’s, and at the time the interest rates were at a 40 year loan. I investigated the various types of loans available and considered both ARM’s and fixed rate loans.

    After very little thought, I realized that if the current interest rates are at a 40 year low, the only direction they are going to go is up, and as such I should get a fixed rate mortgage. I can’t figure out why something that seems so obvious escaped soo many people?

  38. 38 Venessa
    March 9, 2009 at 17:33

    Most everyone in a bad position only have themselves to blame and I have little sympathy. There is the entitlement issue with consumers who want everything now and lenders willing to take risks that they otherwise would not due to lax government regulation. Sounds like there’s enough blame to go around. Perhaps people should take some time to examine their earnings vs. what goes out the door.

    I still cannot believe how many people out there I hear about that have $10k, $20k, $30k+ credit card bills. Who does that? Who buys a home $500k home when they make $50k per year? If anyone gave it some intelligent thought they would realize that they might be over their head. Just because a bank is willing to lend you money doesn’t mean you take it. When banks hunt you down to borrow money wouldn’t you think there is a large profit in it for them?

  39. 39 Brendan
    March 9, 2009 at 17:38

    The one point not being made is that rates of pay have not kept up. Look at the salaries of all the bankers versus the wages of the debtor?????

  40. 40 Gloria
    March 9, 2009 at 17:39

    Yes, consumers are responsible for their debt. However, the banks/credit card companies are gauging their customers. Banks are now raising their interest rates anywhere from 6% plus. That is not right. Especially in light of the fact their current interest rates are already ridiculously high. It’s greed on the bankers/credit card companies, and as a result, many customers are now struggling with payments.

  41. 41 Lynne
    March 9, 2009 at 17:40

    The ultimate responsibility lies with the person who writes the check. It’s inaccurate blame individuals for doing what they have been unceasingly exhorted to do ie: Buy! Buy! Buy! The buck stops with the person who signed the check for the loan. Bankers – along w/ totally unregulated loan originators – could or should have made appropriate judgments on the creditworthiness of every applicant. However, they didn’t do that because it risked their bonuses and they off-loaded the risk anyway.

    The US government’s culpability lies in policy that encouraged an economy built on consuming (mostly foreign made things) rather than actually producing goods and services of value.

  42. 42 Brendan
    March 9, 2009 at 17:40

    I am sorry this is my first time blogging. i meant to say that wages have not kept up. If wages had kept up, we could afford to pay our bills. the bankers don’t have a problem paying their daily bills.

  43. 43 Scott in Portland, OR
    March 9, 2009 at 17:42

    In the early 90’s here, the financial system had many requirements to get a home loan – down payment, pay off all your credit cards, etc. Within a few years it all turned 180 degrees and those requirements disappeared.

    In 2003/4 loan brokers started offering “Stated Income Loans” with low initial variable rates. The loan documents said “all information on this document must be correct under penalty of perjury”. However, the loan brokers were telling people what to write down for their income.

    Then after 3 years, the interest rates on these loans went way up. At this point, people figured that they would be able to refinance for a fixed rate or sell the house.

    Fortunately I was able to keep my ex-wife from refinancing our house with one of these risky loans.

    I blame the government for lack of enforcement and regulation, the financial businesses for their greed, and us, the consumers for our gullibility.

  44. 44 Dave in Florida
    March 9, 2009 at 17:42

    RE: August in US

    When I was a child my father, who was a modest boat mechanic, gave me the only lesson in economics that I ever needed. He said, “Boy, you can’t spend money that you do not have.” End of lesson.

  45. 45 Steve in Boston
    March 9, 2009 at 17:48

    Trying to blame banks or governments for this mess is like trying to blame McDonalds for making you fat. Keep your mouth closed or eat elsewhere, and you won’t get fat. Pointing the finger at the fast food restaurants and wailing that people are “blaming the victim” for your waistline is childish and disingenuous.

    People who took loans they knew they couldn’t afford are no better than thieves. It’s no different than buying merchandise you have good reason to suspect is stolen. Even if it is offered, you are responsible for knowing better.

    Caveat emptor.

  46. 46 Joey
    March 9, 2009 at 17:51

    Dear WHYS,

    The easy lending a few years ago in the US was the way of life, our culture, and reality as it was. Things have changed now only a few years later. But the responsibilities and consequences should rightly fall on the culture as a whole. Already, the reality of lending is chaning, and only time will tell and we will see how this situation affects our culture in the future.
    Thank you,

    colorado, USA

  47. 47 Tom D Ford
    March 9, 2009 at 17:51

    The only reason that these new types of credit were pushed onto the public was the creation of Derivative Financial scams that made some people think that they could take the risk out of risky loans and credit. Now those lenders have borrowers on the hook for Usurious loans and their schemes have brought the world economy to a dead stop but they still have their sacred “Contracts” that they are un-willing to re-negotiate.

    Maybe we ought to outlaw all of those forms of Derivative Financial scams and just let those scheming lenders take their deserved losses. Lets reset the world financial industry and strongly regulate it!

  48. 48 Zak in the U.S.
    March 9, 2009 at 17:52

    I tend to blame people more than banks, although both sides share some of the blame. Banks should know better, but people are the bigger idiots.

    I survive in the U.S. on a part-time job, and I have no debt. It’s not that hard if you learn to live within your means.

  49. 49 Abdi in Kenya
    March 9, 2009 at 17:52

    The World’s financial Crises is no suprise to me!
    Life becomes harder for everyone especially the poor people in Africa!
    But is it fair for a white man in london or the USA to complain of financial crises what a bout the poor in africa who has nothing at all to eat.
    I am really looking forward to today’s Broadacast.,

  50. 50 angelique Bakalyar
    March 9, 2009 at 17:52

    I am sure that it is flattering when a bank gives you a loan for much more than you are worth… it’s all about image and “success” is it? Than you can go buy that fancy car and larger house to make one “look good” vanity. Vanity really doesnt care about the next generation it’s all about me. Bravo good job, people like myself think people like that are selfish what can I do now that I am governed by unrealistic people with selfish goals from the poor who take advantage of the welfare system to the bankers and tele that sell dreams?

  51. 51 Daniel From Kampala
    March 9, 2009 at 17:53

    Well, of course its my fault that I, who lives in a third world country, bereft of any of the easy and soft money taken by so many for granted in the developed world, find myself with a bleak prospect for the future. The sneeze that the US has given out is in danger of turning into a full blown flu epidemic in my part of the world. While Africa was trudging along posting above average solid growth figures for about 10 years in a row based not on hollow consumerism but firm direct private investment, in infrastructure, someone on the east coast decided to take a loan he couldn’t afford to pay for that trip to Africa he couldnt afford, and as a result create venture capital to invest in Africa. My role in this, of course is that I embraced McDonald’s, Apple, CocaCola, Nike, and other American brands in turn. I gave up tending my garden and minding my cows so I could sip that Milkshake from McDonalds or BurgerKing. I decided to be connected to the world market, and the moment I did this, I was never going to be immune from catching a cold. I must pay.

  52. March 9, 2009 at 17:54

    very simple, I give you one dollar, you pay me two dollars.

  53. 53 Maccus Germanis
    March 9, 2009 at 17:55

    Why speak further evil of either banks or borrowers? No one knows an individuals problems quite like said individual. Any communal blame assigned on one group or the other, -or utopian plans based on such assumptions- will not be as benificial as acknowledging person reponsibility for your own economic recovery.

  54. 54 Steve S
    March 9, 2009 at 17:58

    It appears we’re covering all the bases as to why, but I think the real estate speculation that Dan touched on deserves more attention. Think of all the TV shows in the US and Great Britain (and no doubt elsewhere) that are about ‘flipping’ houses, i.e. purchasing homes for quick resale at a much higher price. It used to be you bought a house you could afford, had a kid or two, and maybe 10 or 15 years down the line you bought something a bit better. Nowadays housing prices are put on an aggressive steroid regimen, so to speak. Here’s a radical idea: housing is a basic right, like healthcare; just as we don’t allow people to buy up all the heart surgeries and hospital equipment for their own use, maybe we should at least make ownership of multiple dwellings a bit more prohibitive, with tax disincentives and the like.

    As for some of the talk castigating financially illiterate homebuyers, it sounds a bit like the ‘welfare queen’ rants we heard in the US 20 years ago. Back then, a couple of sensationalistic cases of welfare fraud were used to castigate all welfare recipients. I wonder what is the actual percentage of irresponsible borrowing.

  55. 55 Brendan
    March 9, 2009 at 17:59

    In the United States we have been hammered with credit offers and encouraged to pay later. The thought being that our wages will go up and help service this debt. And the value of our property will continue to go up. My grandson just received a pre approved credit card offer, he is 8 years old?????

  56. 56 John Foster
    March 9, 2009 at 18:10

    I feel that we all do have some of the blame. But not everyone is hurting because they spent on more and more toys. My wife and I sat out what we thought was a great housing bubble here in Nothern California for almost 10 years, but prices kept going up. We thought the dot com bubble bursting in 2000 would bring housing more in reach and it didn’t, but it significantly affected our down payment (invested in mutual funds that we thought were diverse enough, but still took a big hit). Well life, not just finances, pushes you to make descisions. We wanted a family, we had been evicted from houses we rented because they were going up for sale. Interest rates in 2004 were pretty low compared to the year or 2 before. We had built back up a down payment and we thought it was the time. We didn’t buy more than we could afford, and we feel pretty good abou the house and choices we made. However, we owe more than the house is worth, and our neighborhood has been greatly affected by foreclosures. We had bought with the longterm in mind, however if the devastation around us is not checked it is hard to see ourselves staying for 30 years.

  57. 57 Dave in Florida
    March 9, 2009 at 18:11

    RE: Abdi in Kenya

    Exactly! Very well put. I listen to my middle class neighbors whine and moan about their self-inflicted problems, and remember my travels through the world several years back. Most of my fellow Americans can not even imagine what real suffereing is.

  58. 58 john in scotland
    March 9, 2009 at 18:15

    So if its nobodies fault then by definition we are driven by forces not under our control…..Not a good place to be me thinks

    This is not an issue about moral and immoral behaviour , but how humans act under a set of changing socio economic relations that have their own logic and drive us to make the ”choices” we make.

  59. 59 Maccus Germanis
    March 9, 2009 at 18:16

    And here I thought this discussion, might finally turn toward personal responsibility. But instead we hear some tinkerers telling us that they just weren’t allowed to tinker enough with our voluntary transactions.

  60. 60 Anon in US
    March 9, 2009 at 18:18

    First my situation. I am currently 39. I live in a 4000 sq. ft. home that was fully paid off. My wife and I share a SUV and a hybrid that are also paid off. My kids go to a really respectable private school. I have enough cash saved to survive for a couple of years. Our retirement savings and college saving plans are less that half of what they were last year. That is the good and the bad.

    How did I get here? My wife and I made very conservative financial decisions. We did not splurge on vacations or expensive big-screen TVs. My friends (and sometimes my wife) thought I was crazy. No one was willing to think about the basic economic principles. How many of us remember the phrases: “New economy”, “Profits don’t matter”, “Eyeball time”, “B2B”. Well the dot com did come tumbling down. It was the same with this economic boom. Different phrases: “ARMs”, “Negative Amortization”, “Cash Flow” but the same flawed economic model.

    My model for success to survive the next economic boom and subsequent bust is to stick to the basics. Don’t hide in a cave and don’t trust ANY ONE for financial advice. If they say it on CNN it still has a 50% chance of being wrong. Make your own calls. You can still fail but then you won’t be looking for people to blame.

  61. 61 Ogola Benard
    March 9, 2009 at 18:19

    The IMF and the world Bank only needed good monetary management and continued checks on there monetary and fiscal policies – The central treasury also had a role to play as per there policies!

  62. 62 Vijay
    March 9, 2009 at 18:27

    Cheap Japanese money created the bubble. Too much money chasing too few consumers .

    The whole situation was caused by the failure of GATT and WTO to ensure free trade and fair trade and the failure to spread democracy and civil society which would create more consumers.

    The USA and Europe were the places where countries,individuals and companies sent their money to get a return,they were the only game in town.

    The USA has high tariffs and protectionist tendencies and now has become uncompetitive. Europe has high social costs ,bureaucracy ,aging population and an unwillingness to face reality and institute the changes necessary to compete.

    President GW Bush In 2008 said he wanted free trade,free markets and free people,nice sentiments but 8 years too late when he was a lame duck at the fag end of his tenure.

  63. 63 Chad in Tennessee
    March 9, 2009 at 18:35

    I’m sick of this world wide witch hunt, it’s gone on far too long all ready. Perhaps instead of putting so much time and effort into finding a suitable scape-goat, we should concentrate on a solution and a plan to try to prevent this situation from being repeated.

  64. 64 stefan bocioaca
    March 9, 2009 at 18:38

    We shouldn’t blame the mouse who fell in the trap when somebody else put the cheese in! The human being behavior can be influenced, and blaming the victim is simply leaving the real culprits in the shadow.

  65. 65 Maccus Germanis
    March 9, 2009 at 18:46

    @ stefan

    Why further victimize a supposed victim by supposing them unable to learn from their mistakes?

  66. 66 Steve
    March 9, 2009 at 18:47

    There is only so much a govt can teach financial education. Why is it so hard for ourselves to take the responsibilities and say we should not spend more than we make?!?

  67. 67 Mike
    March 9, 2009 at 18:48

    This financial crisis was caused by a collective breakdown of common sense throughout society.
    What I never see addressed in the media, including the BBC, was the role of academia in this mess. The faculty at all these MBA and Banker schools have educated a whole generation of business leaders to build value with debt. A whole generation of buisness leader risk takers. Risk was glamourized. Consumtion became manditory to maintain growth.
    Time after time we see the financial collapse of buisness models overseen by academia…Dot Com Bubbles, Saving and Loan crisis, housing collapse. Long-Term Capital Management was formed and managed by Nobel academics.

  68. 68 john in scotland
    March 9, 2009 at 18:50


    blaming the victim is simply leaving the real culprits in the shadow.
    64 john in scotland
    March 9, 2009 at 18:45

    Mass production and competition drive a decline in the real overall rate profit hence the emergence of credit to facilitate the cycle .

    The problem is not with production , but with producing for profit,

    Change to producing on the basis of need and production over night has no crisis nor does consumption .

    Capitalism afterall has solved the problem of production…just solve the problem of need.

    Your comment is awaiting moderation.

  69. 69 Vijay
    March 9, 2009 at 18:50

    Of course individuals are to blame as well, most people can’t resist the temptation “to live it large” without help either from government or society and religion.

    Banks need national and international regulation to stop them lending irresponsibly,being left to their own devices lead to the present situation.

    Here’s a platitude borrowing money for investment is good ,credit for hollow consumption is bad.

  70. 70 Chad in Tennessee
    March 9, 2009 at 18:53

    I just heard the caller from Canida who raised the issue of education. My experience here in the U.S. was very similar. The complete total of all my financial education in school was a one hour class period we spent to learn how to balance a checkbook. Therefore we have generations who are left completely ignorant of the financial system and its tricky lingo. Which set this generation up as the perfect suckers to be fleeced by the greedy banks.

  71. 71 Eric
    March 9, 2009 at 18:54

    When considering more universal basic education on matters of finance and money, could standardized education promote groupthink and could it have the unintended effect of magnifying global booms and busts?

  72. 72 Karen
    March 9, 2009 at 18:56

    I do not feel everyone is responsible for the credit crisis. There are people who live within their means.

    Quite often going into debt is fine… but if there is any crisis… global or personal, the debt make one very vulnerable.

    over the years I realized that even being a little in debt, even if it was manageable. Ten years ago I left a good paying job. I immediately cut up all my credit cards and paid off all debts

    Now I only pay cash and live a frugal life. Maybe I am not living the “Dream”, but I am much happier and at peace.

  73. 73 stefan bocioaca
    March 9, 2009 at 18:56

    @ Maccus Germanis

    Yes I agree, the victim has a responsibility, but not everybody can discern, there are limitations, we can’t ask everybody to be aware and responsible, it wouldn’t be realistic. As it was said on the radio, there’s need for (more) economic education.

  74. 74 Maccus Germanis
    March 9, 2009 at 18:57

    Why are we planning mandatory education for lessons that we do currently refuse to learn? The market, the invisible hand” if you will is the resultant force of our individual decisions. If you only understand the relative security of burying money in your yard then buy a shovel and stop looking to recreate the world.

  75. 75 MP
    March 9, 2009 at 19:15

    I saw this crash coming years ago when middle class people like me began to live a lifestyle of plenty simply by using zero money down bank loans to finance another house and flip it by the end of the year.
    I presently know regular joes with three properties that they cant sell and will declare bankruptcy. Greed and ignorance gone wild.

    March 9, 2009 at 19:48

    Yes. It is completely right that people’s greed to grow more and more richer. The present mortgage crises are fearsome to the great extent. But in order to combat such situation and let it not to happen again the education of the financial system is must. Financial education is even more necessary for developing countries as sub Sahara African countries and also many Asian countries such as Pakistan, India and others. My viewpoint is that the financial education be made must so that we can escape from such mire. Education will generate solution to this increasingly entangling financial crisis.

  77. 77 Dennis Junior
    March 9, 2009 at 20:25

    i think it is everyone fault (e.g.) bankers and the average person…

  78. 78 John LaGrua/New York
    March 9, 2009 at 21:23

    Any fool can live high on the hog with borrowed money but the politicians self servingly encouraged excess under the guise of providing the “Good Life” Bread and circus has perpetual allure .and democracies choose leaders on the promise of free lunch The corruption of the political leadership in the US went hand in hand with the false prosperity from the Federal Reserve Chairman Greenspan who revelled in celebrity to venal senators getting sweetheart loans .The voices of the prudent were unheard as kill joys and they are the real victims since the prudent now have to pay for the profligate.The Archbishop has it right ,” The fault dear Brutus lies not in our stars but in ourselves.”

  79. 79 Donnamarie in Switzerland
    March 9, 2009 at 22:40

    @ Seve in Boston: Thanks for the vote of confidence.

    @ Tom D. Ford: How did physicists make it into your equation? It sounds like you equate the calling with some kind of esoteric mumbo-jumbo. Having spent the last 30 years of my life in close quarters with physicists of many disciplines, I can tell you that while they understand rocket science, black holes and excess noise in Bismuth whiskers,they are inherently no more likely to understand the vagaries of international economics than the rest of us yokels. Ditto mathematicians. Don’t fantasize that the big domes in their ivory towers are somehow nefariously misguiding the rest of us into bad decision-making. Most people don’t need their expertise, they are perfectly capable of making bad decisions on their own, and physicists and mathematicians aren’t ahead of the pack.

  80. 80 Luci Smith
    March 10, 2009 at 00:59

    People need to have a say for the money that we are putting into banks and big companies.

    Look at Noam Chomsky and others’ letter in the New York Times Oct. 19th, 2008.

    It is like ‘No taxation without representation’.
    Throw out the expensive executives and let the people who are paying for this sit in the boardroom and take part in the process is my best solution.

    Let’s let this crisis be a tacher for us all and reform the system that was so seriously flawed and skewed so that a few people could make a lot of money by robbing many blind, dumb and homeless.

  81. 81 parth guragain,Nepal
    March 10, 2009 at 03:26

    it is no use blaming anyone we have a crisis in hand and have to be solved.Nepal rely much on remitence money sent by many workers abroad.many Nepalis have been lossing job abroad due to this crisis.if this crisis is not solved it will have profound effect in Nepal’s economy.

  82. 82 Des Currie
    March 10, 2009 at 05:17

    The time has come to decide whether you are part of humanity or part of an order.
    Those who to my right, please, those who who choose order …..

  83. March 10, 2009 at 08:07

    me and kenyans are to blame for putting in a government which will never keep their promise of millenium development goals, they now owe us because a promise is a debt,and we as individuals are the ones who will still pay the national debt of promises that never get fulfilled.
    another cause is that by non employed,people tend to take care of their money only if its from a payslip and not a gift.


  84. 84 M
    March 10, 2009 at 10:48

    Corruption is to blame. Personal and corporate.
    People still buy into the dream, commercialism and marketing. Somehow your life will be better if you have a Merc or a BMW.

    It isn’t true!

    The thing is Banks, Governments etc…smelled the gravy train and they all took a taste. Now they will pay the ultimate price for their greed.

    A recession the likes of which has never been witnessed before. There will be much pain before the tide turns

  85. 85 ms_cellaneous
    March 10, 2009 at 13:03

    The only time I have ever taken a loan was because I was forced to take a Student Loan to see me through university in 1995. I still have not paid it back and I refuse to take any blame, I refuse to apologise for it.

  86. 86 anne in Florida
    March 11, 2009 at 04:33

    Ignorance is bliss? is this really what this is all about. How can the so called top people in economic circles not predict this? How could people think they could afford a loan that wasn’t sustainable?

    I asked someone three years ago why they thought that housing wouldn’t depreciate. They told me that it would double every year. Nice. So I asked them who the hell could afford a billion dollar house on $10 ph. And their answer was the baby boomers. But.. I asked… what if the baby boomers had a depreciation in their own houses and couldn’t afford a second house in Fl. His answer was .. that wouldn’t happen. I suppose ignorance is bliss. Doesn’t help him in foreclosing on his properties though.

    It is time the banks (who lent very irresponsibly), the media (who reported irresponsibly) and the Fed Reserve (who kept interest rates too low – very irresponsibly) fess up to the mess. The people who borrowed very irresponsibly – just should foreclose now .. before they change the laws. Then we will have a bottom (forced) on the market and we can build from there.

    This is a time to shift the paradigm of power back to the people. Not to the masters of the universe. After all .. we do overwhelm them 99 to 1.

  87. 87 Tom D Ford
    March 12, 2009 at 18:45

    @Donnamarie in Switzerland
    March 9, 2009 at 22:40

    “@ Tom D. Ford: How did physicists make it into your equation? It sounds like you equate the calling with some kind of esoteric mumbo-jumbo.”

    Not at all!

    The financial schemers hired physicists and mathematicians to think about and create the equations of Derivatives and all of the subsequent CDOs, CDSs, and other financial monsters. The average human does not have either the talent or the education to understand what they created, let alone make decisions about how to allow them to affect them personally.

    It is not “some kind of esoteric mumbo-jumbo”, it is very real financial manipulation and it took very intelligent and talented physicists and mathematicians to create it, to birth the new financial monsters.

  88. 88 craig burton
    March 13, 2009 at 00:33

    now that you really look at it , the archbishop is right basically it is over greed and tastes that caused this problem. the only thing the bankers did was to realize this and take advantage of this fact. The bankers set the trap knowing we would fall for it.

  89. 89 Emile Barre
    March 14, 2009 at 13:19

    Didn’t this hiatus all begin back in the 1990’s with Milton Friedman blabbering on about economic problems being caused by Governments printing money and throwing it at problems to solve them? Quantitive easing anyone? or maybe arsenic?

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