Economic & political chaos -- which country (US or UK) has a more stable future?

Key Moment:

"The 1999 repeal of the Glass–Steagall Act of 1933 effectively removed the separation that previously existed between Wall Street investment banks and depository banks.

The repeal enabled commercial lenders such as Citigroup, which was in 1999 the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.

The legislation was signed into law by President Bill Clinton on November 12, 1999 (dammit! had to be Clinton.....)."*

Living in Miami in the late 90's - 00's, it is hard to believe the level of speculation in real estate. You were considered an idiot if you weren't "flipping" properties - buying "no look" just to turn around and sell as quickly as possible to others doing the same thing. These weren't poor folk trying to get on the ladder, but opportunists fueled by easy credit, artificially low interest rates and historically low tax levels. This is not about low wage people getting a McMansion, and had nothing to do with the idea that housing is supposed to be about shelter and warmth and building a sense of community.

The creation of these creative investment instruments allowed major financial institutions to bundle ponzi scheme loans into packages (given AAA+ ratings by S&P, etc.) which were then sold on to other institutions worldwide, setting up a line of dominoes that would eventually fall.

Labour's fiscal policies have nothing to do at all with this. Saying so is a smokescreen. As bootstrappy and common sensy as right-wing talking points sound, they are not backed up by the facts.       

*from wikipedia, so it must be true.

Hi

Windycitywids - Yes, it's a subject close to me as always! also, on a number of other forums I'm on, this very topic has come up at exactly the same time as here as well as other very similar topics recently. My background is within the IT sector for Financial corporations and Software houses and so I'm constantly looking at the financial state of things.

Sonofsailor - I'm not really so fussed as to the events leading up to this situation, I was prepared for it and had my investments and savings and protected myself from the brunt of it. I'm much more focused on my own plan for the future as I'm looking to expand my business interests. Playing the blame game onto individuals for me is a waste of time, so I can't name people who i think are individually responsible and should be prosecuted etc. Could we perhaps round up all the people who borrowed recklessly and prosecute them as well to make it more fair?!

Looking at your last line "Labour's Fiscal policies have nothing to do with all this" - do you mean with the state of the UK's finances?  or do you mean this November 1999 thing ?

If you mean the former - then 'who's policies' are the reason of the UK's mess? if the latter, so who is it you want charged and put before courts and all that?

Cheers, DtM! West London & Slough UK!

Could we perhaps round up all the people who borrowed recklessly and prosecute them as well to make it more fair?!


if the latter, so who is it you want charged and put before courts and all that?

Reckless borrowing is not a crime....nor is reckless lending....it could be argued that finance itself is inherently risky....but getting yourself in debt is not a crime.

Deven Sharma, recently resigned CEO of S&P would be a good place to start. He, and S&P have been criticized, along with the other large ratings agencies, Moody’s and Fitch, for giving top investment grades to bundles of high-risk subprime mortgages. If they did this knowingly, then it is fraud.....on a major scale.

I never mentioned in my original post anything about blame, what I did say was that nothing has been done to correct the situation. To correct it you have to get to the cause(s). Again, funding Sure Start had nothing to do with the Crunch - which is still ongoing. Britain's government debt as a percentage of GDP is actually not too bad, nor is household debt....the killer is debt by financial institutions, which makes up about 75% of the nation's debt (this is the "City Effect"). Cutting spending will have no effect what so ever on that huge chunk of financial services debt. It will, however lead to higher unemployment and suffering, as private industry, strangled by the crunch, is only growing at .5% per year, or less.

So it ain't big screen TVs or trips to Spain, or funding for those with disabilities driving the problem.

I'm an expat living in New Jersey. The USA has no austerity plan and unlikely to have one in the near future, especially now that the democrats want to cut payroll taxes. The UK does have an austerity plan and it is hurting a lot of people.

I think the US is about 2 years behind the UK.

As it is, the US is probably more politically unstable than the UK since they will have an election next year.