subject: Why are we taxpayers giving to greedy people? [print this page] Why are we taxpayers giving to greedy people?
Hang on, I know I'm over sixty, so in the eyes of the teenager: why am I still breathing? I know I am a Westcountryman, which indicates to most British people that I am stupid, but I'm really confused over the cause of this economic crisis I keep hearing about and paying for.
As I understand it, the whole crisis was brought about by greedy bankers lending money at extortionate rates to people who had no chance of paying the loan back. They then packaged up parts of their loan book with some slightly better business, told a story of fantastic income streams and sold the package to greedy better-off-than-most investors by way of paying high commissions to independent investment advisors.
Before we go any further, just pause for a second. A group of greedy bankers have sold a pack of poo tickets to a group of greedy investors. The bankers celebrated by paying themselves magnificent bonuses, in many cases receiving in one year what most of us would not achieve in our lifetime. The investment advisors got fat commission cheques.
Then, as was bound to happen, the whole castle of sand came crashing down. The investors lost all of their money. That's OK though, because the professional indemnity insurers of the investment advisors, who sold the packaged rubbish to the greedy investors, will make sure that the investors are not out of pocket. The investment advisor will change the name of his company and go back into business, so he's OK too.
Someone has to pay for all of this and guess who it is. Yes, you, the tax payer. The government bailed out the bankers saying that our economy couldn't survive without them. OK, many of the functions of today's banks are fundamental to the way our economy works, but it wasn't that part of the banks' operations that caused the problem.
So, my question is, why are we having a financial crisis? The government bailed out the banks in exchange for their shares. Simply because the government did that, the price of the shares rose. In fact, it seems to be that the government are now in profit on their deal. If they sold the shares that they own, the country would make a profit.
We've now seen the trading results of the banks and the bonus payments to the people who run them. Have the greedy bankers suffered from the crisis? No. Has the investment advisor community suffered from the crisis? No. Have the greedy investors suffered from the crisis? No. Have you and I, who had nothing to do with all of this greed suffered? Yes.
It appears then that a bunch of greedy people extended themselves too far and the rest of us are paying for it.
That's right, isn't it?
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