Page last updated at 12:09 GMT, Saturday, 20 September 2008 13:09 UK

Your Comments: The Credit Crunch

Evan Davis
Evan Davis presents The Credit Crunch Mess: What Next?
BBC Radio 4 broadcast a live debate from the square mile asking what next for the Credit Crunch mess?

Presenter Evan Davis was joined by a cast of bankers, economists, and academics to analyse the fallout following the collapse of the investment bank, Lehman Brothers.

Adding to the debate, the BBC audience sent in their comments about where the blame lies, what the future holds, and how the global economy can move towards recovery.

THE CREDIT CRUNCH MESS: YOUR COMMENTS

I find it hard to believe that all of the firm failures in the US and UK, especially the US, were not known about by central government in advance and I believe that these failures are being drip fed to the market to try and shore up what little confidence remains. If all of the failures were announced at the same time, the markets would have simply been unable to absorb them and crashed. This leads me to believe that there is more, possibly worse, bad news to come.
Gerry Hamilton, Glasgow

With the latest banking bombshells from the US, it's surely time to re-phrase that old aphorism to "The bigger THEY get the harder WE fall" as, no doubt, it won't be the banking bigwigs who'll be picking up the tabs when push comes to shove.
Gordon Petherbridge, North Bucks

Banks have lent so much in the last few years that they need to lend much less for the next few to balance their finances. This will probably mean that house prices that rose too quickly need to correct by reducing for a couple of years.

This reduction in price is necessary to allow houses to be affordable again, and the government should leave the market to work itself out.

It frustrates me that the government wants to keep house prices high, so that they are unaffordable. The other effect that the government appears determined to bring about is the destruction of the estate agent business and builders by maintaining high house prices so that no-one can afford to buy property.
Alan Thompson, Rotherham

Has capitalism been done a disservice by allowing banks - and for that matter, any other company - to become 'too big to fail'?

A universe of more, but smaller, banks would admittedly be more difficult to supervise at the present level of detail, but would be less damaging if they went to the wall. Supervisors could afford to take a more laissez-faire approach because the damage from a failed institution would be so much less. The implicit lack of support may encourage a more disciplined approach to risk control.

Would this discipline be reinforced if bank board members were also required, as a condition of their licence, to take full responsibility (i.e. financially guarantee) of the bank's capital?

It seems that greater size actually encourages inappropriate risk-taking and a tendency to 'bet the bank'.

As somebody once said in another context, we would all reduce car accidents if each car had an iron spike pointing at the driver's chest.
David Boorer, Hexham

It is very simple really. The Western world handed its manufacturing capabilities to China and India over the last 10-15 years. We have been living on a 'pseudo' economy since then and the bubble has now burst. Add a few million unemployed to the current woes and it is Goodbye Western World.

We will have to ask China to come and bail us out. I am surprised that the Chinese have not started to buy up some of our banks already. Governments have been to blame by their inactivity i.e. simply standing back and watching the banks drive us into the ground. Bank leaders who got us into this situation should be jailed quite frankly and their assets impounded. Let's face it - drug dealers do less damage to the economy than these bankers.
Gerry McNamee, Glasgow

Is there actually a credit crunch or have we just returned to more sensible lending?

In housing terms, it has been demonstrated that at current house prices, even a small rise in interest rates causes chaos to millions of borrowers. Why should banks lend imprudently to people who can't repay their loans? Why is the government even thinking of spending tax payers money to keep prices high (or buy votes)?

And is consumer spending out of control? Probably, and has been for a while, at least in the UK. High street spending doesn't seem to have stopped. Shops are having to discount more to get sales but people are still spending as much or even more than a year ago. Is it the public's duty to enable retailers to grow their profits? I don't think so.

Fundamentally, we have over-borrowed to over-spend. It's payback time. Those who have over-borrowed or think their house is worth a fortune are in for a shock.
Graham Boyd, Wetherby

I believe what we are seeing is the end of the whole concept of money. In the days when money was pinned to the gold standard there was physical proof of its "worth". Now days the money is taken on trust because a central bank says "it is worth X, trust me".

Trust is a precious commodity, and when financial institutions and governments abuse it as they've been doing for the last eight years, whom can you trust?
Alex Hammond, East Sussex

As the newspapers have, for the past few years, commented regularly on the concern at the amount of debt owed in the UK alone, why is it such a surprise that finally the bottom has fallen out of the credit market?

As there has been great concern over the amount of debt owed in the UK alone, why are people encouraged to 'spend, spend, spend' to keep up High Street profits?

Surely we can't have spend, spend, spend but no worry over debt accrued? And doesn't it make you think about the fragility of capitalism - that its success depends on continual spending?

Seems daft to me - but hey! I'm 66 and mending, darning, recycling, re-using, not wasting, have been built into my psyche.
Judy Toffell

The five main reasons for the current crisis are: greed, greed, greed, greed and greed. Greedy bankers lent more and more money, and came up with ever-more ingenious forms of trading, out of concern for absolutely no-one apart from themselves. Management, traders and shareholders kept the vast bulk of the rewards to themselves, and very little benefitted the rest of the community.

These appalling ethics-free people had little concern for those to whom the money had been lent, or the long-term viability of such lending. They thought of no-one but themselves, and we should waste not one jot of sympathy on them. They're getting exactly what they deserve.

The way to prevent such revolting and dangerous greed in the future is much tighter regulation of the banking sector. We, the public in general, have the right to call the shots, as it's OUR hard-earned money which is being used to bail out the bankers.

The bankers had their chance and they blew it - now it's the turn of the public through elected governments to tell them what they can and can't do, and the public good must form a much larger part of any future regulation structure. The personal rewards for those involved must be slashed, deeply and permanently, so that those involved in banking are never again tempted to cause such widespread damage to the fabric of society simply to line their own pockets
Graeme Bell, Dinan, France

I think it's almost universally accepted that extraordinarily foolish risk-taking by various financial institutions doing apparently clever and profitable things buying and selling debt is, if not THE cause of the credit crunch, a major cause. What can governments and regulators realistically do to ensure that as far as possible this kind of thing cannot happen again? By that I mean what can they do in the real world in which they depend just as much as the rest of us on the banks and will not want to alienate them too much?
Patrick Powell, North Cornwall

How many bonuses were paid back? None I suspect. So the banking and financial sector is the only one which rewards failure and everyone else pays. How nice. If only we all could live that way. Is this a lesson which we want to teach our children?
Katherine Allan

Since the lack of regulation is what makes the city so popular, I suspect that it would be counter productive to regulate and anyway there are always ways around it. Perhaps the banks should have to contribute to a 'bond' that covers their customers against the risk of the bank failing, this would have to be based on the risk of their investments. Or then again we could all go back to using building societies, where the regulations reduce the risk for customers!

The Bank of England and FSA appear to be useless at managing the banks and I would suggest that they are run by 'captains of industry' who perhaps have a broader view of the economy than banking cronies.

Then perhaps we could come up with a way of preventing anyone being lent more than they can reasonably afford to pay back, perhaps by increasing interest in line with risk. Oh yes, like we used to have back in the 1970s and early 1980s before everyone was so concerned about scrabbling for market share - there are some markets that are not worth having a share in.

Above all we need to be clear that no one who takes risks, when the rest of us are are being prudent will be bailed out by the state. I'm fed up with paying for other people's gambling and big bonuses.
Jan Wilmot, Bedfordshire

The problem: most of this crunch has been caused by reckless lending pushing up house prices leading to more reckless lending - inflating the property bubble.

The solution: the government should introduce legislation so the banks and mortgage brokers are opened up to mis-selling claims.

When a frenzy starts and they actively encourage and facilitate it by lending recklessly they are guilty of endangering people's financial security and the financial security of the British economy as a whole.
Steve Carbet, Hemel Hempstead

In the 1950s, the only thing my parents bought on credit was the house, and so afraid of debt were they, they paid off the mortgage in ten years. We now have the obscene situation of youngsters beginning their lives with thousands of pounds of debt, a result of a university education having been been sold to them.

The politicians are to blame. Liberal-minded people who seem not to know right from wrong. And the irony is, we haven't had a Liberal government. The solution is to now detach from infected systems and come down hard on the banks, forcing them to be responsible employers/lenders.

I doubt Gordon Brown has either the time or the inclination. But he should know that his policies and those of his predecessors are flying in the face of one of the laws of physics: the greater the number of systems and their constituents, the greater the disorder.
Geoffrey Withington, East Kent

I am sick to death of whinging, greedy pigs. They created the whole damn mess and should pay for it themselves. How many of them will lose their houses or yachts or cars or planes? The rich of the world are greedy, selfish and arrogant and deserve to wallow in the mess they have created, and they should damn well pay, but I expect they will have protected their backsides and will get away with legalised crime. I have no sympathy, just anger for their ignorant and arrogant selfish greed.
Katie Millard

I would like to ask Gordon Brown why, when chancellor, he did not regulate the banking system more closely and exert pressure on the banks to be more prudent in their lending policies. Is Mr Darling now doing anything to improve this regulation? I would also ask the boards of directors of the banks etc, what risk assessment and due diligence they applied when taking on the investments which have now proved to be so poor. Can they now be trusted to negotiate out of the situation?
Ken Hamilton, East Kilbride


The Credit Crunch Mess: What Next? was first broadcast on September 15 2008 on BBC Radio 4 at 2000 BST





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