French president says Peugeot layoffs are unacceptable

[HoreTore]

It is, people tend to forget that banks weren't ALLOWED to refuse risky mortages because of the community reinvestment act. All good fun as long as the prices keep rising, but, well.... So yes regulation caused a big part of the crisis.

Nobody told them to repackage them and sell them while pretending the packages were risk-free. The risky mortgages was what caused the bubble to burst, it was not what caused the bubble in the first place. And every bubble will burst eventually.

[Fragony]

Nobody told them to repackage them and sell them while pretending the packages were risk-free. The risky mortgages was what caused the bubble to burst, it was not what caused the bubble in the first place. And every bubble will burst eventually.

If it wasn't for the community reinvestment act people inproblematic area's would have been denied these mortages. That is no exact science but odd as it may sound, banks don't like giving loans to people who can't pay them back. Now the grapes are sour and these houses can't be sold, massive losses for the banks, because of politicians intervening in the market.

[Kralizec]

banks don't like giving loans to people who can't pay them back.

Banks don't care if their clients are solent as long as the collateral keeps rising in value. They also don't care if they can find ways to shuffle the risk of non-payment to other parties.

Why some people think that deregulation will invariably give better results is beyond me. Does anybody here seriously think that in the absence of a state, laws and financial oversight we'd have stock exchanges, or even universally accepted currencies?

Actually, I agree that politicians are largely to blame - but for the reason that they pushed deregulation as some sort of panacea. That bankers and other businessmen will cynically exploit the resulting gaps and loops is to be expected and being morally indignant when they do so is pointless. It's the governments job to provide the framework that discourages housing bubbles, ponzi schemes and other unsustainable practices.

[Fragony]

Why some people think that deregulation will invariably give better results is beyond me. Does anybody here seriously think that in the absence of a state, laws and financial oversight we'd have stock exchanges, or even universally accepted currencies?

That is quite the extreme, only hardcore libertarians will say so.

[drone]

According to my limited quick research, I own 1.8% of PSA Peugeot Citroen. GM owns 7% and is the second largest shareholder after the Peugeot family. US taxpayers own 25% of GM through the bailout.

So, um, freedom fries and cheese eating socialist surrender monkeys?

[Fragony]

According to my limited quick research, I own 1.8% of PSA Peugeot Citroen. GM owns 7% and is the second largest shareholder after the Peugeot family. US taxpayers own 25% of GM through the bailout.

So, um, freedom fries and cheese eating socialist surrender monkeys?

You wut, seriously?

[HoreTore]

You wut, seriously?

25% of 7 is roughly 1.8. He's saying he owns 1.8% as an american taxpayer.

[rory_20_uk]

Nobody told them to repackage them and sell them while pretending the packages were risk-free. The risky mortgages was what caused the bubble to burst, it was not what caused the bubble in the first place. And every bubble will burst eventually.

Repackaging the debt was not of itself the problem, it was the credit rating it was given that was the problem. Was it the banks or the credit agencies that awarded them the AAA ratings?

[gaelic cowboy]

Nobody told them to repackage them and sell them while pretending the packages were risk-free. The risky mortgages was what caused the bubble to burst, it was not what caused the bubble in the first place. And every bubble will burst eventually.

Indeed the bursting of any bubble merely reveals the extent of wealth that has already been destroyed through overinvestment, overcapicity or overconsumption. The bubble period is when the wealth is destroyed as it's just masked so long as said bubble inflates some more.

Basically there was a banking model based on easily available interbank credit which suffered a heart attack when the flow stops.

Repackaging the debt was not of itself the problem, it was the credit rating it was given that was the problem. Was it the banks or the credit agencies that awarded them the AAA ratings?

The credit rating agencies gave them the ratings because it was all wound up with potential extra business that they were touting for.

The credit rating agencies were therefore shall we say incentivised to give a good rating or they might not get business again.

But the banks had people selling loans regardless of the fundamentals because there compensation depended on new business.

This means even if a rating agencies had been more conservative they still would have been unable even to stand over there ratings.

[rory_20_uk]

When Mr McKinsey (a founder of McKinsey unsurprisingly) was on an early project he was asked to present his findings to the board. His conclusions was to sack the CEO and other board members. I am sure that didn't help his immediate business, but he did the odd thing of putting principles (and long term business) about merely placating the client.

The rating agencies historically are the companies that state whether things are any good or not. Giving something a poor rating would not have a knock on on this business as they run a monopoly. Loads of industries are based on payment for selling. But if you get a call for junk bonds one's attitude is different to that of AAA rated material.

[gaelic cowboy]

When Mr McKinsey (a founder of McKinsey unsurprisingly) was on an early project he was asked to present his findings to the board. His conclusions was to sack the CEO and other board members. I am sure that didn't help his immediate business, but he did the odd thing of putting principles (and long term business) about merely placating the client.

The rating agencies historically are the companies that state whether things are any good or not. Giving something a poor rating would not have a knock on on this business as they run a monopoly. Loads of industries are based on payment for selling. But if you get a call for junk bonds one's attitude is different to that of AAA rated material.

The rating of mortgage backed securities was effectively a separate business to rating of the health of the bank so effectively the agencies touted for it by giving favourable ratings.

Credit rating agencies and the subprime crisis

Critics claim that conflicts of interest were involved, as rating agencies are paid by the firms that organize and sell the debt to investors, such as investment banks.[9] John C. Bogle wrote in 2005 that there is an inherent conflict of interest when a professional firm is also publicly-traded, as the pressure to grow and increase profits is relatively stronger, which may detract from the quality of work performed.[10] Moody's became a public firm in 2001, while Standard & Poor's is part of the publicly-traded McGraw-Hill Companies.

In the heel of the hunt the problem could be said to be one of ignoring the risk or being unable to see said things as ricky.

Banks and countires in the west hadnt gone belly up for such a long time that they all thought these things dont happen anymore. Unfortunatlely none of these Very Important Men ever sold a bullock at the mart or they would know the real reason something has a value.

[Sir Moody]

DING DING DING! Spot on.

It's obvious that property needs to be less profitable, while production needs to be more profitable. I do not claim to have a miracle recipe on how to accomplish that, of course. I do know I'm very skeptical of solutions which smells of ideological blindness though, like solutions that focus entirely on tax raises or entirely on tax cuts.

unfortunately this isn't possible for a completely different reason - the Foreign market

the reason manufacturing is having such a hard time becoming profitable in the Modern Western market is Government regulation.

There is cap in the number of man hours someone can work, a minimum wage, restrictions on how you hire and fire workers etc etc etc

this all pushes the cost up

now if this were true everywhere we wouldn't be in trouble, the problem is it isn't

The company I work for employs 2 printers - a British printer and a Chinese printer.

The British company is used to prototype new boxes and produce "emergency" orders - the cost of producing and delivery one box to us is around £1/box

The Chinese company is for mass production before the start of a new retail year - the cost of producing AND delivering is around £0.1/box

The cost of production and shipping is so much cheaper it makes perfect business sense to use the Chinese company for everything except short term orders (things that will need to be in a store within weeks not 2 or 3 months)

Where do these companies differ? well as far as technology is concerned they don't - they use the same machines and the same software - the difference is the labour laws

The Chinese workers work longer and for less which cuts the cost and increases production.

In order to allow the UK printer to produce the same volumes at similar costs we would need to cut back our labour laws - which as far as the Government is concerned (and if it were even allowed with EU laws) is political suicide - the people the current laws protect wouldn't look kindly on the Government allowing their employers to exploit them and they have an Organised voice in the form of a Union to let the Government know they aren't happy - its the biggest flaw in Democracy, they cant fix the problem without severely hurting their chances of re-election - the best they can do is "tinker" with the tax system and hope there's a magic setting which stops companies looking at cheap labour abroad for manufacturing

of course the biggest flaw is also its greatest strength - the same process (hopefully) stops Governments from abusing its people - fundementally its not soemthign we would actually want to fix which again is a lose - lose situation for us...

is there a solution?

damned if I know...

[Greyblades]

is there a solution?

damned if I know...

Yup, If all the third world countries' workforce were allowed to unionize to the extent of the west that would solve it. Of course making that happen is probably impossible.

[HoreTore]

There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. - Henry Ford

Increasing wages drives the economy forwards, not backwards.

[Sir Moody]

There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. - Henry Ford

Increasing wages drives the economy forwards, not backwards.

sadly that is no longer the case - modern industry instead works towards "Make the best quality of goods possible at the lowest cost possible, paying the lowest wages possible."

basically they are only interested in maximising their profits and that's the best way

[HoreTore]

sadly that is no longer the case - modern industry instead works towards "Make the best quality of goods possible at the lowest cost possible, paying the lowest wages possible."

basically they are only interested in maximising their profits and that's the best way

....and that attitude is the reason the US finds itself on the bottom heap when it comes to levels of social problems, health problems, etc etc.