[Jack_B]

Somehow, somewhere, someone has managed to swing poor lending processes and swashbuckling investment decisions by banks, over to Mr poor mortgage payer in the good old USA. That’s a bit like trying to glue jelly to a tree.

We will learn one thing from this recession (or we will not), and that’s common sense in lending and investment policies from the banking sector.

Let's remember that banks have individually bought investments in assets they will never be able to understand, and did not understand when they bought them. To blame the U.S. is just priceless.

I studied the U.S. as an economy in 2007 for five weeks and wrote about its poor state and in particular the state of the housing. Remember we all know they are around a year or so ahead of us in terms of their fiscal policy.

From one side to the other everyone believed the housing market was doomed, and you could already get property at sizeable discounts.

New developments lay empty. Excess supply coupled with dwindling demand. This was not an area I wanted exposure to. As a consequence we invested a sum total of 0% in the U.S.

Somehow, our banks thought it was a great idea to see beyond that and buy investments in worthless collaterised debt obligations in the U.S. Hadn't they learned that when you move down credit curve risk to chase reward your potential for loss soars. I have no sympathy, and am stunned by how banks appear to have escaped the wrath of the public. Instead we are asked to bail them out with our 'taxpayers' money and the joy of higher taxation in the next few years. Wonderful.

This is only part of the story. Because of this and the threat of lending to a financial institution that could go bust, banks have stopped lending to each other. Eighteen months ago I said the whole problem would go away if banks disclosed their bad debt...............

Read the full article and many more at this mortgage broker website.