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ductonius posted:It's the consumer that goes to the bank/CC company asking for credit. The bank is the party that has the greatest control over whether they actually get it and they have the capacity to *find out* any piece of information they want before they give the consumer any loan. You're the one who's trying to assign responsibility, not me. I'm looking at this like a public policy problem, because that's what it is. When a loan goes into default, it's like a traffic accident. Both parties suffer. One or both could be responsible. Insurance companies, police, and traffic courts all exist to assign blame, because that's important to determine who compensates who for that particular accident. The financial equivalent might be a bankruptcy court. But from a public policy perspective, it doesn't matter who's responsible, it matters what conditions lead to accidents. Maybe there's one particular street where pedestrians keep jaywalking and getting run over. Each individual pedestrian is clearly responsible for their own accident; they were negligent when they decided to run across the road without looking both ways. But from a policymaker's perspective, it still makes sense to put a crosswalk and signals in that spot. A certain amount of negligence is going to happen regardless. Basically my point of view is, don't hate the player, hate the game.
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Jan 1, 2015 20:26
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Jan 1, 2015 20:44
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Guy DeBorgore posted:Like, banks can't tell whether any given loan will be paid back. On an individual level the borrower has a much better idea than they do. Banks expect that some proportion of loans will go into default. They've got all sorts of complicated financial models, but those mostly say "For a client has income of A and net assets of B, we can charge X% interest rates and expect the loan's future cash flows to be Y, with a Z% chance of default." If a bank actually knew which loans wouldn't be repaid, they wouldn't make those loans in the first place. So, how could you stop banks from making "predatory" loans without also screwing over the people who legitimately want, need, and can afford a loan? uuuuuuuuuhhhhhh Guy DeBorgore posted:There was a ton of predatory lending that happened in the run-up to the real estate crash. But it wasn't caused by "banks being greedy." Banks were greedy in 1997 and they'll still be greedy in 2017. Like I said above, the NINJA loans and sub-prime mortage bubble can be explained by the incentives facing banks, and the policies and institutions that shape those incentives. Issuing a security that you know the debtor won't be able to honour is like the most textbook case of predatory lending there is and it's extremely profitable when dealing with mortgages. As you seem to be aware of this I'm not really sure why you'd attempt to make the former argument which is blatantly false. I'm in a complete agreement about it being a policy issue. These reoccurring financial bubbles are a feature of regulation having been made ever more lax for over 3 decades in a row. Having capital free and loosely regulated is dangerous, especially when it comes to banks since they're not risking their own capital in their dealings, just their liquidity. This is extremely problematic during over-valuation bubbles since stockholders don't actually stand to risk anything as banks are too big to fall in most modern countries and cannot go belly-up. They'll make hay on dividends leading up to the bubble, wait until the stock-value normalises after the crash and then make their exit. There is no incentive not to do this so of course it keeps happening.
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Jan 1, 2015 21:00
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Hey CI, I'm just sharing my perspective, not saying you need to share it. Although if you're interested, I've got a friendly wager for you. How about, for the next five years, I'll keep doing the boring practical work of improving bank regulation, and you keep spamming this thread with impotent rage. Then we can check back with each other and see who's done more to rebalance the relationship between Canadian citizens and their financial system. Sound good?
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Jan 1, 2015 21:08
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Xoidanor posted:uuuuuuuuuhhhhhh Yeah, sorry, I totally contradicted myself there. The first bit you quoted was meant to be describing how banks work ordinarily. E.g. when they're pushing credit cards on consumers. During the sub-prime bubble there were particular conditions that made it so that banks stopped caring whether loans would be repaid. The issuing banks were selling off the mortgages almost immediately so they didn't care about doing their due diligence. The banks buying the mortgages didn't care either- they were being pooled into AAA-rated securities, AIG was underwriting the risk of default, and the banks themselves were too big to fail. So under those specific conditions, at the height of the bubble, banks were making loans they knew were bad. You might already totally understand this, in which case sorry for the confusion. quote:I'm in a complete agreement about it being a policy issue. These reoccurring financial bubbles are a feature of regulation having been made ever more lax for over 3 decades in a row. Having capital free and loosely regulated is dangerous, especially when it comes to banks since they're not risking their own capital in their dealings, just their liquidity. This is extremely problematic during over-valuation bubbles since stockholders don't actually stand to risk anything as banks are too big to fall in most modern countries and cannot go belly-up. They'll make hay on dividends leading up to the bubble, wait until the stock-value normalises after the crash and then make their exit. There is no incentive not to do this so of course it keeps happening. Yuuuuuuuuuup. When countries dismantled their capital controls en masse it gave banks a huge degree of leverage over policymakers, and really set the stage for undermining regulations like the Glass-Steagal act. There hasn't been much press about it but since 2008 there's actually been a huge international effort led by the FSB to end the need for taxpayer bailouts and it's made a lot of progress. The idea is to regulate too-big-to-fail banks such that, if they DO fail, they can be "bailed in" by imposing losses on their creditors and shareholders. Sounds obvious, right? That's what happens to ordinary firms when they go bankrupt. The problem is that bankruptcy processes take years to play out, but financial contagion from a failing bank (e.g. Lehman Brothers) can travel around the world in a few days. So you basically need processes in place to wind up institutions with $600 billion balance sheets in a single weekend. It's a big undertaking, but if it works then hopefully the next financial crisis will come and go without any need for big publicly-funded bailouts. What I find interesting is that this solution is basically being developed by the global financial elite- wealthy white guys wearing suits at the G20, the IMF, Finance departments and central banks. And it's all based on very orthodox economic theory about avoiding moral hazard. There's even provisions for firing all the senior managers of a failed firm and clawing back bonuses (although I suspect that's more to appease the public). I'm not saying we should be grateful to them, but it's a bit unexpected to see this coming from (roughly) the same global financial elite who oversaw the dismantling of capital controls... Guy DeBorgore fucked around with this message at 21:37 on Jan 1, 2015 |
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Jan 1, 2015 21:28
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Guy DeBorgore posted:There hasn't been much press about it but since 2008 there's actually been a huge international effort led by the FSB to end the need for taxpayer bailouts and it's made a lot of progress. The idea is to regulate too-big-to-fail banks such that, if they DO fail, they can be "bailed in" by imposing losses on their creditors and shareholders. Sounds obvious, right? That's what happens to ordinary firms when they go bankrupt. The problem is that bankruptcy processes take years to play out, but financial contagion from a failing bank (e.g. Lehman Brothers) can travel around the world in a few days. So you basically need processes in place to wind up institutions with $600 billion balance sheets in a single weekend. It's a big undertaking, but if it works then hopefully the next financial crisis will come and go without any need for big publicly-funded bailouts.
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Jan 1, 2015 21:37
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Guy DeBorgore posted:Hey CI, I'm just sharing my perspective, not saying you need to share it. Yo that wasn't meant as hostile. I thought it was a great post.
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Jan 1, 2015 21:38
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LemonDrizzle posted:How exactly are shareholders supposed to be bailed in? They obviously lose out pdq because when the news about the bank's problems gets out, the share price will crash - what further penalties are they expected to face? The possibility of actually losing their equity for a start like they would in any other industry when the company goes bankrupt? 
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Jan 1, 2015 21:46
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LemonDrizzle posted:How exactly are shareholders supposed to be bailed in? They obviously lose out pdq because when the news about the bank's problems gets out, the share price will crash - what further penalties are they expected to face? Shareholders just get nothing. Them's the breaks. With unsecured creditors it's a bit more interesting. The value of their debt might just be written down ("Oh, you're owed 10 million? You get 5, be happy"). But a lot of the time what happens in resolution (the technical term for the bankruptcy-esque process we're talking about) is that a bank gets split up into a bridge institution (which keeps on carrying out all the critical functions needed to preserve the stability of the overall financial system) and a "bad bank" which has the remainder. In that case, the new "good bank" might be capitalized by converting some of the bondholders into shareholders of the new bank. So it would be, "Oh, you're owed 10 million? Well sorry, we're putting that into a bridge institution, but you can have some shares of the bridge institution instead."
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Jan 1, 2015 21:53
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Guy DeBorgore posted:Shareholders just get nothing. Them's the breaks. Yeah in bankruptcy shares becomes worthless, bond holders/other creditors are only slightly better off but will still end up with penny on the dollar.
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Jan 1, 2015 21:57
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When you explain it like that your position makes more sense. We do need banking regulation that is better adapted to the world situation rather than a world when currency transfers were done with bags of actual currency. Also, I don't hate the banks, there's just a tendency amongst people to see creditors as blameless in bankruptcy situations despite their capacity to control lending in the first place. I don't hate the players, and I do think the game is screwy and needs to be changed.
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Jan 1, 2015 22:11
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ChairMaster posted:That seems to me like a little bit like blaming the people who sold you the bottle of liquor you got wasted on that night when you got too drunk and crashed your car or something. You mean like how the law in Canada actually works? You've clearly never gotten a Serving it Right license before. In BC, and I believe most of Canada, the people who sell you the liquor are, in fact, partially responsible for the dumb poo poo you do while drunk on it. There are obviously limits, but sellers/servers of liquor are required not to sell to obviously drunk people, and, in a bar/restaurant situation, are required to ensure that people who got drunk off the liquor they served don't drive home. It actually would be nice if we held banks to the same sort of standards. There's even a model for this in the UK banks. Based on the correspondence I get from my (mostly disused) UK bank account, all kinds of bank regulations have been put in place since 2008 to prevent predatory lending.
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Jan 1, 2015 22:47
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ChairMaster posted:That seems to me like a little bit like blaming the people who sold you the bottle of liquor you got wasted on that night when you got too drunk and crashed your car or something. I don't know what country you come from but where I live (  ) the bartender and establishment are liable for anything that happens because a patron was sold to much alcohol.
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Jan 1, 2015 22:58
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I'm sorry, but how the gently caress is a bar supposed to know that the guy who's had 6 pints intends to walk out that door and hop into his dual cab? I know this is supposedly 'the law' but how does it make even the slightest bit of sense?
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Jan 1, 2015 23:04
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Xoidanor posted:I don't know what country you come from but where I live ( Does this apply to liquor stores too?
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Jan 1, 2015 23:09
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Lexicon posted:I'm sorry, but how the gently caress is a bar supposed to know that the guy who's had 6 pints intends to walk out that door and hop into his dual cab? It's loving moronic, but it's still the law.
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Jan 1, 2015 23:12
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Lead out in cuffs posted:You mean like how the law in Canada actually works? I'm pretty sure no liquor store ever got in poo poo for selling a sober person a 40 of vodka, which is plenty enough for someone to get from sober to drunk enough to crash their car. And that is a pretty fuckin dumb law regardless, there's hardly anything you can actually do as an establishment to prevent anything bad form happening to anyone who drinks at your bar and then does and does something stupid. It's always seemed pretty unreasonable to me. ChairMaster fucked around with this message at 23:15 on Jan 1, 2015 |
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Jan 1, 2015 23:12
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Lexicon posted:I'm sorry, but how the gently caress is a bar supposed to know that the guy who's had 6 pints intends to walk out that door and hop into his dual cab? The liquor laws exist to remove any incentive bars/liquor stores may have to encourage over-consumption and/or continue to serve people who are already intoxicated. That's it. If someone leaves the bar in an ambulance the amount of alcohol they were served there had better not be the cause. As for the guy who gets drunk at a bar and then drives home, it was policy for the place I worked at to ask "you driving?" to anyone paying a bill. People say "no" and leave. That's due diligence. These sound like idiotic laws to sane and normal people, mostly because these laws will never apply to sane and normal people. They provide recourse for the outside cases, not the vast majority of the population.
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Jan 2, 2015 00:22
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Lexicon posted:I'm sorry, but how the gently caress is a bar supposed to know that the guy who's had 6 pints intends to walk out that door and hop into his dual cab? If somebody is obviously drunk from the liquor you've served, you're supposed to at least ask. It's also suggested to have things like cards with cab company numbers and/or a complimentary phone for calling cabs if necessary. computer parts posted:Does this apply to liquor stores too? In Canada, yes, although obviously not if they're sober. But if somebody stumbles drunkenly into your liquor store and you give them more booze, then yes, you are responsible. To be honest, the actual case law examples they give in the Serving it Right course are fairly extreme. The one I remember was a guy getting drunk in a restaurant, getting carried out to his car by the waiters, having his keys dumped in his lap, then driving off and killing a bunch of pedestrians. In that case, the restaurant staff pretty clearly shared responsibility. And I don't think it's a bad thing at all to get bars to try and take some responsibility for the judgement-impaired people in their care. Yeah, basically this: ductonius posted:The liquor laws exist to remove any incentive bars/liquor stores may have to encourage over-consumption and/or continue to serve people who are already intoxicated. That's it. If someone leaves the bar in an ambulance the amount of alcohol they were served there had better not be the cause. E: And to bring this back on topic, I don't see why we shouldn't require banks to do due diligence when providing debt to people with impaired financial judgement. Lead out in cuffs fucked around with this message at 00:30 on Jan 2, 2015 |
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Jan 2, 2015 00:24
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Lexicon posted:I'm sorry, but how the gently caress is a bar supposed to know that the guy who's had 6 pints intends to walk out that door and hop into his dual cab? as a bartender for many years: we are supposed to assume that our customers will not be able to handle their own safety - and follow up to a reasonable point. Of course we don't 'know' that they're going to drive, but if you drove here its not a terribly unreasonable assumption that you're going to consider driving home. computer parts posted:Does this apply to liquor stores too? in Canada? Hell yes. Of course if your underpaid liquor store clerk isn't taking every opportunity to kick people out for fun (looking drunk: kicked out), then they weren't me at 19 I guess. JawKnee fucked around with this message at 02:07 on Jan 2, 2015 |
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Jan 2, 2015 02:04
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http://en.wikipedia.org/wiki/Duty_of_care Getting back on topic, is anyone seeing any early signs of the Alberta housing market being impacted by the currently low oil prices?
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Jan 2, 2015 02:40
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Bilirubin posted:http://en.wikipedia.org/wiki/Duty_of_care The CMHC is sure the next year will still be good for the Alberta housing market: http://www.edmontonsun.com/2014/12/08/alberta-housing-market-looks-strong-headed-into-2015
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Jan 2, 2015 02:43
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http://www.jimsparrow.com/market-stats.php Something's happening relative to last year. For something more definitive, I think we'll need to wait until the spring selling season. e: and here's brian ripley's loving graph salad http://www.chpc.biz/calgary-housing.html Someone needs to send this rear end in a top hat to a course on tableau
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Jan 2, 2015 02:48
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etalian posted:The CMHC is sure the next year will still be good for the Alberta housing market: It looks like that article's talking about projections that were released November 18th, so they would've been developed way before the oil price crash. I'm sure they'll release an updated projection as soon as their next order of red ink gets in...
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Jan 2, 2015 02:50
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http://bc.ctvnews.ca/translink-city-of-vancouver-bet-millions-on-broadway-properties-1.2167503quote:Governments are joining the property rush along the Broadway corridor, spending millions in a gamble that will pay off if a rapid transit line is approved and built. Remember the last time the City of Vancouver decided that it was going to become a developer
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Jan 2, 2015 03:50
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Guy DeBorgore posted:It looks like that article's talking about projections that were released November 18th, so they would've been developed way before the oil price crash. Not to mention there will be a lag before things like not being able to find new office renters, capital/hiring freeze in the energy sector or layoffs start to trickle down into the economy.
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Jan 2, 2015 04:03
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Cultural Imperial posted:http://bc.ctvnews.ca/translink-city-of-vancouver-bet-millions-on-broadway-properties-1.2167503 Why can't the people getting filthy rich off the new train line pay for the new train line? Also The American Housing bubble is reinflating: http://wolfstreet.com/2014/12/29/its-official-home-price-inflation-strangles-us-housing-market/ Also has anyone read Henry George? He seems to propose a solution to some of this stupidity. I would blow Dane Cook fucked around with this message at 04:39 on Jan 2, 2015 |
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Jan 2, 2015 04:37
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Jumpingmanjim posted:Why can't the people getting filthy rich off the new train line pay for the new train line? I'd argue that TransLink would be idiotic to not buy up land seeing that BC Transit never did with the Millennium Line or Expo Line when they were built and as a result never saw any money from places like South Burnaby. Of course, now that those two lines are built and Burnaby has no immediate need for more rail in their cities, they're steadfast against any new rapid transit project.
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Jan 2, 2015 04:39
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OSI bean dip posted:I'd argue that TransLink would be idiotic to not buy up land seeing that BC Transit never did with the Millennium Line or Expo Line when they were built and as a result never saw any money from places like South Burnaby. Of course, now that those two lines are built and Burnaby has no immediate need for more rail in their cities, they're steadfast against any new rapid transit project. It's one way the HK transit authority makes money, they basically know in advance which places will get new subway stations. So they can buy up properties cheap and make piles of money from renting the property.
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Jan 2, 2015 05:12
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HOME price rises might be slowing, but if you’re looking for a place in Sydney it’s going to cost you a median price of three-quarters of a million dollars. Capital city home values were up 0.9 per cent in December, and were up 7.9 per cent in 2014, according to the CoreLogic RP Data home value index. Sydney led the way with prices up by a whopping 12.4 per cent in the year, but were flat in December. That was closely followed by Melbourne, with an 11.3 per cent gain for the year and were up 1.6 per cent in December. Sydney was the most expensive city to buy a home, with a median price of $730,000, almost double the $341,500 recorded in Hobart. RP Data senior research analyst Cameron Kusher said despite the strong result the pace of home price growth continues to slow. “The slowing annual growth rate is further evidence that the housing market is losing some steam with combined capital city home values increasing by 9.8 per cent over the 2013 calendar year compared to a more moderate 7.9 per cent increase in 2014,” he said. “Auction clearance rates reduced noticeably across the two largest auction markets, Sydney and Melbourne, over the final two months of the year.” CommSec chief economist Craig James said the housing market is cooling because there are more homes being built. “As a result, home prices are growing at a slower rate. In fact annual growth of home prices stands at a 14-month low,” he said. “The growth rate of home prices is easing to more sustainable levels, not a boom and not a bust.” Mr Kusher said while home values are still rising, rental growth is sitting at its lowest annual rate over a decade, with capital city rents rising by 1.8 per cent over the past 12 months and he expects it to stay sluggish in 2015. “Affordability hurdles in Sydney, and to a lesser extent in Melbourne, are making it increasingly difficult for some buyers to enter the market,” he said. “Additionally, low rental yields and the likelihood of tougher lending criteria to investment buyers will likely dampen the very active investor segment of the market which may in turn reduce housing demand in 2015.” CAPITAL CITY HOUSE PRICES IN 2014: * Sydney — rose 12.4 pc to $730,500 * Melbourne — rose 7.6 pc to $587,000 * Darwin — rose 1.6 pc to $540,000 * Perth — rose 2.1 pc to $525,000 * Canberra — fell 0.6 pc to $520,000 * Brisbane — rose 4.8 pc to $466,500 * Adelaide — rose 4.3 pc to $410,000 * Hobart — rose 3.5 pc to $341,000
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Jan 2, 2015 05:13
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It also helps that 53% of all Australia market cap is concentrated in the financial industry, by comparison it's 18% in the USA.
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Jan 2, 2015 05:16
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etalian posted:It's one way the HK transit authority makes money, they basically know in advance which places will get new subway stations. It's also more or less the way that Dave Bronconnier, noted rear end in a top hat, made a lot of money off the extension of the C-Train. He did it worse, though, since he tweaked the route to where he owned property, instead of buying property along a well-planned route. That's why the the West LRT goes nowhere useful.
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Jan 2, 2015 05:17
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PT6A posted:It's also more or less the way that Dave Bronconnier, noted rear end in a top hat, made a lot of money off the extension of the C-Train. He did it worse, though, since he tweaked the route to where he owned property, instead of buying property along a well-planned route. That's why the the West LRT goes nowhere useful. At least he didn't re-route plane routes into more dangerous paths like Berlusconi
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Jan 2, 2015 05:48
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Jesus gently caress, did I just read Sydney and Melbourne as being dirt cheap compared to Vancouver
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Jan 2, 2015 05:51
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Cultural Imperial posted:Jesus gently caress, did I just read Sydney and Melbourne as being dirt cheap compared to Vancouver If you include only detached houses the Sydney median is over a million.
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Jan 2, 2015 05:57
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etalian posted:It's one way the HK transit authority makes money, they basically know in advance which places will get new subway stations. Mass transit in Hong Kong is superior to any mass transit I've taken in North America or anywhere else in Asia. If our cities could have transit that cheap I'd look the other way if it was the transit authority doing the developing/landowning.
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Jan 2, 2015 05:57
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Ceciltron posted:Mass transit in Hong Kong is superior to any mass transit I've taken in North America or anywhere else in Asia. If our cities could have transit that cheap I'd look the other way if it was the transit authority doing the developing/landowning. It also has a 186% farebox recovery ratio 
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Jan 2, 2015 06:03
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Guy DeBorgore posted:explained by the incentives facing banks, and the policies and institutions that shape those incentives That you don't mention this is...strange. Guy DeBorgore posted:Basically my point of view is, don't hate the player, hate the game. Guy DeBorgore posted:What I find interesting is that this solution is basically being developed by the global financial elite- wealthy white guys wearing suits at the G20, the IMF, Finance departments and central banks. I can't tell if you're brainwashed or trolling at this point. PC LOAD LETTER fucked around with this message at 11:14 on Jan 2, 2015 |
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Jan 2, 2015 10:53
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Blaming institutions instead of the politicians and researchers who enable them is pretty loving pointless.
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Jan 2, 2015 12:08
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PC LOAD LETTER posted:The banks successfully lobbied for much if not all of those incentives, policies, and often times their choice of regulators to run those institutions. The idea that we're living in a plutocracy of sorts is hardly some new or shocking idea after all and I don't see the use in pretending that it is.
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Jan 2, 2015 12:54
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