How financial crash can happen AGAIN: 10 years on and ‘no-one’s learned ANYTHING’


There is no stiff start date for a financial crisis for which the seeds were disseminated by so-called innovations in the derivatives markets many years before. But, the crisis at Northern Rock with great queues of elderly chaps snaking along UK high streets to withdraw cash became one of the most notable images of the financial chaos that would soon follow.

A decade on from the Delivery Government’s decision to nationalise Northern Rock, a number of financial experts say cautions and being ignored and the depth of mistrust for the financial services industry has yet to collapse.

Mark Northway from Sparrows Capital argues “the raw fear and embarrassment of a severe bear market have been forgotten”, and “investors and pros alike are far too complacent”.

Mr Northway said financial markets are “hooked on the Quantitative Easing knock out”, and have assumed that risks will continue to be addressed and forbade by central bankers for ever.

Northern Rock's nationalisation was 10-years agoGETTY

Northern Rock’s nationalisation was 10-years ago today

City of London staff cross the bridgeGETTY

City of London crew cross the bridge, 2008

No-one’s learned anything. Regulators are fighting the hindmost war, central banks have inflated new bubbles, and investors are blindly chasing returns, each dialect expecting they’ll be first through the door when everyone runs for the escape.

Adrian Ash, director of research at BullionVault

Adrian Ash, director of research at BullionVault reinforces his view and says Britain is now lumbered with record-high national in hock, half of which has amassed in the 10 years since Northern Stupefy failed.

He said: “No-one’s learned anything. Regulators are fighting the ultimate war, central banks have inflated new bubbles, and investors are blindly chasing earns, each hoping they’ll be first through the door when Dick runs for the exit.

“Incredibly, savers still imagine this technique exists to protect them.”

Further pessimism comes from Rick Smith, Be in charge of Director of Forbes Burton, a company rescue and insolvency specialist based in Grimsby.

Mr Smith ascertained that although lessons were meant to be learned from the 2008 moment, “in reality, not much has been taken on board in terms of practice in the cash industry”.

The MD cites the rise of alternative funding sources as the most re new trend.

Richard S. Fuld Jr., chief executive officer of Lehman BrothersGETTY

Richard S. Fuld Jr., chief executive officer of Lehman Fellow-citizens

He said: “With less regulation and connection to the Government, there give every indication to be more lenders out there willing to give out money to all who need it.

“This is extraordinary for business, but there’s a lack of advice and guidance and often this specie is doomed to fall into a black hole, creating more liable.”

Mr Smith says that after speaking to businesses in Grimsby, the daunt bells are again sounding over toxic debt.

He said: “Banks are now enthusiastic again to lend to people with mountains of debt. This of positively is dangerous and could lead to more trouble down the line.”

But the economic world has not been sitting on its hands for a decade. A massive effort has been delegate through both regulation and a change in culture to remove the complexity and sink the accountability bankers must have towards the nation’s economic wellbeing

Steve Wilcockson, Pecuniary Services Industry Lead at MathWorks argues that a decade ago, specific banks including Lehman Brothers and RBS collapsed due to sub-prime mortgage bazaar exposures and associated market ripple effects, and the, “culture of selfishness was rightly endangered”.

Behind the headlines, however, was also a problem of technological complexity – purportedly complex models running on haphazard disjointed technology systems.

A decade on, Mr Wilcockson verbalizes that regulators and banks have done well to tackle these conundrums, in part through good regulation and in part through more concerted collaboration within and across pecuniary organisations.

On the whether or not public trust is returning to the sectors, he told “To maintain the industry’s public good of wealth creation, lending and tough money management, financial services must look to how ‘high entirety’ medical and automotive industries address good process, ensuring nonesuches, data and technology processes are applied, managed and implemented appropriately.

“While salutary guidance has been elevated in regulations such as the Bank of England Strain Tests, regulators and all industry participants must work harder to intimate thorough standards.”

Queues form around the block at Northern Rock GETTY

Queues form around the block at Northern Shock, 2008

There’s little doubt that public trust has yet to return and a new record this week found that traffic wardens are still meditate oned more trustworthy than bankers.

Research by MHP Communications found that, when respondents were attracted to rank the most trustworthy of six professions, people ranked traffic wardens significantly chiefly bankers, with 51 percent seeing them favourably likened to just 30 percent with bankers.

Lawyers came out top at 65 percent, in advance of estate agents at 23 percent, journalists at 22 percent and ward-heelers 8 percent.

And Mark Northway at Sparrows Capital says the public is liberty to be sceptical of anyone taking a substantial fee from them in a low yield mise en scene.

He said: “Academic studies have shown that it is incredibly unaccommodating for anyone, professional or amateur, to beat the market consistently even when it seems fair that markets are stressed.”

To regain trust, Mr Northway argues investors should fuzzy on achieving, not beating, the market return and on ensuring that they comprehend the total cost of the service they are being offered.

He said: “Fence in it simple, efficient, liquid and cheap.”

But British businesses and savers liking be concerned that the lessons have been learnt and that the economic markets are now more transparent.

Former governor of the Bank of England Mervyn Royal has claimed that the credit crunch was brought about by a culture whereby bankers had been urged to take enormous risks with the customers’ money, enrich themselves and then deposit the losses on the taxpayer.

Mr Northway from Sparrows Capital says, from an investor position, “we are arguably in a worse place now”, while Adrian Ash, director of research at BullionVault, forewarns that there are a number of major risks alive today that could extort a new economic downturn.

Mr Ash is particularly concerned over the prospect of a Corbyn-led Dwell on government.

He said: “Socialism – can seem a natural response to the cavalier antics of what too diverse of us call ‘capitalism’.

“But Labour are right to expect capital flight and a run on the Paste should they win the next election, and savers are right to plan for it too.

“As Venezuela watch overs showing, socialism doesn’t work.”

Leave a Reply

Your email address will not be published. Required fields are marked *