What did my £32k go on?

[Yew]

I wonder what the news of the world has to say about this....

 

[yorksrob]

This is an over simplification. It was the availability of credit, particularly sub-prime like Northern Rock, that pushed prices up as buyers could offer more.

I thought that Northern Rocks problems were mainly due to it relying on the credit markets too much and not having enough deposits to fund its own business model rather than sub-prime lending as such.

 

[BlythPower]

So, what does everyone imagine has happened to the deficit in the 14 months or so since the Coalition took command? Have they been manfully wrestling with the monstrous beast of public spending? Attached is a graph from the Office for National Statistics (a bit of government, so no newspaper-style bias). Interestingly, it shows that it only really took off in spring 2008 when the banks imploded under the weight of their own greed and the economy had to be stablised. Even more interestingly, public sector borrowing has continued to increase under the Coalition. Surprsingly, the national debt has also increased! Could it be that the deficit wasn't as important to the Tories (or to the wider national economy) as they made out pre-election? Surely they haven't over-inflated its significance to get away with making massive public sector cuts for purely idealogical reasons?

 

[Xenophon PCDGS]

Sub-prime lending was the factor that happened to be on the surface at the time, it was the pinprick that burst the bubble and easy talk for the (generally speaking) quite thick public. The issues behind it are far more complicated, far more in depth and stem back quite a way.

The sub-prime lending in itself was not the sole factor, as this was specific to the United States of America in its remit.

What was the main factor, was the packaging into financial high-risk inter-financial items including sub-prime mortgages by the large American financial and banking firms, who then spread these packages world-wide amongst the banking communities of all areas. This is why when the sub-prime "bubble" actually burst, the affects were felt on a world-wide basis.