Crash: How Long Will It Last?

2009, Economics  -   44 Comments

Crash: How Long Will It Last?In the second half of this special two-part Dispatches, economist and author Will Hutton continues the definitive insider's account of how Britain's economy went from boom to bust.

Hutton reveals how those who tried to warn of the impending financial disaster were shouted down, ignored or fired. As a result, the repercussions of the collapse of Lehman Brothers hit an unprepared and vulnerable UK, and left the government frantically trying to prevent a banking collapse from turning the UK into an economic wasteland.

Despite the collapse of Northern Rock a year before, the government, the regulators and the banks had largely ignored the warning signals that more collapses would follow. Hutton looks at the weeks that followed Lehman's collapse: weeks that will go down as some of the most crucial in Britain's economic history.

Nationalizing key banks, and then underwriting the banks' bad loans, prevented meltdown, but at a terrible cost that will haunt us for years to come. Dispatches reveals the mistakes that lead to the current crisis and asks: what will it take to lift the UK out of the biggest recession in living memory?

Ratings: 6.90/10from 10 users.

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44 Comments / User Reviews

  1. henrose

    The Cause of the Crisis People Won’t Face
    Experts are feverishly crunching numbers and punching out calculations to see if the economy can last. They should be analyzing something else.

  2. henrose

    In Britain’s banks, it’s not a case of 51 percent being “unrighteous”—it is much higher than that. And that “unrighteousness” is killing the whole industry. As we wrote back in 2008, the root cause of the financial crisis was “greed and its associated sins. Lying. Stealing. Coveting.” Those causes have not been addressed.

    This immorality is the root cause of Britain’s financial problems, and through this crisis this immorality is dealing a huge blow to Britain’s whole economy.

    1. Devon Griffiths

      Of course they haven't been addressed. What exactly do you expect - that someone is going to somehow alter human nature?

      If your system doesn't account for the nature of human beings and is not structured to mitigate human foibles, then it cannot work. Full stop. The communists failed to understand this. Will the market fundamentalists?

  3. henrose

    British and American regulators imposed fines of nearly half a billion dollars on Barclay’s bank on June 27 as the bank settled a massive corruption case with bank regulators. Its share price has fallen 15 percent since the scandal broke, knocking $5.6 billion off.

    The Royal Bank of Scotland has also been implicated in the scandal, according to leaked documents, and “most of the world’s other largest financial institutions” are under investigation, according to Reuters. They are accused of lying and manipulating the interest rates that consumers pay on just about everything.

    The scandal is destroying the trust in Britain’s entire banking system. The assistant editor of the Daily Telegraph, Jeremy Warner, writes:

    Many have already said it, but it is one of those observations that bears constant repetition: In all my years as a financial journalist, it’s hard to recall a case quite as shameful as this—and I’ve certainly seen a few.

    There is no industry in all commerce that relies as much on public trust and reputation for probity as banking. We have seen what happens when trust is lost: We get the legion of banking runs that lie at the heart of the financial crisis; people run for the hills and the economy grinds to a halt.

    To have American regulators accuse Barclays of lies, deception and manipulation is an appalling indictment of one of the oldest and most respected names in British banking. It is like discovering that your local branch manager has routinely raided your hard-earned savings to finance his champagne lifestyle.

    He warns the crisis could mean the end of Britain’s banking system, and with it Britain’s position as a powerful economy:

    When the history books are written, this may be seen as a defining moment, the point at which public anger with the banks bubbled over into something much more seismic in its consequences than the general atmosphere of bank bashing we have seen to date. Despite the crisis, there has been a sense of back to business as normal for the City these past three years. There have been few signs of behavioral change. But this may be the straw that breaks the camel’s back ….

    Finance’s golden age may be drawing to a close; with no new industry or manufacturing renaissance coming up in the wings, it is not entirely clear what’s going to take its place as a source of British wealth, jobs and tax revenues. It is not just finance for which hard times lie ahead.

  4. noconman

    No man is perfect, but Ron Paul stands out amongst the standard flip floppin double talkin politicians who always manage to sway the votes of the 30% of people who actually vote, with empty promises, corporate agendas, and a two party system that has been designed to divide the vote and ping pong us into bankruptcy.
    I have never seen a man in politics who doesn't flip flop, or just simply tell people what they want to hear. Ron Paul is different, he is a MD, and from what I see, he believes in treating the cause of issues, not just masking the symptoms, which only creates future problems and does nothing to cure the problems.
    If you want any real change in this mess that the incompetent, corporate owned government has created, Only men like Ron Paul have the grit to tell it like it is, or the nerve to try and change it.
    If mainstream media wasn't led by corporate interests, and delivered real facts to our nation, instead of reality TV drama and elections that are played out in hollywood style scripted nonsense and flag waving, misdirection of agression hocus pocus, Then Ron Paul would no doubt be the leader in the polls.
    I could only hope, that more people can see the futility of keeping the same kind of polititians in office that has caused the problems.
    Ron Paul is not liked by mainstream media, the Dems or even his own party.
    That should tell you that they fear his interests in restoring our constitutional rights, and making our government get back to the business of governing instead of running it into the ground for corporate interests whos only goal is to make themselves richer.
    Our governments stand and attitude seems to be, Sorry, nothing personal, just corporate business.
    If you're not part of the solution, you're indeed part of the problem. That is what Ron Paul tells Washington, And you could tell them that too!
    Vote for Ron Paul.

    1. grimkm

      As much as Ron Paul might stand up to alot of evils of society, I'd not like to see him in power either. It's a choice of a lesser evil, and I don't think he necessarily is the lesser evil. Anyway, he is out again, so your 'vote for Ron Paul' is quite useless.

    2. noconman

      I respect your opinion.
      Although,I don't understand why you consider Ron Paul, as one of two evils, but, that has been the case with most elections forever.
      To vote for the lesser of two evils, is still voting for evil. The Obama Romney ticket is a perfect example of just that.

      Just don't believe the mainstream propaganda that Ron Paul is out.
      He is very much still there and gaining more supporters all the time. Media has been very much led to discredit him(but he has no dirty secrets) so they rarely mention how successful he has actually been.

  5. vvindred

    my PERSONAL opinion Ron Paul is like all the rest ...corrupt

    1. LB

      Got any proof?

  6. Símun Pauli Dahl

    how can bankers get away with this? how can normal fathers/mothers and otherwise normal worker accapt this? What makes us all just sit in silence and doing nothing about this? Our bank's have just annoucent as late as yesterday 83 new charges for their services, but less then a year ago they came with the idea of providing customers homebanking and so forth to make it cheeper for their customers and other comsumers using their servies.
    Now they will charge you 4 pounds for every bill you pay at the bank and 1 pound for every transaction you make from your homebanking. They will charge you 4 pounds for just calling to ask infromation concerning your own bank balance. These are just a few examples of how grouse and viscios these people are, and how extremly little they care about you or your family, simply becasue they messed up big time in 2003-2006!!!
    We are paying for their mistakes/crimes, and we are paying it with our lifes, to make it pretty sure people understand this, this is not you loosing your house or work this is you and me paying with out life's, becasue it will take more then a life time for people to pay back their debts that these man and women put you in, in the name of greed and bonuses they recive by the end of their year!
    sorry my english ain't good, but i think most of you understand what i am saying:)

  7. William Drew

    Unfortunatley its not that simple, if all the banks had failed, do you think you would be sitting at your computer right now?

    1. LB

      That's all or none thinking. Not ALL of the banks would fail. There are a ton of regional banks that would have made it.

    2. henrose

      I dont think so...

  8. marketer2b

    Recently Nuitra scientific have done experiments. Where they taking individuals put them together in IRM machine and have play game where prize is money. And they noticed that when subjects earn money part of the brain which stimulated is the same part cocaine stimulate. In other words, Government needs to have strict control over bankers as they can't control themselves. Money makes crazy everyone, specially a lot of money.

  9. cezy

    mmm... confusing message in the end. It's not that the markets didn't work, it's that the government didn't let them. It should have let the banks fail and give the billions directly to the people who lost their jobs/savings. Regulation is not going to solve anything as long as the incentive to take on too much risk is there, and if bankers know that they'll never pay in the end, then why should they not gamble?
    Punishment must be inescapable and proportionate to the crime.

  10. punish_them_for_once

    to prevent this from happening again some of the wall streeters must be bought to justice. Take Merrill Lynch for example at the center of every scam and rip off in the world all the time, every manager / should have all pay and bonuses clawed back , and all executives should be put in jail period. Next time wall street scum will think twice before they bring the world to economic collapse.

  11. bee pee

    money is what we think we want, we really want what money can buy and what we need is what money cant buy...

  12. cezy

    I wonder why despite the constant impoverishment of the middle/lower classes, no serious revolt as yet arisen...

    1. Rocky Racoon

      We have been brainwashed into believing that if we are poor or not financially successful we should be ashamed of ourselves-that it is our fault and if you haven't come up with reasons to blame yourself don't worry they will be touting the next theory of poverty that blames the poor for their plight before the year is out. It is a cottage industry at institutions of higher learning managed by the sons an daughters of the privledgenzia doncha know.

    2. LB

      Cezy, it's coming. The hunger will have to be greater than the fear.

    3. henrose

      It will..

  13. Cool E Beans

    England is more asleep than we are. I know that the American government knows who is pulling the strings but if they try to do anything about it they will be eliminated. Abe Lincoln and John F. Kennedy were both assasinated by the same people for the same reason...Lincoln created greenback currency outside the reserve system and Kennedy signed an executive order which would have created US backed money instead of the fiat currency.

    The Bank of England was standing on the side of the English government providing the answers to the current problem when they themselves were the cause of the situation in the first place.

    No country and no business is at fault within the economic system worldwide. It is the IMF, the Bank of England and the Federal Reserve who LOAN credit money to countries at INTEREST which is an INTEREST ONLY LOAN (look at the US Federal Debt) causing a continuous daily drain on the money in circulation and as each countries' debt increases, so does the draining of their economies.

    Even at 1/2% or 1/4%, 12 trillion dollars borrowed is a huge amount of interest money paid to a banking institution who loaned this money/credit with the stroke of a computer key. Find the podcast by NPR: Planet Money regarding the Federal Reserves' purchase of 1.25 billion dollars worth of US mortgages. They state in this podcast exactly where they get their money from. Once you know this, the only solution is the dissolution of the entire reserve system world wide.

  14. Jonathan Roseland

    Interesting but it attempts to play off the bankers as victims as well which is just completely incorrect

  15. Matt Kukowski

    TERRIBLE doc... trying to play off the bankers as just children not knowing what they were doing is a complete LIE. They knew they were crooks all of them.

    1. Hanan Zalkinder

      I don't get why you think that the documentary inferred that the bankers didn't know what was going on...They obviously knew the risks; who would believe otherwise?

    2. Hanan Zalkinder

      I don't get why you think that the documentary inferred that the bankers didn't know what was going on...They obviously knew the risks; who would believe otherwise?

  16. American Art

    I watched this program and I have to be honest the banking system as it is setup makes absolutely no sense what-so-ever.

    Let me get this right. Banks are encouraged to lend as much money as possible. By lending money their employees make gobs of money. If the loans fail the bank employees do not have to pay back any money they earned on commissions.

    The reason for a banks existence is too make its employees as rich as possible with no risk.

    If a bank runs out of money it simply goes to the government where it asks for money to lend so that it can continue to pay its employees huge salaries.

    My question is this. Why not skip the whole lending part. Why not just pay the bank employees huge salaries for sitting at their desk. It amounts to the same thing without the loan losses.

    As the current banking system is setup now it is obvious from this video that it is doomed to fail because there is NO accountability.

    The banking system is a complete joke.

    And I hear over and over again that high compensation for bank employees and bank presidents results in the best performance and the smartest individuals. Yes that seems to be the obvious case with billions if not trillions of pounds and dollars lost, millions of people out of work and hundreds of thousands of homeless people.

    If these people get any smarter and make any more money, there will not be any money left for them to make.

    The American and British governments would have done everyone a favor by letting the banks (all of them) fail. So if a bank fails how big is everyone's year end bonus? I'm just curious as they seem to get bonuses for billions in toxic loans.

    Natioanlize the banking system. Set salaries at 30K pounds a year for everyone top to bottom. And get rid of the rest of the nonsense.

    People's insatiable greed needs to be stopped. Because a person can NEVER ever make enough money they will always want more.

    And if people think we had problems in 2008-2009, just wait for oil to run out between 2020 and 2030. This will cause a cascade banking collapse around the world.

    American Art

    1. RodOliveira

      Ah Ah You're right. Though bear in mind that the ones with the power to stop this nonsense are the same ones that need banks to make great politics. So, who's gonna stop it now?

  17. ukphil

    Did you hear about the great Bank meltdown of 2012,
    You will it's not over with yet only just getting started.
    People playing with money that does not exist.
    Take your money out of the banks and stop giving it to the bankers.
    And don't spend what you don't have...

  18. dreamerphil1

    Not bad for the BBC, quite watchable, but nothing revelatory. Lightweight overview of the meltdown from UK perspective.

    1. Carl

      I agree..

    2. Naomi Bettina Watts

      Its not the BBC, it was on channel 4....BBC would never put this on BBC 1.

  19. esmuziq & frames

    at least they are sorry

    1. Carl

      I would say sorry to if I were able to retire at 50 with 750klbs a year... Lmao those guys have not a single hair of sincerity..

  20. leddewis

    if the uk can wake the f up why cant we

    1. ThekomaN

      because we have bigger bonuses :P there fore we can do way more blow then they can !

    2. Carl