Credit Crunch

Credit Cruch. Tumbling house prices. Downturn. Recession. A global finiancial turmoil the likes of which the world has never seen.

Like the majority of people, Dave's initial thought was

"Whoohoo!! I'll finally be able to aford a house!!!"

Unfortunately, much to Dave's and many others like him great astonishment, there is a dark side to the Credit Crunch.

It all started with subprime loans and mortgages in America. A "subprime" loan basically translates as a loan from a person you doubt will ever really pay you back. A high risk individual. So why oh why would a bank ever want to agree to give such a loan?

Simple. You sell the loan on to someone else. They take the risk, you keep a small profit. Repeat that enough and you a whopping big profit. No real risk. But why would someone want to buy it off you?

Simple. They sell the loan on to someone else. They pass on the risk, they keep a small profit. Repeat that enough and they get a whopping big profit. No real risk. But why would someone want to buy it off them?...

Pyramid scheme anyone?

Of cause, the banks are not, despite popular opinion and all the evidence, stupid. They realise someone has to be holding the loan if/when it finally fails. But they have safety nets in place. The loans are usually secured on a house. Loan fails, bank gets the house, sells it and makes the money back. But what happens when house prices drop and are no longer worth enough to cover the loan? Big risk and a loss. Repeat THAT enough times and it's a whopping big loss.

Unfortunately, it gets worse. See things like money and shares are funny old things. They're the fundamental building blocks of the world as we know it, and yet they rely purely on Faith. Money doesn't actually exist. It's a figment of our collective imagination. Shares are worth only what people want to pay for them. So when a bank makes a big loss, it can't just shrug it off, put it down to experience and move on, because it hasn't just lost money, it's lost the Faith of it's followers. That makes the bank worth less, lossing them more money, and in turn more Faith. If they can't perform a miracle, they may face a slippery slop.

Unfortunately, it gets even worse. You can make money from money you don't have. For example, if you get a 0% creddit card and buy everything using the card, then before you pay it back, the money you have technically already spent is sitting in the bank earning you money. Banks like these kind of games, so they borrow lots of money from other banks to try to make profit with it. They also lend out lots of their own money to earn interest on that. Whatever kind of opertunity comes along they call on their fellow rivals to help them out. Try not to think about where this money actually comes from, it'll make your head hurt. Just remember it's all not real anyway. But what happens when because you've lost the Faith of your followers, you also lose the Faith of your rivals?

Your source of cash gets cut off, your miracle becomes that much harder, your followers become less Faithful and the slippery slop looks that much slippier. And when THAT anoucement reaches the media, those Faithful that still had some hope or just hadn't yet noticed pull out while they still can. Game over.

But still not the end of the story. Because the Bank that just died did so in a classic "If I go down I'm taking you with me" manner. Chances are he still owed alot of his rivals ALOT of money, and they're never going to see that again. Which means whopping big losses for all of them. Which means loss of Faith from all their followers and from each other. And hey presto, Credit Crunch.

The only way the banks can get some money back is to increase interest on borrowing and sack all unnecessary staff. This steals money from the non-financial world, and the job loses spread.

So despite finally having the arrival of the glorious house price drop, harder mortgages and a lack of employment mean Dave and the others still don't have a house.

Damn.

Good Old Bush

One of the world's least popular people, up there with terrorists, murderers and Brittney Spears, it's good Old Texas boy W. Bush.

Now, after the pounding McCain took just for kinda reminding people a little of Bush, one may imagine Bush would just sit quietly in a corner and wait to be taken out with the rest of the trash. But not good old Bush, nah, he's going down swinging.

His latest trick? "Bush 'seeks to ease wildlife law'"

http://news.bbc.co.uk/1/hi/world/americas/7738933.stm

Apparently Bush has realised that digging for oil would be a lot more efficient if people didn't worry so much about petty little things like "a full scientific assessment as to the likely impact on the environment." Nope, if we worried a little less about that kind of thing we could dig in all kinds of new places and our energy problems would be over. So good old Bush is hoping to make that dream come true. Hurray for Bush!

Unfortunately, if he doesn't finish the paperwork by Friday, he won't have time to get it done before Obama kicks him out and we'll be stuck with this pesky "environment" of ours a little longer.

Darn.

Obama

November 4th 2008. A day to remember.

The US election was in full swing, the result of over 600 days and billions of dollars of campaigning boiled down to the last few hours. According to all the polls it was an open and shut case, Obama had it in the bag, and yet the world watched with bated breath.

Around 4 am in England, the result the world had waited for was finally announced. Obama would become the 44th president of America. Dave and the rest of the world gave a collective huge sigh of relief and an overwhelming jump for joy.

Obama seems to be the guy the world has waited for. An intelligent, logical guy who appears to focus on bringing peace and hope and has plans to comunicate with the rest of the world and work together for the greater global good. After 8 years of terror from Bush, it comes as welcomed news. How much of a change Obama can bring only time will tell.

"The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term, but America - I have never been more hopeful than I am tonight that we will get there. I promise you - we as a people will get there.
There will be setbacks and false starts. There are many who won't agree with every decision or policy I make as president, and we know that government can't solve every problem. But I will always be honest with you about the challenges we face. I will listen to you, especially when we disagree."

The election of Obama was a turning point in history not only because it marked the toppling of the statue of Bush. For those who haven't heard, Obama is the first black president of the USA.

"Rosa sat so Martin could walk, Martin walked so Obama could run, Obama ran so our children could fly."

Rosa Parks was a black lady who refused to stand for a white passenger on a bus in Alabama. At the time that was a big deal. A very big deal.

What's difficult for a kid born in the 80's with Greek father, English Mother, Chinese wife and friends of all races and sexualities to fully comprehend is that that time was as recent as 1955. Just 53 years ago.

From subhuman to worlds most powerful postion within living memory, Obama really has changed the world. Martin dreamed of a world where man would be judged on character alone and not the colour of his skin. The election of Obama has seen a huge step in the right direction and renewed faith in America and the world that Martin's dream will become a reality.

Only two things dampen the spirit of Obama's election. The two sheets of bullet proof glass present at Obama's acceptance speech. A painful reminder that although we can now see the promised land, perhaps we're not quite there. Obama will still be judged by the colour of his skin. Whatever he does, good or bad, he does as a black president.

But "If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer. "

The dream is alive and kicking.

MTV Awards

Dave had been offered the chance of a life time. The MTV awards were coming to his home town of Liverpool and Helen and Andy had 3 extra tickets. Would he like to go? He quickly weighed up the pros and cons.

Pros:

-Live performances of a few good songs.

Cons:

-The tickets cost £65 each.
-Award ceremonies are generally very boring.
-Britney Spears would be there.
-Amy Winehouse would be there.

It really was a no-brainer, Dave respectfully declined. Jean however had clearly miscounted the number of pros and cons and decided to snap up the offer.

Andy and Helen placed the remaining two tickets on ebay. They sold for around £600 each.

".. £600..?!?!..."

Jean suddenly felt more than a little guilty for taking the ticket. She tried to convince Andy and Helen to sell her one as well, but they had agreed to take her and were true to their word, even knowing they would be £535 better off if they left her behind. A greatly respectable couple. All Jean could do now was go and enjoy herself.

None of it made much sense to Dave.

"Seriously? £600? They know Britney Spears will be there right?"