Dan says the vast majority of junk mail - be it loans or otherwise - is directed at the sub-prime market: "The best thing you can tell a client is that you can accurately identify sub-prime individuals. Which is why, when people are asked to fill in lifestyle surveys, they'll often see questions like, 'Have you ever experienced difficulty getting credit?' or, 'Have you ever missed a mortgage payment?' Those are the sorts of triggers that will identify you as potentially sub-prime."
So an inability to pay debts wasn't merely a flaw to be overlooked, but something that was actually desirable in creditors. More to the point this was generally known before the bubble burst.
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Well, now that such people have had their dodgy avenues to middle-class lifestyle closed off we are about to discover how hard it actually is to make a decent living in this country. There won't be many laughs along the way.
The fact is that most sub-prime types are, to generalise, not especially bright & without particular skills but feel entitled to a consumer lifestyle. A lifestyle which is far more expensive than was hitherto thought & is in fact unaffordable.
People like me can grit their teeth, cling on to their shite jobs & wouldn't be much worse off on the dole anyway. But for some the sheer ugliness of their real situation will be a sight to behold.
I wonder what the long-term consequences of this will be- perhaps, for example, those sections of the population with any shards of a brain will have far fewer children than before because the future looks so uncertain & they are unsure of their ability to provide (A consideration that has never hindered the thick, not even in the days of no welfare state).
I try not to yield to pessimism. I think we are in a state of flux & we will change our material lifestyle & mental state in the years to come. Be it good or bad, we shall see.
"The fact is that most sub-prime types are, to generalise, not especially bright & without particular skills but feel entitled to a consumer lifestyle."
Or 'Labour voters', as they are more commonly known...
So an inability to pay debts wasn't merely a flaw to be overlooked, but something that was actually desirable in creditors. More to the point this was generally known before the bubble burst.
I don't know why you think this is such a revelation. The principal locus for sub-prime collapse is the US where the communities re-investment act was designed to give easy credit to the "excluded". God's strewth, that's where Barry made his name - suing banks that didn't match the correct racial mix for lending.
Even in the UK, I'm old enough to remember switches in the narrative between "denying credit to the marginalised" and "forcing credit cards down people's throats", never once pausing at "are you sure you can repay that debt"
I don't really understand your surprise either. If there's a profit to be made then people will find ways of making it - I couldn't really argue it is undesirable. The problem surely was the banks so mispriced the risk, not that they were willing to take it.
As I say, what I find remarkable is not so much that it was happening, that is what the sub-prime collapse is about, but that it was being populalry reported long before the bubble burst.
It isn't as though the banks were taking enormous risks behind our backs without anyone noticing.
But such is the nature of hubris.
We all saw reports talking about the unsustainable nature of the internet bubble. The business models were not going to make a profit. Yet there were no end of excuses made about why this was different and at the time people were convinced. After all the share price was rising.
I read an article (I think it was in the FT but I've long lost the link). A market analyst foresaw the internet bubble crashing long before anyone else consequently refused to advise in favour of investing.
Unfortunately, he was so far ahead of the curve that whilst he held back, many others who had not, were seeing their investments going up in defiance of the naysayers. Consequently he was sacked just a little before the bubble burst, for giving bad advice.
Now you might regard this as unjust because his advice was basically sound. However it's really just a matter of timing. The investor who buys early and sells at or before the peak has got it right.
So the fact is people who thought sub-prime was a 'good idea' were right if they got out the market at the right time and wrong if they left it to late. The fact is some banks did see the signs and got out. Others did not. All a matter of timing.
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