成人快手

I鈥檇 perfectly understand if you鈥檇 rather not think about money this weekend. But you鈥檒l probably have noticed that the words 鈥渇inancial crisis鈥� have been much in the air again this week, and I think we need to try to make sense of what鈥檚 going on.

I鈥檓 one of those people who get a headache just looking at a bank statement. So this hasn鈥檛 been an easy time for me. But I labour long and hard on your behalf, and I think I鈥檝e got the hang of it.

It goes, I think, something like this. Suppose I ask you to lend me 拢50. How you respond will depend in large part on how much money you have. If you don鈥檛 know exactly how much you鈥檝e got 鈥� if you鈥檝e already lent out oodles of dosh but you鈥檙e not sure you鈥檒l ever get it back 鈥� well, you may politely tell me to look elsewhere. And if you鈥檙e just one of many in the same position, I鈥檒l find it pretty tough to get my hands on that 拢50.

I will be, to use the technical term, the victim of a credit squeeze. And I will be in pretty much the same position as many of the world鈥檚 biggest banks. No one wants to lend, because no one is sure any more how much is in the coffers.

Last Tuesday, my colleague Jonty Bloom explained it all in wonderfully simple terms in an essay which you can either hear again via the Listen Again facility, or you can read the transcript which I鈥檝e put online .

Here鈥檚 the key passage: 鈥淚t all started with sub-prime lending. There is a lot of ignorance about what sub-prime actually means, but it is quite easy really: sub-prime is a euphemism for rubbish. American banks lent lots and lots of money to people who couldn't pay it back because they were too poor to. That was bad enough, but the banks made it worse by then passing on the risks of not being paid back by bundling together thousands of good and bad mortgages and selling those bundles on to other banks around the world.鈥�

Have you ever heard of a 鈥淢insky moment鈥�? was an American economist who used to argue that markets are inherently unstable and that if you have a long stretch of good times, you鈥檒l just end up eventually with a bigger collapse.

His reasoning went like this: When times are good, investors feel so confident that they take on more risk. The longer the times stay good, the more risk the investors take on, until, one day, they've taken on too much. They reach a point where the cash generated by their assets is no longer enough to pay off their debts. That鈥檚 when the lenders start to call in their loans 鈥� and asset values collapse. It sounds horribly familiar, doesn鈥檛 it?

So perhaps capitalism has a built-in contradiction. It thrives on private risk 鈥� and the notion that the bigger the risk, the bigger the potential reward. But if too many people lose too much by taking on too many risks, the state has to intervene, because it鈥檚 in no one鈥檚 interests for the whole edifice to come crashing down.

The financial regulatory agencies are meant to keep an eye on the banks to make sure that they behave sensibly. But Jonty Bloom has a theory: that people鈥檚 memories are just a fraction shorter than the typical economic cycle 鈥� so that there鈥檚 always a period when they come to believe that this time things are different: that they have reinvented the wheel, that the force of gravity has been overcome.

So do yourself a favour. Write a note in big black letters, and stick it somewhere where you鈥檒l see it every day. 鈥淲hat goes up, must come down.鈥� And if you know any bankers, give them a copy too.

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