Growing Evidence That The Upturn Is Upon Us
The 1970's saw three day weeks and my Grandad milking the cows by candlelight because the miners had shut down the power stations - no, we're not quite there.
Unwinding all this debt though will take years and prosperity in terms of spending power will not return to 2007 levels for at least a decade. The days when borrowing £75k to spend on flying training felt normal will not return for quite some time. Perhaps this is a good thing.
Airline losses in 2009 are going to be horrendous. 100% guaranteed.
WWW
Unwinding all this debt though will take years and prosperity in terms of spending power will not return to 2007 levels for at least a decade. The days when borrowing £75k to spend on flying training felt normal will not return for quite some time. Perhaps this is a good thing.
Airline losses in 2009 are going to be horrendous. 100% guaranteed.
WWW
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FT.com - Southwest’s loss
Published: October 16 2008 14:53 | Last updated: October 16 2008 20:40
Ask any gambler – on the way up its all about skill, on the way down its damned bad luck. So how should the results of Southwest Airlines be treated? On Thursday, the group reported its first quarterly loss in 17 years. The only investment-grade US airline, and one of the few actually to make an economic return, Southwest reported paper losses due to the fall in the oil price – marking-to-market the group’s fuel hedging arrangements produced a $247m charge.
If that is treated as an exceptional item, then Southwest made money. But it points to a big problem ahead for the airline. The group began hedging in the late 1990s and it has been a competitive advantage ever since as struggling peers lacked the credit quality to pursue a similar strategy. The effect on profitability has been dramatic; this year alone the group has saved $1.3bn on its fuel bill so far. In fact, were the help from fuel hedges to be excluded, the $4.8bn in operating profit Southwest has generated since 2001 would fall to just $500m.
That edge on costs is now gone. Southwest has locked in an in effect rate of $73 per barrel of oil for three quarters of its 2009 fuel needs, above current prices. Furthermore, with some hedging in place at $90 or more, a further cheapening of crude could prompt margin calls – which has caused the airline to draw down pre-emptively $400m of a revolving credit line.
Some advantages remain. The group’s point-to-point model is inherently more efficient than peers based at big airport hubs. Nor is its balance sheet weighed down by debt. But the rest of the industry has been forced on a crash diet due to bankruptcies and spiralling fuel costs As the recession bites, Southwest needs to prove that it has not just enjoyed the blessings of lady luck.
Published: October 16 2008 14:53 | Last updated: October 16 2008 20:40
Ask any gambler – on the way up its all about skill, on the way down its damned bad luck. So how should the results of Southwest Airlines be treated? On Thursday, the group reported its first quarterly loss in 17 years. The only investment-grade US airline, and one of the few actually to make an economic return, Southwest reported paper losses due to the fall in the oil price – marking-to-market the group’s fuel hedging arrangements produced a $247m charge.
If that is treated as an exceptional item, then Southwest made money. But it points to a big problem ahead for the airline. The group began hedging in the late 1990s and it has been a competitive advantage ever since as struggling peers lacked the credit quality to pursue a similar strategy. The effect on profitability has been dramatic; this year alone the group has saved $1.3bn on its fuel bill so far. In fact, were the help from fuel hedges to be excluded, the $4.8bn in operating profit Southwest has generated since 2001 would fall to just $500m.
That edge on costs is now gone. Southwest has locked in an in effect rate of $73 per barrel of oil for three quarters of its 2009 fuel needs, above current prices. Furthermore, with some hedging in place at $90 or more, a further cheapening of crude could prompt margin calls – which has caused the airline to draw down pre-emptively $400m of a revolving credit line.
Some advantages remain. The group’s point-to-point model is inherently more efficient than peers based at big airport hubs. Nor is its balance sheet weighed down by debt. But the rest of the industry has been forced on a crash diet due to bankruptcies and spiralling fuel costs As the recession bites, Southwest needs to prove that it has not just enjoyed the blessings of lady luck.
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Originally Posted by WWW
spending power will not return to 2007 levels for at least a decade.
I also think we are witnessing the beginning of the end of the 70K loan for flight trainning and the many of the wannabees in the system or those about to join it, in time are going be yet more casualties of the 'credit crunch'.
I can't see banks being willing to make wreckless loans of this magnitude for a very long time once they start seeing the dozens, maybe even hundreds of defaults that will inevitably start to occur over the next few years.
If the boom when it happens turns out to be as big as some are predicting, this may well leave a gap in the market....enter airline sponsorship in the shape of the MPL.
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All this and yet there are still people on threads not too far from here asking how they can get themselves into £70k-100k of debt to join at the back of a very very long and growing queue of people with both a frozen and un-frozen ATPL looking for jobs..... I hate to be rude but I am gonna be anyway.... some folks are just f**king stupid..... but I guess people like that with such a lack of financial sense are a large part of the reason we are in this mess anyway..... I despair sometimes.
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I wouldn't believe everything you read in the press Alex.... we are in this mess because the everyday man in the street have borrowed too much money and is now less likely to pay it back. This is causing house prices to fall in the US etc etc... this is then impacting things like the CDO market. That is why money markets are frozen too much leverage everywhere including households.
The political answer is to blame the city as it doesn't cost votes. Did you know banks were 40% of total UK corporate tax takings for the government? thats a big hole to fill. Funny that.... the wanabee that is 70k in debt and defaulting on his loan is sat next to the the BTL investor and others who shirk responsibilities they signed up to and they sit at the root cause of this crisis.... it is these loans not being repaid that creates the huge losses for the banks.
The political answer is to blame the city as it doesn't cost votes. Did you know banks were 40% of total UK corporate tax takings for the government? thats a big hole to fill. Funny that.... the wanabee that is 70k in debt and defaulting on his loan is sat next to the the BTL investor and others who shirk responsibilities they signed up to and they sit at the root cause of this crisis.... it is these loans not being repaid that creates the huge losses for the banks.
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Thought I would post this here, although posted on another forum, I'm sure you will agree its relevance. Sir Richard Branson on Fox News. He mentions the Great Depression more than once. And he also says that if HBOS went down, so would Virgin.
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There's greed everywhere. I think it's a bit rich to blame Joe the plumber for taking out too big a mortgage when it's offered to him, though.
The charge 'a lack of financial sense' could be levelled at banks offering high LTV mortgages (did they think they boom was going on forever?) to governments unwilling to regulate to slow the boom (some did - in France you can't get a mortgage if the repayments exceed a third of your income) and to financial institutions who can't identify the extent of toxic debt they hold (how stupid is that?) and use financial instruments so complex that very few can understand the debt they hold (also, how stupid is that?).
It's notable that the financially sophisticated are very good at identifying a trend but seem incapable of spotting when a trend is about to reverse, just look at the 'experts' who were forecasting oil at $200 a barrel by Christmas. When the market is going up, oh, it's going to go on forever and when it's going down, oh, it's going down forever. It seems to me a child with a pin could do better.
The charge 'a lack of financial sense' could be levelled at banks offering high LTV mortgages (did they think they boom was going on forever?) to governments unwilling to regulate to slow the boom (some did - in France you can't get a mortgage if the repayments exceed a third of your income) and to financial institutions who can't identify the extent of toxic debt they hold (how stupid is that?) and use financial instruments so complex that very few can understand the debt they hold (also, how stupid is that?).
It's notable that the financially sophisticated are very good at identifying a trend but seem incapable of spotting when a trend is about to reverse, just look at the 'experts' who were forecasting oil at $200 a barrel by Christmas. When the market is going up, oh, it's going to go on forever and when it's going down, oh, it's going down forever. It seems to me a child with a pin could do better.
Interesting times ahead. I applied to LloydsTSB for a mortgage last year. I needed to know how much I could borrow with my present income, then with my new 'pilot job' lower income, and also adding in the wifes income to the equation. We would be able to borrow, jointly, £325,000 on a 100% type repayment mortgage. Needless to say we didn't take that much as our joint income at that time was approx £65k, and we thought we might just be pushing it a bit.
Why would a lender be so stupid? Greed? We had A1 credit scores from paying back loans etc over the years. I guess that helped, but many people are going to be in a whole world of sh*t soon.
Luckily we borrowed just what we needed (less than half) but even now I still feel it is a lot of money, regardless of the fact I spent £110k getting my present job if I add in everything on the way.
I can only advise anyone even thinking of borrowing any money right now to have a serious think about things and wait a year or two at least! I know it all sounds so harsh to come onto a pilot forum to be told don't bother, but I think that for once, the best bet is to maybe take the advice being offered on this thread very seriously. Sorry we can't be more positive.
Why would a lender be so stupid? Greed? We had A1 credit scores from paying back loans etc over the years. I guess that helped, but many people are going to be in a whole world of sh*t soon.
Luckily we borrowed just what we needed (less than half) but even now I still feel it is a lot of money, regardless of the fact I spent £110k getting my present job if I add in everything on the way.
I can only advise anyone even thinking of borrowing any money right now to have a serious think about things and wait a year or two at least! I know it all sounds so harsh to come onto a pilot forum to be told don't bother, but I think that for once, the best bet is to maybe take the advice being offered on this thread very seriously. Sorry we can't be more positive.
I think the public for borrowing, the banks for lending and the government for turning a blind eye can all be apportioned blame fairly evenly. The public have the defence of being a bit thick, the other two do not.
The Machiavellian side of me think that in both the US and UK the government of the day calculated a change of administration was likely and thus the bursting bubble would be the-other-lots problem so they let the bubble grow. I wouldn't fancy George Osbornes job of sorting out the public finances of 2010 - 2015. Would you?
It is possible to celebrate rather than lament the US/UK/Wests prediliction for boom and bust. Creative Destruction is real. Hosing money around does ensure that some is sprinkled on wacky but worthy new businesses. Google probably wouldn't have got going were it not for the promise of millionaire making stock options prevalent during the tech bubble.
Whatever. We are where we are and the graph I posted above shows that we are somewhere we haven't quite been before. There has never ever ever been a credit and asset price bubble like we have spent the last decade living through. Its new. Its new in both scale and in breadth. If we are to return to historical norms we will have to have GDP shrinkage of around 6% per year for 2 years and then stagnation/low growth for a decade.
That would be deeply horrible. Perhaps it won't happen. I suspect it will though.
If you look at the the CAA statistics there were 1146 new CPL's issued in the year to August 2007 (over a year out of date I know). That is the sort of scale of competition that the Wannabe is up against. Plus redundancies. Plus foreigners who speak English and hold JAA licenses.
The figures for Professional License Issues and Renewals per year shows:
Year
-----
06-07 5384
05-06 5362
04-05 3434
03-04 2775
The statistics are not detailed nor consistent enough to draw definitive conclusions. Nevertheless it looks very much as if the last 3 years has seen a tidal wave of people going through the training system. Were this to fall back to 03-04 levels then the flying training industry is going to shrink by close to half.
Be careful out there and unless you are a window licking loon DO NOT borrow vast sums of money to fund training unless bankruptcy suits your circumstances.
Which is very well might.
WWW
The Machiavellian side of me think that in both the US and UK the government of the day calculated a change of administration was likely and thus the bursting bubble would be the-other-lots problem so they let the bubble grow. I wouldn't fancy George Osbornes job of sorting out the public finances of 2010 - 2015. Would you?
It is possible to celebrate rather than lament the US/UK/Wests prediliction for boom and bust. Creative Destruction is real. Hosing money around does ensure that some is sprinkled on wacky but worthy new businesses. Google probably wouldn't have got going were it not for the promise of millionaire making stock options prevalent during the tech bubble.
Whatever. We are where we are and the graph I posted above shows that we are somewhere we haven't quite been before. There has never ever ever been a credit and asset price bubble like we have spent the last decade living through. Its new. Its new in both scale and in breadth. If we are to return to historical norms we will have to have GDP shrinkage of around 6% per year for 2 years and then stagnation/low growth for a decade.
That would be deeply horrible. Perhaps it won't happen. I suspect it will though.
If you look at the the CAA statistics there were 1146 new CPL's issued in the year to August 2007 (over a year out of date I know). That is the sort of scale of competition that the Wannabe is up against. Plus redundancies. Plus foreigners who speak English and hold JAA licenses.
The figures for Professional License Issues and Renewals per year shows:
Year
-----
06-07 5384
05-06 5362
04-05 3434
03-04 2775
The statistics are not detailed nor consistent enough to draw definitive conclusions. Nevertheless it looks very much as if the last 3 years has seen a tidal wave of people going through the training system. Were this to fall back to 03-04 levels then the flying training industry is going to shrink by close to half.
Be careful out there and unless you are a window licking loon DO NOT borrow vast sums of money to fund training unless bankruptcy suits your circumstances.
Which is very well might.
WWW
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I agree with WWW's first paragraph. A lot of the time, the general public are blamed for borrowing too much, which is strictly true but it suggests that there is a money pot from which the general public have free reign and can take as and when they please!
In fact, the bank with the financial knowledge gave them the option to borrow that amount. I'm sure the bank manager or mortgage / long term liability advisor would not be giving those loans out without consideration from the bank's risk assessment team, therefore, it has been decided by those that run the bank and assess the risk, that the general public can have those loans despite the risk that this will carry in the event of a downturn, therefore, to me, they are primarily responsible! They knew the risks but dished out the credit anyway. Of course, the poor punter that signed on the dotted line to say "I understand the above" clearly didn't have those risks conveyed to them!
In short, it doesn't seem unreasonable to suggest that the banks put a sniff of financial return above the welfare and ethical aspect of lending to those that in all honesty, couldn't afford it.
It's like a dietician giving a child a lot of sweets and then blaming the child when their teeth rot...
In fact, the bank with the financial knowledge gave them the option to borrow that amount. I'm sure the bank manager or mortgage / long term liability advisor would not be giving those loans out without consideration from the bank's risk assessment team, therefore, it has been decided by those that run the bank and assess the risk, that the general public can have those loans despite the risk that this will carry in the event of a downturn, therefore, to me, they are primarily responsible! They knew the risks but dished out the credit anyway. Of course, the poor punter that signed on the dotted line to say "I understand the above" clearly didn't have those risks conveyed to them!
In short, it doesn't seem unreasonable to suggest that the banks put a sniff of financial return above the welfare and ethical aspect of lending to those that in all honesty, couldn't afford it.
It's like a dietician giving a child a lot of sweets and then blaming the child when their teeth rot...
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The "poor stupid punter" line is just b*llocks..... that sort of excuse is at the centre of what is wrong with society today.... IF YOU BORROWED THE MONEY TAKE SOME BLOODY RESPONSIBILITY FOR YOUR ACTIONS!!! Why is it always someone elses fault???
... making excuses for what was plain old fashioned greed on behalf of the borrower.... whatever next
... making excuses for what was plain old fashioned greed on behalf of the borrower.... whatever next
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Yes, but you have to add in to your condemnation:
'and greed on behalf of the banks, and greed on behalf of the bankers chasing bonuses and commisions, and dishonesty (naked short selling) and a desire to stay in power to the detriment of the country on behalf of the politicians'
It was a team effort.
'and greed on behalf of the banks, and greed on behalf of the bankers chasing bonuses and commisions, and dishonesty (naked short selling) and a desire to stay in power to the detriment of the country on behalf of the politicians'
It was a team effort.
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For you, your family and friends, it may be stupid. And if I borrowed money, no I would not rely on the bank to tell me everything, indeed I'm sceptical of anything when it comes to finance so I would do every last piece of research possible to ensure it was sound.
There are always two sides to the coin, and whilst I don't want to aggravate your apparent hypertension
....
IF YOU LEND THE MONEY, TAKE SOME BLOODY RESPONSIBILITY FOR YOUR ACTIONS!!!
Likewise, making excuses for plain old greed on behalf of the lender, whatever next. The banks were greedy; they lent to those they knew would probably not afford it. More to the point, they lent amounts to those they would not even consider borrowing themselves.
I'm not arguing with you or saying you're wrong - just providing the other side of the coin for some people...
There are always two sides to the coin, and whilst I don't want to aggravate your apparent hypertension
....
Originally Posted by Grass Strip Basher
IF YOU BORROWED THE MONEY TAKE SOME BLOODY RESPONSIBILITY FOR YOUR ACTIONS!!!
Originally Posted by Grass Strip Basher
... making excuses for what was plain old fashioned greed on behalf of the borrower.... whatever next
I'm not arguing with you or saying you're wrong - just providing the other side of the coin for some people...
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While I agree that the Banks have an awful lot to answer for, Joe public must take some responsibility. You only have to watch the Bailiff gets his own back shows on Dave and other sat channels to see how irresponsible people have become. It's not just the stupid ones either. There has been for too many years a culture of buy now worry about it later.
Credit cards, store credit and loans are relativity new to the UK, Credit cards came in the late 60's I think, with Barclays being the first issuer. We have embraced a world where we want large plasma tv's, better cars than our neighbours, designer clothes, names on everything and we want it now.
Our grandparents and for some of us, parents would have saved dammed hard and then thought about spending we cannot be bothered and must have it now.
I have a Ipod, the photo model, when I bought it 3 years ago it was cutting edge, now I keep getting told that I need a new one at £200.00 why? it works well, sounds fine and has caused me no problems whatsoever, but it is old and not as cool as the new one so I should spend money just to look trendy.
My niece's parents have a perfectly nice house, but they went ans spent £80K on an extension INSANE, they have has at least 8 cars in the past 8 years, all on HP, all nearly new. Their current motor is a Audi A3, it's newer than my BMW Coupe so it must be better! She has a basic Neff oven but as it's newer than my Miele, which I bought in a liquidation auction along with the whole kitchen, it is better WHY.
Until we can curb our desire to have it right here right now we will never change, as WWW said there are 18 and 19 year olds on other threads trying get £60-90K and if you offer words of caution, sod you, you don't know anything.
I had a flying lesson when I was 15, I first went on a flight deck when I was 11, it was a JAL 747-100 on the way to Japan, the old way over the pole. I spent an hour on the flight deck and realised that was what I wanted to do. I did not get behind the controls of a aircraft again until I was 33, doing my PPL here I am 5 years later with a job on 737's. In Africa, earning good money and enjoying it. My debt, although I do have some, is manageable and will be clear within 18 months (£20k ish).
My point, well I saved and waited, worked bloody hard and now am reaping the rewards. I might even buy a Boxter S next year, unless my Fiancée wants a Volvo XC90.
Rant over.
Good flying and good luck
FC
Credit cards, store credit and loans are relativity new to the UK, Credit cards came in the late 60's I think, with Barclays being the first issuer. We have embraced a world where we want large plasma tv's, better cars than our neighbours, designer clothes, names on everything and we want it now.
Our grandparents and for some of us, parents would have saved dammed hard and then thought about spending we cannot be bothered and must have it now.
I have a Ipod, the photo model, when I bought it 3 years ago it was cutting edge, now I keep getting told that I need a new one at £200.00 why? it works well, sounds fine and has caused me no problems whatsoever, but it is old and not as cool as the new one so I should spend money just to look trendy.
My niece's parents have a perfectly nice house, but they went ans spent £80K on an extension INSANE, they have has at least 8 cars in the past 8 years, all on HP, all nearly new. Their current motor is a Audi A3, it's newer than my BMW Coupe so it must be better! She has a basic Neff oven but as it's newer than my Miele, which I bought in a liquidation auction along with the whole kitchen, it is better WHY.
Until we can curb our desire to have it right here right now we will never change, as WWW said there are 18 and 19 year olds on other threads trying get £60-90K and if you offer words of caution, sod you, you don't know anything.
I had a flying lesson when I was 15, I first went on a flight deck when I was 11, it was a JAL 747-100 on the way to Japan, the old way over the pole. I spent an hour on the flight deck and realised that was what I wanted to do. I did not get behind the controls of a aircraft again until I was 33, doing my PPL here I am 5 years later with a job on 737's. In Africa, earning good money and enjoying it. My debt, although I do have some, is manageable and will be clear within 18 months (£20k ish).
My point, well I saved and waited, worked bloody hard and now am reaping the rewards. I might even buy a Boxter S next year, unless my Fiancée wants a Volvo XC90.
Rant over.
Good flying and good luck
FC
Last edited by ford cortina; 21st Oct 2008 at 11:24.
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The banks of late forgot that their remit was to manage risk but the senior managers all seem to be of the product-sales school of thought so they have plenty to answer for.
The branch bonus systems testify to such corporate policies.
The branch bonus systems testify to such corporate policies.
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Sometimes I despair. Trying to shift blame from the borrower to the banks is ridiculous and the analogy of handing a child sweets one of the daftest things i've ever read.
We're talking about adults here, not children, adults are legally obliged to take responsibility for their actions, children aren't. That's why banks don't lend money to children.
There is plenty of information available on the cost of living, now more than ever. Anyone taking out a loan has a responsibility to find out exactly what it will cost them, what the cost of living is and what will happen when their discounted rate ends Whether it's from the internet, work collegues, family or even the bank itself, the information is out there and it's free!
Of course there are some halfwits out there who can't think beyond the end of their flat screen tv hd dvd cinema system but banks can't be expected to spot them from the genuine man in the street but to soley blame the banks for doing their job, making as much money for their depositers and share holders is wrong.
Stricter regulations are required, not less or more lax regulation. It may mean the banks aren't able to extract every last penny from those who are genuinely able to pay their dues but it will significantly reduce the number of people getting mortgages who can't rather than leaving the rest of us to suffer the consequences of fools.
We're talking about adults here, not children, adults are legally obliged to take responsibility for their actions, children aren't. That's why banks don't lend money to children.
There is plenty of information available on the cost of living, now more than ever. Anyone taking out a loan has a responsibility to find out exactly what it will cost them, what the cost of living is and what will happen when their discounted rate ends Whether it's from the internet, work collegues, family or even the bank itself, the information is out there and it's free!
Of course there are some halfwits out there who can't think beyond the end of their flat screen tv hd dvd cinema system but banks can't be expected to spot them from the genuine man in the street but to soley blame the banks for doing their job, making as much money for their depositers and share holders is wrong.
Stricter regulations are required, not less or more lax regulation. It may mean the banks aren't able to extract every last penny from those who are genuinely able to pay their dues but it will significantly reduce the number of people getting mortgages who can't rather than leaving the rest of us to suffer the consequences of fools.
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Really?
It's like a dietician giving a child a lot of sweets and then blaming the child when their teeth rot...
Whereas an adult should be able to assess their own money needs, and their ability to afford any debt they take on.
The "no-one told me I was going to get into trouble if I did this" legion (and in GB circa 2008 they ARE legion!) really get on my pecs, pardon my french.
Just like that couple on the debt re-structuring loan ads (strangely absent right now!) bimbling round their big house playing with their expensive toys while negotiating their subsequent penury over the phone with nice guy from loansdirect who "really just wants to help" and "talks to us like we're grown ups..."
AAAAARRRRGHHH!
Incompetence, greed and stupidity on ALL fronts methinks, coupled with a FSA that has freely admitted to being asleep at the wheel during the build-up to all this.
Apportioning blame at this point is certainly satisfying, but ultimately pointless. The wave is upon us, there seems to be no way out, all that remains is to batten down the hatches, tie ourselves to the mast and hope that when the storm dies our respective boats are still afloat. Don't forget to apply life jackets to the ones you love!
To extend the mettyfor a little further, now might not be the time to unfurl all sails and set out for a distant shining shore, as you will almost certainly be dismasted in the process, founder, and sink to the bottom of the briny deep.
See what I did there? Well, I thought it was good..
I think we really are heading for times where it isn't unreasonable to wish everyone good luck for the financial future.
Regards
JR.
p.s. While having little sympathy those who have paddled themselves up sh!t creek then set fire to the paddle all in the name of having the next number plate or foreign holiday nownowNOW, my heart goes out to those who got themselves into debt to pay for those luxuries such as, ermmm, food.
Just enough money and pride not to be dole queue dossers, but not enough to buffer themselves against what is to come. Poor sods.
pps. That loansdirect ad REALLY used to get on my nerves.
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Of course the borrower is to blame - they asked for the loan in the first place. The bank didn't come around to their house and force them into a loan under duress.
However, my opinion is that the bank should be pointing out the dangers of the loan they are taking out - not assess whether someone is stupid and then tell them, or assess whether someone seems quite bright and don't tell them. If there is a risk, tell them about it and let them make their own decision! If they then go ahead with the loan, they go ahead with the full facts in posession.
Of course, it isn't in the banks' interests to point out the flaws of their plan (unless they think the plan is hideous to the point they won't get the return) which is probably why it doesn't happen like that.
Whether you think the analogy is ridiculous or not, I don't really understand why people disagree with a bank pointing out genuine flaws in their repayment plan before letting them sign! If they ignore this and continue to sign, good on them, and good luck with it. My point was that giving money to somebody that might not know better, is unethical. If you think they are stupid for not knowing better, then so be it, but it still doesn't make it right!
Anyway, I've said my piece!
However, my opinion is that the bank should be pointing out the dangers of the loan they are taking out - not assess whether someone is stupid and then tell them, or assess whether someone seems quite bright and don't tell them. If there is a risk, tell them about it and let them make their own decision! If they then go ahead with the loan, they go ahead with the full facts in posession.
Of course, it isn't in the banks' interests to point out the flaws of their plan (unless they think the plan is hideous to the point they won't get the return) which is probably why it doesn't happen like that.
Whether you think the analogy is ridiculous or not, I don't really understand why people disagree with a bank pointing out genuine flaws in their repayment plan before letting them sign! If they ignore this and continue to sign, good on them, and good luck with it. My point was that giving money to somebody that might not know better, is unethical. If you think they are stupid for not knowing better, then so be it, but it still doesn't make it right!
Anyway, I've said my piece!