Armageddon avoided
The symbolism couldn't be worse.
Gordon Brown commits £400bn of taxpayers' money - equivalent to about a third of our entire economic output - to rescuing the banking system.
And central banks from Asia to Europe to North America slash interest rates.
In other words, there's been a co-ordinated global attempt to prop up the financial system and save individual economies from a deep dark recession.
Yet the FTSE 100 plumbs new depths.
What on earth's going on?
Are we all doomed?
Well, the symbolism is a bit misleading, because the FTSE 100 is massively unrepresentative of the British economy.
The main reason it's fallen is because of sharp falls in the prices of giant mining companies that are listed on the London exchange.
So does that mean the FTSE 100 drop doesn't matter?
No, for two reasons.
First, one of the untold horror stories of the credit crunch is that it's wreaking havoc with the investments that underpin the value of millions of people's pensions.
Also, the reason for the fall in those mining companies is that there's been a further sharp drop in the price of commodity and energy prices.
Good news in a way, if it leads to lower household bills.
But the cause of those drops is a slowdown in economic activity throughout the world and the onset of recessions in several developed economies.
So what Gordon Brown and central banks have done today should stave off economic Armageddon - but it's probably too late to save us from months, or even years, of sluggish growth.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~27~RS~)
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Hate to say it Robert but we're all gloomed.
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Also Robert I think it's in the Guardian online where you're being blamed for everything you might want to take a look.
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This really should have predicted. In hindsight, a cut a couple of months ago may even have prevented some of the recent disasters (i.e. B+B, Lloyds + HBOS etc.).
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A superb album by Marvin Gaye.
If anything even more relevant now that when it was issued 38 years ago.
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I'll happily settle for sluggish growth, given the alternative.
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Government and BOE now has started to move in the right direction, rates need to go down further as things stand now 3% will be more realistic.
What happened happened now we need more cuts to sustain the economy, if BOE has cut rates earlier we will not be in this mess now.
Hope they announce further 0.5% cut tomorrow.
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Perhaps the market is at least representative in its mood music. It's like waking up to be told that you'll live, but you've lost both legs in the process. Some adaptation to reality will be required!!
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It's all about the bankers that have secretly been our government for centuries!.....Stoopid!
Why else do you think Blair was rewarded with a $5m p/a part time job with JPMorgan, and after only 7 months from resigning from office!
It's also why it makes no difference which party is in office. They all (I mean both) follow the same secret agenda such as EU expansion, political and economic union, expansion of the single european currency etc, etc.
Where was our promised referendum on the EU treaty?
Look what happened after Ireland voted NO (although they were supposed to vote yes by being bribed before hand with massive EU subsudies). The NO vote is now getting side stepped (read steam rollered) by these shysters.
There is no democracy....its just a sham and a con trick that is being performed by a cabal of 'elite' financial and political megalomaniacs. HENCE THE BAILOUT TODAY. They don't care what happens to equities and the stock markets.....they just want to own all the assets.
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Is it true that Robert Peston has been reported to the FSA for allegedly breaching rules regarding how market sensitive information should be properly announced to the stock exchange?
http://3.bp.blogspot.com/_EQc_hLHXONE/SOzOyY5z_4I/AAAAAAAACX8/jkMsI67deN4/s1600-h/complaint.jpg
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At last! A reference to an issue affecting ordinary folks - pensions.
Can we hear more about that please Robert.
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Seven years of sluggish growth ,starting one year ago
Weve had the seven fat cat years,now we have the seven lean years starting last year
Biblical cycles overide purely economic ones
Usa will have to find someone with the wisdom of, a Joseph with a coat of many colors and sold into slavery, to manage events and deal with the pottyfar economic system
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Yes. But Robert how many days can we go on doing this?
We do not have an unlimited supply of money.
What rate is the chacellor borrowing at and what rate is he lending at?
He has been very cagey about many of these things.
I think that things are going to get a lot worse before they get better and I wish Darling would keep the public money out of this.
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There is nothing wrong at all with sluggish growth, as long as it is growth. One shoe that has still to drop is the inevitable imminent bust in the tiger economies, as their exponential growth is about to run out of mileage when they kill their markets, and THAT's going to be painful.
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Labour and the FTSE....2nd May 1997 it was 4455.60 ------Today 4344.92
Labour and the FTSE....2nd May 1997 it was 4455.60 ------Today 4344.92
Labour and the FTSE....2nd May 1997 it was 4455.60 ------Today 4344.92
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Now isn't the time for the government to even think about sitting back and feeling smug compared with some in Europe and eslewhere.
Whats was unveiled is the barest minimum and just a first step to what is required. There is still the matter of rebuilding wholesale markets in a manner that is more transparent and sustainable and of course the matter of working through the existing overhang of stuff the media has been labelling toxic (but which isn't all dangerous)
BW
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can somebody explain this to me. how can the French claim to be outside of the global turmoil as a result of strict bank lending, but the CAC is tumbling down?
is this the same language as the head of duetche bank claiming that they were immune from the write downs at the end of last year? surely this is a misleading statement and illegal?
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I've been selling crude all day and am smiling. Thank goodness they didn't ban short-selling in commodities huh?
However, don't expect lower utility bills any time soon. The utilities are making high while the sun shines for them. Lower coal, crude and gas prices are not being reflected in lower wholesale power prices. The spark (from burning gas) and dark spreads (from burning coal) are at record highs i.e. power utility margins are higher than they've ever been. And they have the audacity to raise your bills!
We need a full scale investigation into this! utility bills should be linked directly to coal, gas and carbon emission prices and not some manipulated power price!
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Cheerleader Peston!
How many bank shares do you have?
Impartiality and all that...
What are your thoughts on this:
http://video.google.com/videoplay?docid=-9050474362583451279
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I'm affraid that was it. The only thing they can do now is to shut down all the stock exchanges for a while. Open it when some sensible set of rules are drawn so that we don't forget the reason of the stock exchange. It's not there so that some people move their computer mouse to move their money from here to there every day to get rich. This is the ugly truth and the longer we avoid confronting it the deeper we will sink.
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But it does matter, RBS was barely even today after falling 50% this week alone. The effort to shore up the banks is crucial. The whole government is dependent on it from a credibility perspective.
iceland is bankrupt, pakistan is headed that way. russia is clsoing its markets constantly.
let's hope calmer heads prevail in the days ahead. but short selling of banks is back on the agenda from tomorrow.
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As a (horrified) onlooker without specialist knowledge, what astounds me is the toxicity of the mortgage debt that the Americans sold into the system. Thanks to the opaque derivatives (concealing dodgy loans) emanating from the States, the whole western financial system seems to be in very serious trouble. The UK is worst affected in the EU.
I hope if nothing else, this will shake our politicians out of their silly copying of everything American.
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Robert,
Can you clarify if the 'third of our economic output' is just for a year?
If it is, despite 400 bn being a huge figure - who cares!
I didn't realise we earnt so much as a country.
What are we playing at? Don't let the Saudi's buy everything, this should just be the start.
I suggest UK Gov starts buying into oil and gas futures to protect us from the cartels.
Why stop at that? We could snap up all the banks, buy all the building societies, start purchasing small un-inhabited islands and even start a real estate business on the moon!
I feel richer already!
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Robert. Less words like "plunges", armageddon, please. It (you) are not helping matters.
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"What's going on?"
Confused owners of index-trackers asking that question should have checked the price trends of what resource companies are selling.
The commodity bull run topped months ago, since then commodities have been dropping. This is a normal effect of credit deflation. Other stock markets with heavy exposure have already suffered worse. The FTSE's resource-heavy composition has been the subject of newspaper comment all year, but has been overshadowed by inflation stories told at the peak of the bubble in a classic example of missing the wood for the trees. The only surprise is how long it has taken falling prices to feed through to earnings expectations here. If demand pulls back as sharply as it looks, soon markets will be retesting post tech bubble lows. It is a side effect of our financial problems which cash injections are unlikely to fix.
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isnt £400 billion as much as the US bailout? given our relative size this surely is Armageddon. and i am not sure this would even solve the problem, the Fed the BOE and the European bank have been pumping massive amount of money into the system to no avail. why would this be any different given there are more "strings" attached? The banks just say no thank you.
The basic problem is trust, so why dont all governments insist that the banks come clean and publish their balance sheets. The sooner the bullet is bitten the sooner we can get over the problem.
What does darling think will be the effect of a 0.5% cut in base rate, as the banks gave up on using the base rate a long time ago. What is needed is a massive rate hike to say 10% coupled with a 100% deposit guarantee, and just watch "liquidity" flood into the banks.
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Frankly, if it wasn't having such a desperate effect on the majority of ordinary people, it would be something to laugh about.
The entire system is always rigged to make money float to the top of the pyramid. occasionally, the pyramid collapses from the middle down, and some of the middle men loose everything, and the pain permeates to the people at the bottom who have worked hard and done nothing more but buy the hype that the politicians and financiers have been telling us over the last few years, which is to keep on buying, get another credit card, release equity, buy, buy, buy! Well, so many people bought, and kept on buying, one credit card not enough, not to worry, get a second and a third and a fourth, max them out, but fret not, lines of credit will be extended and your limits will be raised. Recoup equity in your home and spend it on a new car or holiday, after all, house prices will keep on going up wont they?
Usually, the wonderful and canny people in the banks are wise enough to keep on being sensible while the rest of us go mad on cheap credit, but it went on for so long, that most of them believed their own hype and fell for it, to the extent that they too bought into the credit lifestyle, and the neverland make believe of unending credit and growth. They fashioned wonderful financial vehicles and instruments to take real world risks and package them into fanciful products that they convinced themselves and others were worth a fortune, and the big party went on.
Then of course, as will all parties, the drink run outs, the food is eaten or discarded in congealed lumps on scattered plates dawn breaks and realisation sets in that it is time to go home, and that not so nice feeling that you did something you really ought not to have begins to nag at you, so you think to try and slip out unnoticed to leave the clearing up to someone else, and realise in horror that the party was in your own house, and its been well and truly wrecked.
Like all clean ups after a hell of a long and enjoyable party, it isn't the pile of rubbish that instantly is visible that is the problem during the clean up, its the red wine on the new carpet, the vomit in the sofa, the broken toilet and the wet mattress. Just when you think you got it all sorted, you find something else to horrify you, and this financial crisis is no different. From the initial mortgage backed securities and the credit crunch, we have many more bad news stories to come, the whole $6trillion mound of festering Credit Defaults are sitting in the spare bedroom, a waft of putrid smell occasionally assailing our nostrils, as we scrub at the stains on the rub, but we put off going into the spare bedroom as we hope nobody actually went in there.
It is going to get a LOT worse before there is a hint of it getting better, but one thing we could do if we wanted to make sure that future generations do not have to go through similar is to ensure that we change the face of our financial systems once and for all.
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Whats the big deal? I've just got my annual inflation linked pay rise, my mortgage is going down, petrol is going down - surely all good news for most people?
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Robert,
Please please can we have some objectivity in your reporting.
Neither you nor I nor Alistair Darling have seen anything like this before. You don't know whether 0.5% rate cuts now and the £400bn package is enough to avert a full scale depression any more than I do or the man on the Clapham omnibus.
Will you please separate opinion from fact in your reports, otherwise personal sector spending will collapse. People do listen to the BBC, you know...
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thus this government and others master plan has come into being, they know they are due to be unemployed soon and to damage there oposition they have destroyed the ecconomy of the planet. sounds far fetched but looking at the facts it seems plausable.
its all our own fault and sadly we will have to suffer this collective planned incompitents.
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To answer your question:
"Are we all doomed?" we need to review the long wave theory of Professor Kondratieff. He looked at economic performance from the early 19th century.
He proposed that economies go through cycles of around 70 years.
The Kondratieff wave cycle goes through four distinct phases of beneficial inflation (spring), stagflation (summer), beneficial deflation (autumn), and deflation (winter).
Since, the last Kontratieff cycle ended around 1949, we have seen beneficial inflation 1949-1966, stagflation 1966-1982, beneficial deflation 1982-2000 and according to Kondratieff, we are now in the (winter) deflation cycle which should lead to depression.
I hope he's wrong!
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#21: There is quite a parallel between that and the funding of the wars...
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Robert, thanks for the reassuring words, we need them. Though I have to say the most flabbergasting news unfolding at present has got to be the great 'compensation' scandal coming out before the US Congress House Oversight and Government Reform Committee, with Chairman Waxman asking ex-Lehman CFO Richard Fuld whether it was fair to say he had received $480m (£276.2m) in pay and bonuses since 2000.
Fuld has replied that the correct amount was more like $300m (£172.6m) adding, "we had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders."
Employees? Does he seriously mean the admin and the poor old clerks in the Lehman back office were in their 'compensation' plan? Don't make me laugh.
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"We are not out of the woods yet," said Joshua Raymond, market strategist City Index.
"We will have to see whether this has any long lasting effect on confidence."
Whose confidence exactly??? - why is this guy (in a position of apparently deciding strategy) waiting for others - is it a case of eveyone waiting for someone to be brave enough? Paid for what exactly?
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I think the answer is that absolutely noone can possibly have any real overview of the situation. The government, the BoE and the FSA are essentially guessing and then putting huge amounts of taxpayer money behind their guesses. I'm not saying they are wrong to do it, but that's in essence what they are doing.
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I'm with #28
for too long now the BBC - funded by us no less! has been offering its opinion as if it were indeed fact - I don't want to hear the soap opera of BBC news - I want to hear objective reporting of the facts - it seems more air time is given over to BBC correspondents' need for TV and radio exposure than to a critical evaluation and presentation of the facts.
It needs to stop!!!!
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So, replacing 400 billion of roulette money with 400 billion of real money when the economy is going down. Let's assume half of it would default, half can be withdrawn by the BoE in three months' time, so 200 billion unwarranted increase in money supply. What inflation rate does it likely to suggest?
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#35 - top right of the page.
"I'm Robert Peston, the BBC's business editor. This blog is my regular take on the business stories and issues that matter."
This is a blog!
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Your speculation has caused billions to be wiped off shares and I am pleased that you are now facing an FSA enquiry.
Your actions have been utterly irresponsible and acting as you have, as a conduit for government whispers has created a crisis out of a problem.
I, and thousands of others, hope they throw the book at you and your employer.
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I'm struggling with something and I hope one of you trader fellows can help. Apparently the FTSE is down so much driven by big falls in mining/mineral stocks ... that being driven by gloomy thoughts about global economic slowdown etc. What I'm struggling with is why this blinding flash of insight occured today - hasn't it been obvious for months? Thanks in advance for any clarification.
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Should have put interest rates up (means bugger all to the mortgage rates for most anyway) and attracted some investment in sterling.
Labour should not only be voted out after 11 years of mess (PFI is going to bite some sorry government in the backside in a few years time too), but they should be made extinct.
They have no place in the future of this country - they're wrecking it day by day.
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Forgive my ignorance but can someone explain how we can get back to growth without one of the following?
1. Using more natural resources - which we will run out of in the not too distant future.
2. Using existing resources more efficiently, not easy when costs in this country are comparitively high and investment is low.
3. Consuming ever more from other countries, giving big balance of payments defecit.
4. Finding a way to use smoke and mirrors to do the financial equivilent of pyrimid selling.
With my limited grasp of economics surely there has to come a point when the economy cannot grow anymore? If so what then as everything appears to be built on contiual growth. Do we need a new non growth model?
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Armageddon avoided...for now
This is a crisis with no ending
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The last few weeks are enormous, historically.(and the next few). 1929 in slow motion.
Capitalism will never be the same again.
Perhaps the Chinese model (communist government with a capitalist sector) will come to prevail in many countries.
It certainly seems to work.
A massive lesson to learn by sad-looking Western governments...
"Dont let the financial sharks rob you".
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@ silverfoxuk
#9
"Is it true that Robert Peston has been reported to the FSA for allegedly breaching rules regarding how market sensitive information should be properly announced to the stock exchange?"
No, it is not, and if you bothered reading the letter it says this:
"I therefore request that you launch an immediate inquiry into the SOURCE of the leaked information as received by the BBC and others in this case" That clearly states Mr Howard wants the moles gonads nailed to a plank not Roberts Pestons.
Robert Peston is NOT responsible for the stock market tumbling. It's the irresponsible banking and investment executives that are to blame and they are now reaping what they sowed. So will you and everyone else who has or is thinking of doing so, do the rest of us all a favour and stop bleating about the BBC sending the FTSE into decline - please. It's just so dull.
BTW, I don't work for the BBC...
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Today's shenanigans bring clarity to a situation that we all should have known about for some time. We now have an enormous civil service. All bankers and their hangers on now owe their jobs to the rest of us that are in productive employment.
They join the teachers, council workers, nurses, politicians, local government quango members etc. Not forgetting the armed services.
The difference of course is that the above list has a useful purpose.
The bankers do not.
Let me explain.
Automation has made great inroads into all aspects of modern life. Machining stations take the place of teams of men working lathes etc. The software used to design and specify and describe components takes the place of whole drawing offices. All this has happened in the years when service industries including banking have expanded.
Have bankers grasped automation? Well there are now ATMs and bankers can keep tabs on money as it courses around the world. Also “What, If” scenarios can be played out on computers in order to maximise profits. But has the actual banking process been automated, computerised? Nope. We still have loads of bankers earning loads of money needed to service the real economy. The bankers of course reckon that they are the real economy. Not so, as the recent events have shown.
The real economy could easily be serviced by computers programmed up to get money to companies that need it. Those companies would still compete against each other. There would still be innovation. All without thousands of bankers.
Those innovators that got lured into the banking system could have been real industrialists, who knows what clever gizmos and processes we could have had by now if their efforts had been channelled into real work?
I hate to say it, but wee Harold was right to have introduced Selective Employment Tax.
We could have had continuous white hot technological development.
Instead we got a bloated banker class.
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Good on Gordon and Alastair- it might not work but I think they have just about gone as far as they could. A larger rate cut that was not co-ordinated would have been pointless and may not have been passed on. We are certainly not out of it- lots of job losses to come and we are all poorer- but I think now we may not go into a nosedive into an empty pool.
On the Icelandic bank- hear that some LAs had £10m's at stake- what on earth were they putting that much into a poorly rated bank- their risk management and policies should make them spread their risk and stick to major UK banks especially after Northern Rock- I am sure theye were despearte to get extra income to maintain services but now they are stuffed. The contageon of acting stupidly seems to have spread.
Of course the FTSE will go down- there are lower profits and dividends for a few years especially in key sectors- lowering rates will help but I repeat- we are all poorer so next HMG must target help to the poor to ensure there is a safety net. I think an increase in higher rate to 50% is called for.
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Armageddon avoided, and the FTSE drops another 5%.
If this is avoidance I'd love to see what a head-on collision looks like.
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Armageddon fall out...city boys are off-loading their Ferraris and Porches. Don't think there will be many takers guys...it's the association...know what I mean?
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There's far too much negativity around. Nobody's died. And most people are a little better off overall.
Most people have received another welcome reduction in their mortgage rates. Mine will be down by over £300 pcm since the crisis began last year. My deposit rate is now actually higher than my borrowing rate.
I suspect that's about the same for most people.
True, the nominal value of my pension fund is down quite a bit. But as I don't need to sell, that doesn't affect me yet.
I note that oil and commodity prices are falling everywhere, and it's not long before those big cuts will be reflected in lower retail prices.
However, many people on low incomes do need the help our government has already promised.
All in all, the gloom is overdone for most people. We shouldn't create unnecessary anxieties.
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If the conditions for receiving the government / taxpayers support (the system) were to include a set premium (3%) on the inter bank lending rate between those in the system over the Bank of England base rate changes in the interest rate would directly flow into the credit market. Those outside the system would not be able to benefit from this finance.
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If taxpayer's are to contribute £1,610 odd (of our own money) to purchase preference shares of ailing banks, is there any chance of knowing what conditions are going to beput in place to ensure that our money is not flushed doen the loo?
It amazes me that a financial rescue plan of such magnitude can be put in place so quickly, who draws up these plans and potential conditions up on behalf of the public?
Will I get a tax rebate when the 'investment' comes good?
We all knew something like this was coming, we just didn't know 'when' or 'how bad' . So, to be frank the 'bankers' that have caused this trouble are nothing short of fraudsters and should be punished as criminals; I would like to se the government punishing failed banking executives with jail sentences going forward, will this happen? Thought not.
BTW, don't blame America, we could have put measures, checks and balances in place to protect our economy from the worst of this, if labour are to ever do carry out a decent 'old labour' style policy, this could be it!
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The current situation is serious enough without our leading public-service broadcaster creating confusion - Robert, your enthusiasm is clear, but you must distinguish between reporting and analysing. There are many, many views out there, and many experienced hands who can explain what is going on - we really need more than subjective guesswork and hysterical innuendo to inform the British public.
I don't think we are yet in a position to make any further predictions about the rate and depth of slowdown that is now unfolding - but if the BBC continues to talk it down, we will surely sink deeper than otherwise.
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WHERE HAS THE MONEY GONE???
Why is no-one asking where this £B400 and $B700 has actually gone? For there to be a need for this much cash, it must have GONE from somewhere. Who has it? Where did it go?
The banks have "squandered" their capital on these wonderfully obtuse "packaged finance deals" with "toxic debt". That money has been given/taken by someone from the banks. It has not just dematerialised. Where is it?
I wonder...Is it us? Do we have all of this money in the form of personal debt, so that when there is a run on a bank, they actually have no cash to give us back?
It all seems very murky to me. Why is noone asking more awkward questions???
And also, how come the banks are now taking £B400 of OUR money, and are going to loan it BACK TO US at a very nice interest rate over the next few years thank you very much, making BILLIONS more for themselves.
Huh?
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Yes - Armagedon avoided for the present.
Nobody forced banks here to buy these financial instruments from the USA, some of which appear to have been very bad investments.
Politicans such as Gordon Brown seemed to think, until very recently, that UK property prices increasing by an average 18% pa over the last ten years was a good thing, when the norm is just over 3% pa.
This 'relaxed' attitude by Government to rampant property inflation has had serious consequences.
It will all take time and some pain to unwind.
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Yes Robert, Pension Funds
I am with Equitable Life (No need to laugh all of you, its a final salary one and have been told it's still good).
But no body there replies to e-mails. Talk about customer service, it's a joke.
I suppose enquiring customers and just a nuisance to british financial institutions these days. All they want is our money so they can invest it recklessly.
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Robert, you have already mentioned pension funds - perhaps you could expand on the effects of the current crisis on:
a) pension funds and payments to pensioners. Are these funds safe?
b) the credit card debt mountain that we have accumulated in the UK. Will there be massive hikes in charges and a further downturn in consumer spending as people try to pay off credit card debts, mortgage repayments and cover the costs of the increasing energy and food prices?
We should be told!
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Businesses look to effect takeovers when there are perfect fits.
Do you think Scotland and Iceland should unite and rationalize their fishing and banks.
It would solve some problems for the government and Gordon Brown could go North to do what it takes.
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#23, 28, 35
I totally agree with these posts. Peston needs to tone down the use of its extreme vocabulary and be more objective.
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#36: Oh, don't worry about inflation. The Bank of England are on top of that with their tough interest rate policy.
Oh, wait a minute...
I suppose the one consolation is that I should be able to pay off my mortgage with the change in my back pocket in a few years' time.
Seriously, is rampant inflation really a bad thing?
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Dear Mr Peston,
I heard you speaking on the 6pm BBC news (8/10) and making reference to the decline in price of commodities and oil and attributing this to anticipated fall in demand. This is clearly a factor but isnt it also relevant that the hedge funds no longer have access to easy credit and are increasingly out of the market. It is very disappointing that commentators fail to tell viewers about the impact of speculators on the markets which affect their lives. Using descriptions such as 'investors' (not the same thing at all) or generic terms such as markets is inadequate.
A key concern re: the govt's attempts to reinflate the credit market is that this doesnt enable financial terrorists to resume their activities but goes to truly productive parts of the economy and ordinary decent people.
Regards,
Mike Pummell
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Its not just the bankers who are to blame for the current crisis. There were plenty of memebers of the public willing to borrow way beyond their means, aided and abbetted by the present "prudent" prime minister, to fuel the wonky wheels of a false economy,
Now so many fools have saddled themselves with the most exceptional debts that all those crows are coming home to roost.
Sorry but we need to bear the pain and suffer the consequences for many years to come. Its going to be grim, and not just up North !
This will not go away with yet more borrowing from Gordon and his pals
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What are all these personal attacks on RP and the BBC coming from... All very strange.
If RP has all this power then he can make it all better...
A good hack he is... Omnipresent being he aint.
All these other reports on RP smack of sour grapes from other lesser hacks (of which there are too many). He is doing his job. I don't like what he has to say. But on the whole he is getting it right and giving Darling something to think about.
Image the situation if there wasn't any reporting on this situation of this level. Just straight reporting of "Facts" from whom ? Press releases for the Executive and BoE. Facts from the Banks ?? Where are all these hard facts to be had. This situation is not only about facts.
It is also about confidence, attitude, morals, philosophy and politics. Areas of life/business where hard facts are even harder to find...
We need to know not only the "Facts" (what ever they may be) but how these "Facts" are being arrived at and the effect that they may/may not have.
If one don't like what RP is saying then hey, don't read it... But these personal attacks on a reporter just for what he is saying is getting a bit scary and I feel missing the point.
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With the bail out surely there is now no need for the HBOS/Lloyds merger. Can anyone explain why this would not be the case? If I was an HBOS shareholder I certainly wouldn't be voting in favour of the merger if I knew that my bank wouldn't be allowed to fail and sooner or later would be out the other side. for this merger
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RP - I am your biggest fan..
But again this afternoon you were saying the taxpayer could potentially "earn" from this 50bn investment in the banks.
It is surely technically impossible for the taxpayer to earn out of this..!
The banks EARNINGS can only come from loans sold to TAXPAYERS and the profit is the interest the bank charges on those loans...
...but if WE are both the customer and the owner of the bank, we cannot logically earn anything.
..We are lending and borrowing from ourselves at the same time - charging and paying ourselves..
The only difference in the amounts ..is a LOSS equal to the bank's administration fee..
???
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1 I have been boring my wife since early 2004 when I told her that our economy was like a Catherine wheel that was going to come off. The only question was when.
It has been a standing joke that as each months figures were released I told her it was getting faster.
2 I have watched with astonishment at the way Icelandic banks have built their sandcastle and nothing in the world would have persuaded me to invest in them.
3 I think the current problem is much severer than we think and we have to wake up to the fact that our living standards are simply way beyond what this country can support.
There is only so long we can have such a balance of payments deficit. There comes a time when the Far East can no longer see benefit in recycling their money into the UK as we have not enough to offer them.
It only needed a glitch of confidence and their banks no longer want to lend to us.
As I see it we are in for a really long haul - at best marking time for a decade so that we can catch up withourselves after almost ten years of gluttony.
I am no economist so I am probably talking out of the back of my head
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Mr Peston: I'm not too bothered about the substance or lack of it in your reports as I assume City types do not rely entirely upon you before making their decisions - but I am getting increasingly irritated by your use of the phrase 'I have learned...'. This implies some effort other than just 'being there'. Please can you alter your introductoions to 'I have been told'. This, I think, may be more accurate and would certainly be more palatable. Thanks.
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i see that HSBC and Abbey have both declined Mr Darling's offer. Who else?
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All Brown has done is create inflation. He's just printed 400billion. He's clueless. These banks are gonna fail anyway.
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Many thanks for your balanced reporting of the current crisis. Many other journalists are failing in this respect and their near hysteria fuels already raging fires. We saw examples of this during foot and mouth, in the aftermath of the disappearance of poor Madaleine McCann and now here. Such newsprint (and airtime) might sell a few redtops but at what cost to the nation?
Please continue not to be first but to be accurate and balanced.
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Is Mr Peston going to do the honorable thing and resign. Or offer to pay some of his salary to make up for the additional deficit he has caused?
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Well which ever way you look at it we have certainly gone from "Boom to Bust" under friend Gordan who spent so long telling us that it would never happen under his watch. Silly me, of cause it is not his fault it is everyone else that has dragged us into it. So now it is going to could well cost every adult in this country £2000 to pay for it all and even then it might not work !
Well lets be clear about one thing, before taxes rise and services are cut we need to get our priorities right ...
The Olympics can go for a start, it is not being financially well managed, is already over budget, and I am damned if I am paying for the Olympics Committee to live in our best hotels during a time of austerity.
Anyone agree with me?
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Right, I'm getting tired of all this theater and show. As I said before, politicians need to work hard to surgically separate this malicious debt bubble from our economies and lay it to rest in the toxic waste bin, seal it and never open it again. But this stupid symbolic global slashing of the interest rates, probably aimed at voters in certain countries, is a sign that politicians fail to understand what their job is.
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#39: As far as I can tell, the mining stocks have indeed been plunging for a while now. It's just that we didn't notice because the freefall in the banking stocks was even more spectacular.
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Well this really takes the p**s, here we have banks who for years have been hitting us with extortionist bank charges and merciless foreclosures now being given our tax revenue so that they can borrow it back to us and we will have to pay interest for borrowing our own moneys. YOU COULDNT MAKE IT UP!!!!!!!
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Low Interest rates are not the answer! Interest rates have been 2% in USA for a year, has it helped? NO! We will not spend our way out of this recession and banks will never again lend at the low rates of the last 5-6 years!!
If you (and it seems many of you are!) are hoping that a cut will drop mortgage rates before all the low fixed term mortgages expire and stop defaults, repossessions and plummeting house prices - think again! A gargantuan world wide credit bubble has burst and the avalanche of fallout is only just gathering speed.
The nationalised banks will own 40-50% of nationalised housing in a years time!!
Unless of course.....we just 'talk ourselves out of the recession' that we have been 'talking ourselves into' for the last year???!!!
Any of those comments still being posted? I think not! CDS and derivatives have nothing to do with what we talk about here and they have foiled bubble....BIG TIME!
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#49
No real grasp of the principles here! Falling commodity prices and lower interest rates is leading toward seizing up of world trade, world deflation and then a world depression!
I hope you aren't retiring anytime in the next ten years, perhaps you will be a bit more appreciative of the 'problem' then Jack!
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Sounds to me like we've thrown ourselves on the sword.
£500bn is a LOT of money to be gambling in a casino where the odds are fixed.
Who are we going to go cap in hand to this time? No wonder nobody wants to talk to China about human rights!
Cheers, Gordon.
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As Robert points out I think the next problem is everyone other than the banks. We've been so focused on banking over the last year that FTSE and Bank have become synonymous.
I see the banks stabilising and rising to more reasonable levels over the next few months, however the FTSE will probably remain flat as the rest of the companies take a hit from the recession.
We've been so focused on banking and housing since July that everyone has forgotten about employment and inflation. While not as serious as the crunch things still aren't going to look pretty.
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Just one more thing: Given the state of things and given that all this is nothing else but a correction of a debt bubble: How on earth can they cut interest rates in an apparent attempt to blow some more hot air into the bubble. That is totally irresponsible and like pouring petrol on the fire.
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HELLO EVERYBODY
SO HERE WE ARE AGAIN ANOTHER DAY NO GUARANTEE ON BANK DEPOSITS SO ALL OUR CASH WILL STAY IN IRISH BANKING SYSTEM.
ITS THE ONLY WAY I CAN BE SURE WE CAN PAY OUR STAFF AND SUPPLIERS INCLUDING DARE I SAY IT THE PAYE THE VAT AND THE TAX.
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comment 18
The fractional reserve, yes, I'm sure Peston knows about that and modern money mechanics.
The monetary system is in a tailspin and the amount of exposure to derivative debt is an unknown and bares no relation to the actual net worth of planet Earth.
Now here's the bad news the Banking system has sold the planet many times over, debt is out there in the derivative-o-sphere and the only currency that is holding it's own is gold.
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I see that Lehman Brothers employees are staging a protest outside their head office... See the picture here.... http://tradeforce.blogspot.com/
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It is totally unacceptable that County Councils put UK taxpayers money overseas, in locations like Iceland. All it shows is that they have no concept of risk, you do not get something for nothing.
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#39: There are many reasons resource and industrial companies are suddenly doing badly, but I can give you three.
First, because share ISAs and mutual funds (such as in pension funds) buy an index. The investment contains shares (and sometimes bonds) in proportion to the index (FTSE100 for example). Unless the owner of the investment transfers his money elsewhere, he stays invested and continues to accumulate. The FTSE dropping 1000 points in a month and 600 points in a week has finally got people's attention enough for them to dig out that number and make that phone call.
Second, because the "decoupling" theory that even professionals came to believe is being discredited before our eyes. The theory went that the developing world had come of age, no longer needed the West, had ample income exporting basic resources and their construction booms would continue immune from our problems. In fact the developing world is not self-financing and in some ways is more vulnerable. Progress on the surface is an illusion fueled by a commodity bubble to which it has heavy undiversified exposure. A lot of its income has been our excess debt (we could afford to pay more for the same thing), and with that gone so is the commodity gravy train. The intermediary companies suffer accordingly.
Third, it has been a very profitable sector and with reality dawning, people are taking profits.
That bubble will not be reinflated by the taxpayer giving money to banks, only if people then borrow and spend. So stock markets will fall regardless.
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Can someone explain how a bank like ING can take over the commitment of individuals deposits of another bank without the cash to payout. Has the government provided a guarantee.
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Over the last year, we have heard so many times that 'this is the bottom'.
First we had the nationalisation of Northern Rock. Then all those banks rights issues, Bear Stearns buy-out, AIG bail-out then Bradford and Bingley etc.
After all of these things have got better for about a week, then some new piece of new has come out and we are back on the death spiral again.
I do not know how the treasury can raise the money required through issuing gilts. The banks have no money to buy them and if I was a foreign institution I would steer well clear. After all, how can we hope to even service the debt while tax revenues continue to drop.
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Robert, did you know that the Bilderberg Group met in 2008 (June 5-8) at the Westfields Marriott in Chantilly, Virginia, United States? If you check the guest list it is surprising how many Financial Executives attended this year! hmmm it is no wonder that conspiracy theorists conclude that the Global crisis is actually pre planned so that a Globalised Financial banking system is put in place? Conclusion: as a result of this mess with the eventual demise of the dollar the American people will be offered the Amero currency to save the economy. One more step to a Global currency!
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"53. At 6:22pm on 08 Oct 2008, jakeeyre wrote:
It all seems very murky to me. Why is noone asking more awkward questions???"
It all makes perfect sense if you make the assumption that it is in fact the banks (not governments) which are in charge of the world... Hence "masters of the universe".
Here's a quote by a former director of the Bank of England:
"Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again…
Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit." - Josiah Stamp (Director of the Bank of England, 1928-194)
"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests." The Rothschild brothers of London writing to associates in New York, 1863.
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50 billion pounds.....450 billion pounds?....The government does not have that amount of money. It is just a number....like a bank transfer....no money gets transferred just the number. They know it, we know it so stop the nonsense and correct the problem. If someone is bleeding you dont give them a blood transfusion unless you first stop the bleeding. So.... stop the trading now....correct the financial rules then allow trading to commence. Stop the bleed of money then transfuse the money supply with new money to allow the patient to recover. Next patient please :-)
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#41 I am with you. We cannot keep expanding.
The natural resources are running out.
Apparently Fractional Reserve Banking relies on continuing expansion to work. Plainly it is not working.
What will replace it?
In all the dscussions about growth problems, not a word has been said about birth control.
Everyone seems surprised by these events but Mr Reece-Mogg predicted it last year, as did Mr Alan Edwards,IOM, who commented on HBOS Auditors in August 2007 and Mr Warren Buffett spoke about this problem 2 years ago.
Mark to Market will have to go, too.
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Robert Peston tells us that economic armageddon has been avoided.
Rejoice at that news,
as Margaret Thatcher famously said.
Robert Peston should be appointed either:
1) A member of the Bank of England's monetary policy committee immediately, charged with setting appropriate monetary policy and rates of interest to suit our current needs, or
2) A deputy governor of the Bank of England in charge of economic stability.
Of the two the latter role would be more appropriate. Robert Peston's talents are wasted as an economic commentator.
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For many years government has been weary of the money men and Financial institutions. It is time the government took back power on behalf of the people. Atleast we elect them and throw them out when need be.
Energy sector is next. Imagine when a nuclear reactor goes wrong and this private companies won't clean up or evacuate people. Government will be back.
It was quite armageddon!
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#14
re Bankers in 1997 and Bankers in 2008
Bankers and the FTSE....2nd May 1997 it was 4455.60 ------Today 4344.92
Now stop blaming the blameless, start blaming those who traded and speculated with the money and broke the bank...
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I'm buying my bread early so that I can avoid the line.
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#23
The truth hurts I assume?...
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I do wonder if pension funds have actually been part of the problem. Rather than investing in the future, they seem to have spent a lot of time lending money via the money markets to the banks, who have then lent it back to the ordinary individuals who were saving in those pension funds in the first place, getting them into debt. It all seems very circular and bizarre.
Does this all date back the Robert Maxwell case? Before that I seem to remember company pension funds were often invested back into the company.
It made sense at the time to get pension funds to diversify, but the side-effect seems to have been to add a great deal to the asset/debt bubble the repercusions of which we're now suffering.
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Mr Peston, I too am getting increasingly irritated by your overexcitable almost gleeful manner of delivery over the past few days... Yes some in the banking world have acted imprudently but what about everyone else in the country who have enjoyed the bull run in spending and lending over the past 10 years. Its payback time.
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I see Peston has been named in Michael Howard's letter to the FSA about market-sensitive information being leaked. Good.
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Robert on a slightly more positive note.
It looks like finally we're on the right path with a united cut in interest rates.
How about future mortgage loans fixed to a multiple of average past Tax bills to limit lending and increase Tax revenue.
We’re going to need the extra taxes to pay for all this.
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Not reporting Howard's complaint about you yet?
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The BBC has become llittle more than a government apologist when Peston announces things such as “because the FTSE 100 is massively unrepresentative of the British economy”
This is quite ridiculous. In the last year the FTSE 100 has fallen by 33.99%, the more diverse FTSE 250 has fallen by 37.26%, the larger all share index has fallen by 34.67%. If anything the FTSE 100 fails to reflect the economic problems that beset the UK economy, the comparisons with international exchanges tell their own story.
I’ve long abandoned hope of the BBC looking objectively about the explosion of debt over the last decade, the systemic collapse of the balance of trade in goods and services, just how long are we supposed to ignore simple facts ?
When Peston reports “ what Gordon Brown and central banks have done today should stave off economic Armageddon” it is very difficult to ignore the political role of the BBC in the upcoming and getting the required result.
The public interest is rather remote from the interests of the BBC, time for a change.
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#38
"Your speculation has caused billions to be wiped off shares and I am pleased that you are now facing an FSA enquiry."
So am I, perhaps you would care to tell us which Banker / speculator you are talking about...
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When house prices in the US and here fall to an affordable level then we will start to be on to the road to recovery. This whole fiasco has been caused by house price inflation and will be cured by house price collapse. When the houses start to recover so will the toxic debt.
In the Uk there must be another 10 - 15% from peak fall waiting to happen, taking it to 25 - 35%.
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Surely all talk of models and predictions are futile? Even models of normal economic growth and shrinkage could never have coped for a donald duck up of these proportions?
One question nagging at me is the automatic notion that Asia (read China) will benefit; their people are desperately poor by world standards and are kept that way by their governments, their factories pump out poorly manufactured goods for our consumption, most growth there have been by Western business making hay with cheap labour costs and a blind eye to human rights / human safety at work, if we stop buying from them, where does their growth go?
Their people do not earn enough to buy houses; masters degree qualified architects can, in some instances, earn a pittance in comparison to western values and earnings ...
And commodities running out? There's billions of barrels of oil and gas still in the ground, it's just a case of it being cost effective enough to actually go and get it, the ice shrinking off is maybe no bad thing for Exxon et al ... ;)
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Well £500bn sounds a lot - soon we are talking about real money! (so the saying goes!) at about 30% of UK GDP.
Makes you wonder what the value of the Irish so called ''Guarantee'' is when theirs is 400% of their GDP.
Not the kind of Guarantee I would feel comfortable with - probably only marginally better than an Icelandic Guarantee.
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Comment 40 seems very apposite to me.
The whole mess is based on excessive debt and loans unlikely to be repaid, hence the banks shortage of funds. The interbank rate is 2% over base rate.
Surely the correct approach is to increase interest rates to bring money into the banks, thereby recapitalising them?
The end result of excessive funding by the taxpayer will be increased PSBR or increased taxes, or both. I think that a government will be unwilling to put up taxes or cut services in a major way in the run up to an election, so enormous PSBR. A real poison chalice for the Tories, with inflation in a big way when the recession is over.
I have managed my personal finances responsibly, and have manageable debts. I resent having to bail out the imprudent, including the Brown Government.
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#59 Rampant inflation is really good. Especially at the scale of the 1946's Hungarian one. I think it's still world record. It devalues overvalued assets, it wipes out debts.
Oh hang on a minute, it also wipes out savings.
No worry then for those who have only debt.
In a more serious tone. I don't understand all these optimistic (or uptimistic) tones about inflation - it's coming with a recession (I haven't seen stagflation for more than 2O years, so it's quite exciting reunion) because politically it is impossible to declare inflation a more dangerous enemy and the recovery of manufacturing and non-financial services more desirable than looking inactive in this mild financial breeze (compared to 1857 mind you).
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Can someone please explain the pensions crisis? As I understand it all civil servants (MP's included) have index linked gold plated pensions guaranteed and paid for, in the main, by the tax payer.
In 1997 Gordon Brown attacked the private pension funds by removing the tax credit on dividends thus destroying one of the best pension industries in the world. Today, as markets plunge, Brown is happy to pour our money into guaranteeing savers funds in a foreign bank but has done nothing to protect the rapidly diminishing pension funds which are either linked to the stock markets or to banks.
The £50,000 protection he so proudly announced is an insult to anyone whose pension fund is held, for safety, in a bank. To earn the sort of pension Brown will get he'd need, in the private sector, a pension fund in excess of £2,000,000.00 of which his government is only protecting less than 1/40th ie 2.5%. Some pension he'd get then.
Why does he never mention the pension time bomb and indeed why is he never confronted about it? His actions in 1997 were criminal and done without any thought or regard for the self employed whom he claims to support.
He MUST be held to account and explain why he thought his removal of the tax credit would be fair to all and ultimately so good for private pensions.
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We have a rescue package that offers hope. What we now need is people to start supporting this and not shooting it down at every possible moment. There is time for a debate and there is time for getting on with things. We urgently need to stop talking and get on with implementation.
For now, it makes sense for everyone to take a deep breath and start supporting this. Please we have to move on.
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I do despair reading some of the doom mongers on here. I really think that reading some posters on here they have put their life savings into Marker Pens, Card and Wood and will be leading the plebs unto the front line when everything collapses and are just dying for it to happen.
Things are bad yes, but efforts are being made to stop the problem, there is no point going down the blame game at the moment as it won't fix the problem.
What needs to happen now is we continue to stabalize the economy and only when more secure look to amending the structure in order that this situation can be avoided in future.
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IT MAY NOT BE ARMAGEDDON, BUT IT SURE LOOKS LIKE WATERLOO FOR THE MARKET AND BANKS!
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Lets not forget a few things, as long as there is booze and medicinal plants and fungi that grow naturally from gods earth and a good libido, all is never lost ;)
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This comment was removed because the moderators found it broke the House Rules.
#48
"There's far too much negativity around. Nobody's died. And most people are a little better off overall."
Wait until the redundancy notices start going out, some have already gone, and then the unemployment figures rise - then come back and try saying the same...
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Mr Peston, what other words you are going to use next time ? Dont you think you are not helping the current situation by leaking all the information at in appropriate timing and you even dont show up your face on BBC news trying to explain to the viewer whats happening. Have you forgotten what happened to Nothern Rock ? you never learnt how to be an approprriate Business Editor. You are suppose to report the fact and putting in your view. In this culture is allow to be carried on, i think more people will start abonding BBC for business information.
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One thing this crisis highlights so dramatically is that the control of the money supply, the dubious ability to inflate and deflate it at whim must be taken out of the control of private institutions like the banks.
They simply cannot be trusted.
The money supply must fall back under the control of those it is rightly supposed to serve. The people.
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The fundamental problem, counterparty risk, is massive. All of this action does nothing to address that and until counterparty risk becomes public information or the level of potential loss decreases it's no change on financial markets. I happen to think that the potential loss will increase and change in sourcer over the coming quarters. More capital of the preference share kind will be required if the liquidity capital is to have any benefit.
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All this talk of monies being lost every day is just too much! It was almost as bad when it was about profits made.
For years individuals and professionals have been milking the world economy for billions or trillions of £s $s and €s without contributing a dime, penny or cent to industrial output, manufacturing, real exports, sustainable national or world growth let alone making a real contribution to the so called developing nations.
One of the more regular villains of the peace have been the very same banks and financial sector corporations that today are being supported by governments around the world. What were the combined financial sector profits for the past 5 years? How many zeros do we need ? Where is this money today ? What did the financial sector actually contribute to the world economy ? Putting it another way how much real working capitall did they remove from the same world economy ?
Of course we need the financial sector to realise growth through the ability to borrow funds to realise development and growth that contributes to the national and world economies.
We do not need a financial sector that considers itself to be an industry. The financial sector should be a pure service provider of funding that is of course permitted to make a margin and take a loss along the way.
We do not need that which we have today which can best be considered as a bottomless pit.
Let's go back to why we have a share market, the concept of cleaver and inventive individuals bringing new ideas to the market that, if they believe in the venture, place capital into the hands of people and companies who know, in most cases, how to apply the funds to the benefit of many rather than the exclusve benefit of the few!
I believe 100% in free enterprise and practise that which I preach in my daily business life.
The financial sector ceases to be eligible for the status of free enterprise when it is capable of the enormous damage being done around the world to countries, corporations and not least citizens who believe in a better future, a better life, a better world.
A good old fashioned natural disaster is better than all this man made stuff being served day after day. At least you can repair the infrastructure and know what to do when nature shows her force.
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#62
re RP bashing
Well said, and I for one would like it all to stop.
On a slightly different tack, I would love to do a IP trace-route on some of them, It wouldn't surprise me to find that they lead straight back to either other media outlets or stock trading rooms (especially during 'office hours'). If Wikipedia can do trace-routs on submissions then I'm dammed sure an organisation like the BBC can too, just a thought for all the RP bashes to cogitate on should the vermin start to become rather too toxic...
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Let's get our facts straight. This isn't "taxpayers' money" any more than my credit card debt is "my money".
The Government is going to borrow whatever money it needs. Effectively it then makes a secured loan to the banks, presumably at a higher rate of interest. So far, so good; sounds like good old-fashioned, profitable, banking. And like an old-fashioned banker, the taxpayer "only" has to worry about the risk of default by the banks. Well... they probably won't actually default, because they will not be expected to repay the loan unless they can afford to. So, it's a pretty good support, if it's enough.
Either by supporting the banks, or through some other initiative, our current levels of personal, corporate and public-sector indebted ness have to be sustained and, indeed, increased in the short term, if Armageddon is to be avoided. But in the medium to long term, indebtedness has to be decreased to levels that are sustainable. The least painful way of doing this, as far as I know, is inflation. Inflation means we can repay nominal loans with smaller amounts in real terms (fewer hours work, if you prefer). Higher inflation is signalled by the base-rate reduction. We all pay the price, one way or another, of our past reckless borrowing.
For two or three generations, we have been paying ourselves more than we have been earning; we have been consuming more tha we have been producing; we have been selling tomorrow to pay for today. And for decades, "financial institutions" have helped us with our delusional confidence trick. If the chickens are not now finally coming home to roost, we are lucky to have one more chance to fix our problem.
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Call me pedantic, Robert, and I know that you're an economics not an Eng Lit graduate, but please stop talking about Armageddon, which is the supposed final battle between good and evil (or God and the Devil) when you actually mean apocalypse, which is generally used as shorthand for 'the end of the world'.
Accuracy is so important at times like this, don't you think?
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Can someone tell Robert to stop emphasising every other word when he is on the TV or the radio?
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There are two issues at stake regarding the cause of the crash which the Government is trying to sell as one.
First there is the US based 'dubious' practice of rolling up the securitised mortgages many from commission driven sales. The quality mix was not revealed. These were sold on as triple 'A'. Are our Clearing Banks being castigated for this? The Government claims the US poisoned bonds were the cause.
In this country there is said to be a quality issue with the lending 'the taking of extreme risk' in the UK mortgage business. The extent is unknown. Is this why the Banks are being chastised? If this is the case the Government should not continue to claim the problem has been imported from the US and admit their new regulatory set up failed.
Am I missing something or am I just too simple?
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Mr Peston
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I think Robert watched too many episodes of Dads Army. "We're all doomed!"... at least it has put the climate change doom mongers off the back pages for a few weeks......
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My God Peston, I'm looking at you on Newsnight and you're wearing a tie that's neither the purple spotty one nor is it the purple diamond-y one. But it is purple. Not a major sartorial departure, but a definite improvement. Next, why not try wearing a tie that's actually a different colour? Blue is quite a lot like purple, but different.
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97,98,100, 101, and all the rest of you 'hang Robert Peston high' nutcases. So poor old Robert's this great behind the scenes market manipulator? You're all a bunch of nutters. So Michael Howard's 'named' him has he? Ooooooo, I bet Robert's wetting his pants at the thought of it. Let's get this straight: if any of you nutters want someone to blame for the current market turmoil, blame the rogue bankers, and new labour. If you don't like what he writes or what the good old BEEB represents then go and buy a couple of big sausages, stick them in your ears then use them to signal your mothership and get it to take you home.
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Robert Peston is right, economic armegeddon has been avoided by timely measures and lower interests rates and the promise of more yet to come.
However. few have yet considered the costs and pressures on society, which remain from the boom years.
The UK faces the problem of having an army of surplus labour attracted during the post war years and especially during the boom years by the governments laissez-faire policies and expanding service sectors.
As the competition for employment becomes more intense so will the demand for solutions.
Many have likened current events to those of the great depression. If they are right events in the financial world will inevitably spill over with uncontrollable consequences.
The lessons of history are there.
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115 Dr Dangerous:
Are you John Prescott by any chance?
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Para 1: Down.
Para 2: Up.
Para 11: Down.
Para 14: Up.
Para 15: Down.
Para 16: Up-Down.
Journalism? Emotion on a page more like.
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Robert, I have a nasty feeling that many of your BBC colleagues on Gardners World and on Farming Today are going to be more important to our survival than Gordon Brown.
Best next investment a greenhouse, stuff the money markets, free at last I declare.
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average length of market declines is 2.5 yrs.
average percentage declines of long term declines is 50-70%.
there's more to come.. we're only in the first year and we're down only 30%.
http://www.ashraflaidi.com/articles/margin-debt-shows-more-selling-ahead.asp
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It does seem all Extraordinary Popular Delusions and the Madness of Crowds tonight on here...
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#97
It certainly is pay back time and as for 'Joe Public' getting intoxicated on credit, they wouldn't have done so if the banks and bankers hadn't offered such a cheap deal on the booze - so please, don't try to reversing the guilt, it won't work this time.
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to the (anti) fractional reserve banking lobby:
if you are right we are merely just delaying the inevitable and with the massive increase in govt debt making the "problem" worse the end WILL be nigh sooner or later no matter what central banks n govts do as the ever-expanding debt/money mountain/pyramid implodes n all money is lost in a puff of logic....
or the "FRB=unsustainable fraud" theory is just yet another erroneous apocalyptic conspiratorial meta-theory.
i'm reserving [ha ha] judgement.
maybe Armageddon has been avoided or is only a week away. or maybe not. who knows? well no-one it seems.
"money as debt" youtube vids v amusing tho :-)
well done RP. awesome reporting and if the FSA do take you to task tell em to "go away and procreate"
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#97
"Yes some in the banking world have acted imprudently but what about everyone else in the country who have enjoyed the bull run in spending and lending over the past 10 years. Its payback time."
Some banks,,, seems more like most if not all banks have acted not imprudently more like chimpanzees at a tea party. In fact words cannot describe how bad I feel about banks. Tonight there are millions of people who are very, very angry with banks. Just hope and pray that they decide to keep their business with banks - otherwise they are gone.
I don't think paying 300% more for the very same houses that previous generations lived in is "enjoying". I would classify this more in the realms of "ripoff" and "scam".
Where does "everyone" come from,,, most of the older generations are very prudent with their money. They have learnt the hard way from previous financial scams to look after their money. I feel very sorry for the younger generations going through the hard process of realising they were duped - not only that forced, with student loans, to go into debt. And oh look we are being forced AGAIN with another pension scheme - aren't we the lucky ones !
In your case you seem to feel the public got what they deserved eh ? Trying to buy a home, raise a family and maybe have something for the future. Oh oops - your not having that, some greedy financial institution destroys your life for the next 5-10 years.
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Whilst the government is making bold moves to avoid economic meltdown - can anyone explain how the UK political system allows the government to draw on such large sums of the taxpayers money without parliamentary consent, whilst the American government had to spend days getting the democractic process to agree to this?
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We need more cuts from BOE, base rate should be 3% or less.
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Looks like the central banks know that real hard times are unavoidable ahead.
They are attempting to create a 'soft landing', rather than one of those ugly 'wheels up' hard landings.
Here's hoping the medicine is not worse than the ailment.
Heard a most interesting conversation betwixt Cavuto and Dave Ramsey today, where Ramsey discussed how to navigate these waters and keep one's peace of mind.
Don't let the southern accent put you off, he has valuable things to say.
Would love to get Cavuto, Peston, and Ramsey in the same room together!
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This comment was removed because the moderators found it broke the House Rules.
Interesting story on Bloomberg tonight, headed: "Ten-Year Swap Spread Collapses After Fed Rate Cut."
This might be the first tentative sign of easing of the credit crunch, as it shows the premium for borrowing fixed versus floating rates has suddenly reversed today, and has gone below what it was when the credit crisis started in summer 2007.
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#110
"What needs to happen now is we continue to stabalize the economy and only when more secure look to amending the structure in order that this situation can be avoided in future."
No.
This is the call of those who want to make money in this time of turmoil. The best thing that could happen is the markets are closed for a year or so.
There is every reason to "play the blame game".
How well will the "problems" be "fixed" if the dumb idiots who got us there are still in charge ?
How much will we be "ripped off" by both the financial institutions and the markets if the scammers are still in charge.
It's time for a clean sweep and there is no time like the present.
Time for all directors of banks to go and all bonuses for the last 7-10 years to be repaid with interest.
Time for heads of all regulators and auditors to be sacked and all assets seized.
Time for a change in government.
Then we need a complete review of a stock market and financial system that brings out one dodgy financial vehicle after another.
But I guess we won't have this will we ? No, we'll have the same old fudge of "It'll be alright" and a pat on the head.
It makes me sick.
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#121
"Armageddon, which is the supposed final battle between good and evil (or God and the Devil) "
Hmm, some would say the above described the relationship between Joe Public and Banks very well - Armageddon appears to be totally appropriate!
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Further news. Trichet of the ECB has said he can't rule out further rate cuts, which probably means there will be more!
He's also said ECB will make unlimited funds available to banks. It will do so at the benchmark rate, rather than at an auction rate that may be higher. So banks can get unlimited credit at a guaranteed 3.75%. So banks can now get funding irrespective of whether the interbank market opens up. I can't help but wonder why this wasn't tried earlier. It seems a fairly obvious and simple step. Presumably there's a good reason not to do it normally, but then this isn't normally.
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The banks are partly to blame for the mess they've gotten into. They got carried away with the good times, and borrowed money to lend out willy nilly. Good times don't last for ever, and when things started going sour, it's up to the taxpayer to sort it out. It's all very well to pat the government on the back for stepping in and guaranteeing peoples savings, but in reality, it's us who's paying to guarantee our own money. It stinks.
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#137: The US votes on spending because they have a written constitution. Article 1, Section 7: "All bills for raising Revenue shall originate in the House of Representatives..." In the UK the government can spend by fiat. However with a $10 trillion debt, the protection afforded by the constitution means little. The bill passed the way all bills passed, with each representative tacking on some spending or laws serving his or her interests.
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#131
"Best next investment a greenhouse"
Perhaps the BBC could repeat "The Good Life"!...
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Robert Peston, your business editor, has been level-headed and measured in commenting on the current financial crisis, but today he went off the rails in an outrageous way. To say, as he did in tonight’s 10 o’clock news that the money being provided by the UK government could build 13,000 schools is misleading to the public, grossly misleading.
The BBC news editorial staff also deserve censure for their totally false numbers and phrases splashed across the screens. The Treasury is not remotely ‘spending’ £400 billion of ‘our money’ on the banks and building societies.
1) They are investing £25 billion in preference shares, and possibly another £25 billion if it is necessary later. Even those figures are dependent on the banks applying for them. This element of the plan is an investment, not a gift or ‘spending’ of any kind. The fact that this is finely judged and not a bail-out of bankers is demonstrated by the equivocal stock market reaction.
2) The Bank of England is increasing its current short-term lending to banks by £100 billion. Those are loans, not gifts or ‘spending’, fully due to be paid back, and 100% backed by collateral taken from the banks at severe valuation discounts.
3) The Government is providing up to £250 billion of guarantees to back bank long-term borrowing, with the correct aim of restoring confidence to the financial system. These are guarantees, which admittedly involve risk, but these amounts are not gifts or ‘spending’. The risks are far less than any alternative in the current situation. Guarantees do not require any more borrowing at present.
So the only immediate increase in borrowing from today’s scheme is likely to be £25 billion. The interest cost to the tax payer is only likely to be around 4%, i.e. £750 million. Anyway the preference dividends on the investments made in banks will certainly be much higher than that. The taxpayer is going to make a profit from that element.
So the number of schools not built as a result of today’s ‘rescue’ is zero.
The threat to the number of schools comes from a different source: a severe recession eating into the government’s tax base. Not acting as the government did today would have risked a full-blown depression and the collapse of our banking system, and everything else in the economy collapsing with it.
The BBC should be praising the government’s strategy, not running it into the ground. John Humphreys’ rude, alarmist and ignorant badgering and interruptions of the Chancellor this morning on Radio 4 were disgraceful and undermining. In these moments of severe crisis he should show respect, and make a positive and constructive contribution. The BBC could have a praiseworthy role in boosting confidence and winning the battle against the financial crisis. Analogies with the Second World War are not inappropriate.
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Glad you're referring to the untold horror of pension values dropping.
I was amazed last August when NR's share price started to collapse and Darling, Cable et al insisted shareholders should pay not taxpayers for NR's troubles (which were in any event largely inflicted by Government/BoE incompetence), that nobody in the media pointed out that the taxpayers are largely pension savers i.e. shareholders, and so they would pay any way through their pension funds.
Of course the situation has got infinitely worse for pension savers due to the collapse in confidence the government has allowed to happen with the BoE in particular seeming to have a mission to destroy confidence in its every announcement, and very reluctantly agreeing to liquidity schemes - how has King survived so long?
So much for London leading the world as a financial centre - the government seems to have led the destruction of confidence in the global banking system.
Now that the banks are part nationalised and dividends will be substantially reduced by the government, who will be raking it in with their preference share dividends and fat fees, given that bank dividends made up 25% of all dividends, where will the pension funds get their cash to pay current pensioners?
Watch further pressure on final salary schemes and expect the double whammy of lower annuity rates on lower pension values.
Despite all the chaos and destruction of the nation's wealth I would not be surprised if the gullible British public actually raise Brown's ratings - you can already see Lord Mandy's handiwork in Brown's recent performances in press conferences and parliament.
You have got to admire Mandy - he must be one in 60 million.
Sadly Cameron and Clegg do not appear much better than Brown.
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#137
Judging by the all party support in the Commons today they could have there or four days of debate and the result would be the same - all party support - except that another two banks would have gone down, meaning that the rescue price has just doubled, if not pasted the point of no return (from depression)...
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I see Robert Peston's profile has reached such heights that he is now being satired by the Daily Mash:
http://www.thedailymash.co.uk/news/celebrity/robert-peston-transformed-into-pure-energy-200810081310/
Keep going Robert!
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There's a trend, in a significant number of comments above, that things are not all bad. To my mind, the most interesting observation so far during the crisis has been Warren Buffet's remark, when the Paulson plan was in its early days, to the effect that he would love to have $B700 to buy in so-called 'toxic' instruments. The whole point of CDOs is (or was, assuming that the CDO is now a dead duck) that they contained a variety of debt, some AAA-rated, some middling, some, the 'equity' element, trash (but high-yielding trash). To read a lot of comment, you'd think that CDOs were single-based, exclusively on sub-prime mortgages. That was CMOs, half a generation ago.
The last sale of CDOs I picked up on was pricing a $B22 tranche at $B7 = about 35 cents on the dollar. I would guess now that you can pick up CDOs at 20-25 cents on the dollar - maybe less, even a lot less? Given that this paper is still yielding an interest stream, and that there is a significant percentage of real value in there at a whacking great discount, some people with the resources and the cojones to get in there and buy, and then the time and the patience to dismantle and repackage what they've bought, are going to get really rich as this crisis works itself out.
Whatever happens, greed will still drive the markets. The key to sorting out current problems is to achieve a balance between the power of greed motivation and the needs of the common good. This is what intelligent regulation is about. 08 Oct 08 may be seen as a start in this direction. Two cheers, at least.
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Heres a thing. If we have zero growth isnt that what the world needs to stop global warming.
At some point we need to stop consuming more because we live on a finite planet.
Ideally the worlds economies should probably collapse in half, we should all stop driving madly around and spend more time doing diy and growing vegetables.
Then we might do what is needed to avert global warming.
Just a thought and I am a trained MBA capitalist
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Dear Robert
I think now would be a good time to calm down - you have done more harm than good right from the moment you created panic over Northern Rock. You may have more viewers at the BBC now, but they're all a bit worse off due to your leaks of sensitive information.
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#144
re ECB announcement
Looks like a bit of joined up thinking within the EU at last, the outcome from that meeting last weekend perhaps and might explain that non discript holding statement when it finished.
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Undoubtedly we are in for a recession - but indeed meltdown has been avoided. Now it is everyone's responsibility - and especially that of reporters to start to take a more positive outlook - so much of the economic instability has been heightened by panic, and therefore we need to avoid stoking the flames - so please a little more confidence in the reporting please!
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Today I am really worried for the first time. If even the ECB starts cutting interest rates it means total capitulation to the forces of evil. If Europe just gives up on sorting the debt mess, bailing out the thugs and punishing the decent people then we're really doomed. Is today's economic shortsightedness so chronic that it is not curable any more?
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Post135 trikdiki,
"or the "FRB=unsustainable fraud" theory is just yet another erroneous apocalyptical conspiratorial meta-theory"
"I am reserving judgement [ha ha} judgement"
Well,quite apart from the fact that this "theory" is the very same one admitted by the banking overlords themselves to be their actual modus operandi, I don`t think I,or anyone else with functioning logical machinery in their craniums, need to reserve judgement [ha ha ha...ha!]
Maybe you think Nations should be swallowed up into a Global slave plantation ruled by a tiny elite of untouchable overlords?
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I am actually stunned by the economic ignorance in this post. I will quote in the future for laughs.
The rescue package is just dressed up fascism.
Cutting the interest rates? Well thats been tried in Japan under similar circumstances and so we'll have similar results... an 18 year recession?
Unless doing the same thing over and over expecting a different result is NOT the definition of insanity.
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#148
1) Preference share stuff:
Ok, cards on the table. Without the Bank of England there would be NO banks. That means, if you don't understand it, that the banks would literally be bankrupt without the public backing them.
Literally the share price of these banks is nothing without the public. So banks and shareholders consider yourselves very lucky.
2) 100 billion loan stuff:
Ok, well banks have already had 200 billion. Now they get another 100 billion. And as you say they will be paid back. Hold on a moment, these banks are making money off the public. So in effect banks are making us, the public, give them a job ? Nice work if you can get it eh ?
As regards collateral: Well if the collateral was so great just go and sell it and then banks won't need any public money ! Oh dear they can't can they ? Because they are practically junk.
And where do you think schools and hospitals come from ?
3) Guarantees and spending stuff:
Profits are not guaranteed.
Dividends are not guaranteed.
Who do you think is generating those profits ? Yes the public again.
Where do you think all of the money is coming from ? The B of E is gonna have to print money because banks have loaned wholesale money incompetantly. Creating money in this way dilutes - devalues the rest. And yes that means our currency has been weak for a while now, nice bit of inflation for us.
But that aside. The best part about what the banks have done - we've ended up spending 300% more for the same houses (or in fact smaller houses) than the previous generation !
Just think of the power stations, the infrastructure, the research, the schools, the list is endless.
No. It's all gone on charging more money for the same stuff !
Well done financial institutions, AGAIN.
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#137
silence of the lambs
#148
The BBC should be praising the government?s strategy, not running it into the ground. John Humphreys? rude, alarmist and ignorant badgering and interruptions of the Chancellor this morning on Radio 4 were disgraceful and undermining.
er, who is the main underminer
again#148
In these moments of severe crisis he should show respect,
the word respect and a reference to a menber of the labour party in the same sentence. are you "havin a larf"
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Dear Mr Peston, and fellow bloggers
I've been having some vague thoughts about interest rates.
Current savings rates post tax, apart from those offered by institutions in deep trouble, fail to match inflation.
Savings rates in the UK (and the U.S. for that matter) have been desperately low. - a reason for the emergence of a bloated interbank lending market perhaps?
Over the course of the present crisis prior to today the Fed policy of slashing interest rates, the BoE's of shaving them and the ECB's of raising them seems to have made no discernible difference to the course of events in the different financial markets that those institutions addressed. In all three markets bad debts eroded capital so lending shrank.
When Japan got into trouble in the early nineties the BoJ cut rates to zero and flooded the system with liquidity yet the country stayed mired in depression for a decade. The easy credit allowed dud loans to fester on bank balance sheets tying up capital and preventing new lending. The Japanese eventually restored broken banking systems by forcibly writing off bad debts and recapitalising, not by pretending that everything was all right really and just needed cheap money and a bit of tweaking.
A number of Scandinavian countries had banking crises at around the same time. From memory they didn't bother with the zero interest rate bit and went straight to the write-off and recapitalise model. They recovered quite rapidly.
You mentioned in an earlier blog that the banking system's dependence on inter bank lending only began after 2000. Doesn't that suggest that the mysterious disappearing interbank market was an artifact created by lax lending policies and wafer thin interest margins that placed a premium on high gearing and high loan volumes? In that case the interbank market will not recover to anything like its former size because the conditions that created it no longer exist.
If that is the case the banking system badly needs to bring its customer deposit base into line with its loan book, a process that will be a lot less painful if it can attract additional savings ideally channelled to those banks that are well capitalised enough to write off their bad debts and resume lending.
Which we achieve by cutting interest rates to the bone and encouraging savers to invest in the weakest banks by means of a blanket deposit guarantee?
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Sluggish growth?? You've got to be kidding me. This will do little to stop the inevitable and massive recession, this just patches up the banking system .. until the next domino falls, in some other country. Or until the next government goes bankrupt. Or until the $1.14 quadrillion derivative liability blackhole is officially dumped on the banks balance sheets.
The problem isn't really with the banks, it is with the monetary model of the last 70 years. It is fragile to periods of no/slow growth... but for periods of negative growth, the Keynesian fiat money system just does not work at all. No doubt governments will throw more and more debt/money at the problem until they realise they need to change the money system completely.
We need new currencies, or gold backing. But we must put an end to the perpetual "lets inflate our way out of the problem" antics, or else it will be Zimbabwe or Weimar Germany... but all across the western world.
No .. the money system/banking problems are FAR from over.
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Thanks once again for your insight Robert.
http://www.thedailymash.co.uk/news/celebrity/robert-peston-transformed-into-pure-energy-200810081310/
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Click on my name for my PM comments.
How frightened are all these financiers and experts that you might have to get proper jobs, Robert?
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Thanks once again for your insight Robert.
Maybe you could also shed some light on this latest rumour...
http://www.thedailymash.co.uk/news/celebrity/robert-peston-transformed-into-pure-energy-200810081310/
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#149
Paying current pensioners should be the least of our worries. Pensions in payment are mainly secured by fixed-interest instruments such as gilt-edged securities, with very careful matching of assets and liabilities (actuaries are almost polar opposites of bankers; I wonder how many of these virtuous individuals have been consulted on our current problems).
What pensioners have to worry about is inflation, which will erode the value of all but index-linked pensions.
Defined benefit schemes have also, increasingly, been investing in fixed-interest instruments thanks, once again, to those virtuous actuaries.
The people who really deserve our sympathy are the unadvised or ill-advised "ordinary" index-linked prospective pensioners, whose "pension pot" has been eroded by market movements, but who have little freedom over when they need to sell their devalued assets to buy an annuity.
I haven't looked at annuity rates recently, but they are driven by what happens to fixed-interest instruments, which become more expensive as interest rates fall. Sorry, guys, it's a triple whammy for you: a smaller pot, a more expensive (smaller) annuity, and ever-higher inflation eroding your smaller pension...
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ps -and when can we expect an interview on the telly with that French minister who said they were fine and it won't happen to them?!!!! She's been very quiet! LOL!
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BBC have been having trouble with their clock today-tv showing 10 minutes behind!
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It was the addiction of the "growth junkies" that fueled this crisis. And now there is more wailing and gnashing of teeth that "growth will be sluggish" !!
No economy can grow unless it produces something that is useful to other people. It is this dependence and addiction to "miracle growth" and funny money that caused this problem; so when that is removed, what do you expect ??
Growth will return when people here produce truly useful *AND* salable goods and services !! The one guaranteed area is the knowledge industry but the government has put paid to that by degrading the value of the qualifications in Britain and encouraging the taking up of unmarketable degrees simply to satisfy political "targets" !!
As for general manufacturing, that went South (or should that be East ?) a long time ago when British workers priced themselves out of the market !! Only specialist manufacturers will survive and grow (again, knowledge based) !!
Manufacturing funny money and fancy "products" from junk assets is not growth; as we now see to our cost !! Stripping away all that smoke and mirrors has shown the real growth, or lack thereof, of the British economy in the last 10 years !! It was Brown who kept sweeping that economic failure under the carpet and that lump underneath is now threatening to collapse the house !!
Good luck to those who still insist on growth !! I'd be happy if we don't get into too serious a recession !!
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With respect Robert it’s been 1 day - the impact or lack of impact will unknown for a while.
There are still a lot of unknown factors on the horizon (US Election and how the markets react to the results for example).
But one certainty is Gordon brown and Darling have more or less staked what’s left of their reputations on this high stakes gamble.
I wont speculate, as I am no expert by any means.
But for their sake's it better show some positives soon, as they committed a considerable amount of my and everyone else’s tax money.
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oh dear-are we on a blog black out again?!!!! Does anyone know if bookmakers have odds on which bank will go? Look at the USA-a brief steadying period after the bail out there, and now on a downward plunge again!
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#160 The "previous generation" (me included) read books from the library instead of spending huge sums on fancy DVD players and flat screen HD TV and surround sound music systems !! Sums that this generation did not possess and had to be borrowed !!
The previous generation worked hard to save up for a large deposit on their homes and then worked harder to pay that mortgage off as soon as possible instead of borrowing 125% of the property value !!
The previous generation went out and got things done instead of expecting them to be handed out on a platter !!
That 300% you mention is the price this generation pays for the sin of greed !!
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Where is this money coming from? If the govt has to borrow it, where are they getting it from? Sounds quite a daft idea.
I think the powers that be a re thrashing around like stranded whales with no ideas on how to really get us out of this mess.
To try and shore up a system that hasn't worked is madness. I predicted this years ago and I'm no economist!
The whole world system needs to change and sticking with the staus quo will just mean more of the same down the track.
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I can't help but think this is the perfect illustration of winners and losers in a recession; on the face of it, we would appear to be throwing money at the problem like the US, but with a more considered approach, the global future gains we will see, as a result of a little more care to detail, will see UK plc in good stead.
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This is a blog, Robert is a reporter. It is the business of reporters to be first to present information, and arguably the business of reporters' blogs to present opinion.
If we really believe that The City reads Robert's blog and that billions of pounds move on the strength of it then I suspect we credit him with rather more influence than is realistic. If we don't really believe that, then perhaps we can read his blog as one of the several inputs from which we form our opinions. Or, if we don't like what he says, we don't have to read it at all.
We might sometimes wish that a reporter did not "scoop". Of course, we canot know what information a reporter has known but withheld through a personal exercise of judgment. We can, however, reasonably enquire how Robert was in possession of information. That is what Howard has asked the FSA to investigate. I suspect that there may be some pressure to disclose sources, which may be interesting,
I'm rather looking forward to a book, perhaps in 12-18 months time, to allow a period for calm reflection, in which Robert reviews the events and gives his opinion of the causes. Perhaps he will speculate on what might have been done differently - but please only with the benefit of sufficient hindsight.
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So far , so good.
The UK banks share values seem to be stabilising and the market is favouring the builders again. Signs are that there is some confidence in a freeing up of the mortgage supply. Once the housing market stabilises (and it will in UK because there's still an underlying shortage of quality properties) we will get a virtuous circle rather than the current spiral down. Not too worried that there is some selling of commodities, - perhaps to finance some of those bank and builder purchases. Miners have been overpriced and they will inevitably recover because oil and metals, like gold, have intrinsic value that will always underpin market prices. The flight to cash is ineffective as a long term investment unless anyone is expecting prolonged deflation, - highly unlikely with governments resorting to their currency printing presses.
Is that a light at the end of the tunnel or just the headlamp of another panic?
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# 155
Yes, I thought there were a couple of interesting throwaway lines at the EU Big 4 press conference last weekend.
First, they said they'd suspend the competition rules for cross-border bank mergers. Next day the BNP-Fortis deal got done.
Second, they suspended the EUR Stability and Growth Pact, which means nobody is stuck with keeping borrowing at under 3% of GDP. That helped Germany with Hypo Real, and it will help with government budgets. We have our budget in Ireland next week, and before last weekend we were facing big expenditure cuts and tax hikes. I still think we'll see some infrastructure spending deferred (mainly transport plans that won't now be needed for a few years anyway). I think we might see some targeted tax cuts to help households (VAT cut on gas and electric maybe?), and to help business investment (further cut in corporation tax which is already very low here).
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I've just been reading part of the J P Morgan rescue plan.
Step 1 was was a recap of £38 billion.
Step 2 was the creation of a seperate institution to hold £300 billion of bad UK mortgages and corporate loans.
Are we going to have step 2 or are the £250 billion in loans a defacto Step 2.
Is there more to this plan, I haven't been able to find it yet ?
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how strange! My main comment never even reached the moderators....that's weird!
I suggested loads of stuff but Boone will get to read it!
Was it my comment about peasants or politics that did it? Or was my rescue plan too scary for public consumption?!
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questions....
1. Has the EU agreed to our bail out plan and what will happen if they don't.
2. Where can I find the banks up to date balance sheets?
3. My county council has £50m in a frozen Icelandic bank-is that why the government is threatening to sue Iceland?
4. Where can I find the current Libor rate?
Night all!
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#180 Tigerjayj
The usual reason is that you used an & in your post. It has to be specially coded to appear.
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Rubbish. Paulson went to a Congressional Hearing and said that there were USD 17,500,000,000,000,000,000 of CDS (credit default swaps) in the market.
The UK has put forward £500,000,000,000.
The US has put forward $700,000,000,000
Global or not - check out the CDS in the USA alone.
We're all broke - it's only a matter of time.
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Have we avoided the road to Armageddon - no just taken the scenic detour back to the traveller purgatory of up hill and down dale of boom and bust economic strife greed of low moral, low morality, none existent ethics and an open book to do it all again.
Having bailed out he banks the government have healed a mere scratch in the torments of our journey because the manipulators and the goblins have to let the economy fall so its really cheap to buy in you assets then they will pump the rest of the money out to inflate the price in a false market so your assets soar in price but now you have to convince everyone this is true value not price. They ill convince us they have magically increased everyone’s net worth. High value property - sorry high price property (there they’ve got me believing the propaganda) - will do again.
In this process though just look the pension pot is over burdened the oldies are getting the goodies and we have not even got their industry or expertise in the economy any more so our dark forces need to pull their money back in to help re-inflate the market and make a heap more speculated asset on the balance sheet that will fool a few governments into giving Old Nick carte blanch then ten to fifteen years from now do it can start all over again
When will it stop? When we stop rebuilding the same model and build a different one when we do things differently when we reward the things we want to see and correct, cut and condemn with sanctions the things we don’t.
Yesterday one Labour back bencher asked when did this all start to go wrong he was trying to get Gordon to blame the Tories The coalition caused Brown to suggest history might say a long way back and he is right it stared to go wrong in the 1400’s when a Venetian merchant invented double entry book keeping. in those days the Thames used to freeze over in winter..
The sad fact is we are now at a crossroad that could allow us to try a new way of travelling in fact the finger post may be dictating that we have to travel differently because unless we can sustain the planet, social and economics stability any other mechanism we come up with will not be of any concern in avoiding the road to Armageddon because we will all have arrived in Hades.
Seriously I would like it to work but unless we vehemently rethink the way we’ve come over the last five hundred years and decide on an entirely new way forward we will have not avoided the road to Armageddon but put ourselves firmly on it. We need some new definitions of society, economics governance and conduct We all have to develop an understanding of social climate as well as planetary climate and we have to have a re defining of success so we can reward cooperation.. Difficult – yes, optional – no.
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Armageddon was possibly not the best choice of title for this article.
I read somewhere recently, about the banking system collapsing in 1920's/30's Germany, hyper-inflation, Hitlers rise to power and the subsequent global conflict...
Meltdown doesn't seem to bad a description for the crisis. Whatever anybody does, it doesn't seem to cure the problem ....
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How right you are Robert...the stock exchange does NOT represent the reality in the real world.This is precisely what got us "sheep unto the slaughter" into this mess in the first place.As much as I think that The Government should have taken a strategic control of all fuel commodities and pricings long ago in The UK so should they have done the same with Financial Institutions.I never agreed with total privatization (thank you Margaret) as I feel that there are just some things that are too important to leave to the greed and avarice of market speculators.Keeping warm and having a pension are two of these things.Myself and all intelligent people watch this unfolding drama,add up the certain cost to us all,realize we are totally impotent to do anything about and wonder who to blame.
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How right you are Robert...the stock exchange does NOT represent the reality in the real world.This is precisely what got us "sheep unto the slaughter" into this mess in the first place.As much as I think that The Government should have taken a strategic control of all fuel commodities and pricings long ago in The UK so should they have done the same with Financial Institutions.I never agreed with total privatization (thank you Margaret) as I feel that there are just some things that are too important to leave to the greed and avarice of market speculators.Keeping warm and having a pension are two of these things.Myself and all intelligent people watch this unfolding drama,add up the certain cost to us all,realize we are totally impotent to do anything about it and wonder who to blame.One must just hope that lessons will be learnt from all this.
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I think I have an idea what the REAL plan behind this "rescue" package is.
Everyone knows the banks have huge debts that they can never actually repay. The only way out would be many years of rampant inflation that would erode the value of those debts to the point that they don't matter any more.
So, what was the real point of pumping 400 billion quid of non-existent money into the economy and a half point cut in interest rates?
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To answer the question as to why Gordon Brown was looking a lot more relaxed and confident recently. He is the first Labour PM who can boast that he's managed to partially nationalise the banks. Harold Wilson must be turning in his grave with envy!
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Obviously the global financial crisis is entirely Peston's fault. He should be made to eat 200 jaffa cakes in one sitting as punishment.
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Various comments on this blog and others knock the "Doom mongers".
If they (OK, we), the "Doom mongers" had been listened to over the last ten years or so, when forecasting the consequences of borrowing so much (look at back issues of newspapers, magazines and blog sites like this), we wouldn't be in this fine mess, Stanley...
The merchant bankers who say its not a problem now, while enjoying their tax-payer funded jollies at the Health farms, need to think about their responsibilities to everybody else, and change their ways now that the "Doom mongers" have been proven right...
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I seem to remember reading somewhere, many years ago, that high government debt was a good thing in terms of pensions because it was a low-risk source of steady funds.
Although in the short term, pensions may be adversely affected, couldn't high government debt be a good thing for pensions in the medium term?
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Dear Robert
ARMAGEDAN has not been adverted only postponed.TRADERS ARE THE CAUSE, BANKERS ARE THE CAUSE, THEY HAVE TO BE TACKLED FOR A SOLUTION.BANKERS COULD NOT GIVE A DAMN, LOOK AT BARCLAYS AND THEIR EXECUTIVE 'S ALL COTSS PAID BREAK TO iTALY --villa erba BY LAKE COMO.
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Instead of passing billions to the banks is it not possible to simply insure the risk which is stopping them lending/ borrowing money from each other as, one assumes, the fear/cost of losing their money will be less than the reality.
Also, if the banks have agreed the "rescue plan" why is there so much doubt about them implementing it successfully?
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I sniff some major re-alignment in the air.
Leave aside banks for a moment. Note those with deposits being offered protection. Nothing wrong with that per-se, of course. But! NO protection put forward of ANY kind, no safety net from the almost medieval legal consequences of failure (foreclosure, bankrupcy, repossession, eviction, court orders & bailiff and sheriffs' seizures etc etc) for those with NO savings. And they are certainly in a majority.
Why should this be? When you consider that vast numbers of people with no savings have to work to service their liabilities - if that work dries out the whole ghastly process starts instantly. Whereas, conversely, so long as they are able to keep their firm going or hang onto their job they are solvent and taxpayers.
And the savers - how many of them are still working and generating tax revenue?
Which group is more important to the UK's future. Answer? Both of course! But one group has been singled out for special treatment and the other ignored. Odd, because of course the group that's been sidelined is also, inevitably, going to include a lot of traditional Labour voters.
There is a lot of loose talk about rebuilding the economy. Well, the savers aren't going to contribute a brass farthing to that 'reconstruction' (of the UK economy) - assuming that such a thing is even possible - whereas the non-savers - by default - are going to working themseleves to death.
This blindness isn't confined to the present Government. John Major introduced a 'budget for savers' in the 90's at the very time that it was the LAST thing the UK economy needed. Money was desperately needed out on the High St and in circulation, not squirreled away in Andorra, Monaco, Bahamas, Cayman Islands, Zurich et alia. Money is a finite thing. When money is banked in that way it's out of circulation and if the scale of it is big enough everyone suffers.
As the year grinds on and everyone runs around wondering why the economy has ground to a halt (in other words firms can't close deals and their order books are drying up) and fiscal revenues are dropping and the welfare and NHS bills for caring for the people whose lives collapse because of this gets ever larger - Government and big private depositors should think about that.
Is this realignment due to deliberate policy - that a large sector of the working population can burn_to_ashes - or is it just the usual crass ignorance.
Whatever, it's certainly knocking on many doors and certainly coming your way soon.
GC
Owner
Guy Croft Racing Engines
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Robert,
There is another interesting facet to the governments bank bail out.
The government is making huge sums available to banks because they cannot meet their liabilities when they fall due without government help (I take this as a given as otherwise, why would they make taxpayer's money available?)
The government has also offered to take equity stake in these banks.
If and when they do take an equity stake, what will be its value? There are two options - nil and "£x". If nil, then the investment has to be written off as government expenditure. If £x, then the government has to accept that an equity stake in a bank that cannot meet its liabilities when they fall due has value.
If an equity stake in a bank that cannot meet its liabilities when they fall due without government help is worth £x, then shares in Northern Rock must have been worth something at the point of nationalisation (unless, of course, you run the argument that things were worse then than they are now!).
Logic (hopefully, making a surprise comeback) dictates that either the government have to write off all equity investments in banks or they have to compensate Northern Rock shareholders to a far greater extent than they currently envisage.
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# 1O9
Your point would be valid, if the assumption that there is a need for rescuing is valid. Have yet to see any evidence for it (several banks' collapse is not one of them).
# 11O
Since it this type of financial crisis has repeated itself ever since Peel's Act (over 16O years ago), it's not very likely that a package could help now, because it's systemic. If you want capitalism, you will get this as a bonus.
What's wrong with investment in Marking Pens? That one is based on the assumption that people would use it. Investment in deregulated banking is based on the assumption that the government wouldn't let them fail (unfortunately it's proven true...)
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Robert....forgive me if you´ve picked up on this already, but where´s the equality in this.....
UK savers left their UK bank/building society to go to Icesave, lured by unbelievably high rates (compared to the lower, but more realistic, rates offered by UK institutions).
Now, Alistair Darling/the Treasury guarantee that nobody with savings in Icesave will lose any money at all.
So how come AD/Treasury will give a 100% guarantee to the greedy and still apply the 50,000 GBP cap to the more loyal UK savers?
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What is abundantly clear from this whole crisis is that the hub of the financial markets is irreversibly rotten. It has been driven for too long by a core of individuals dedicated to corporate and personal greed to the total exclusion of national well-being, in a way that requires a wholesale clearing out of the system.
I am no expert, but I would be voting for any politician that undertook the following:
1 – Limit the amount of commissions and bonuses that can be paid out on unrealized profits (in any organization). In an ideal world, it would be nice to see payments made out of unrealized profits in the past declared unlawful and recovered from recipients in the manner of illegal dividends.
2 – Ban senior politicians from taking commercial non-executive roles post-retirement (at least above a defined pay threshold), to avoid conflicts of interest whilst in power.
3 – Governments to join forces in a no-stone-unturned investigation of the investment banks involved in the credit default and mortgage securitization markets, identifying any individuals responsible for mis-selling, creating false markets, or knowingly failing to adequately reserve against default rates.
4 – A total rethink on the nature of speculative investment and how this can be limited/disincentivised to avoid the massive market shifts that enable profiteering at the expense of national well-being.
5 – Regulatory bodies and central banks to be moved away from the clubby organizations that they are to organizations with far greater insight, motivation and practical powers to challenge and, where necessary, punish.
It is sad to have to recognize that human greed (to an extent at all levels, though the young family taking on excessive mortgage strain is far less culpable than the sales people up the chain) has all but defeated the concept of the free market.
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So, now there's more money sloshing around. Does that mean that HBOS can borrow this money/request the Government buy a stake and doesn't need to be bought over by Lloyds TSB anymore?
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richpost
Thank u so much for that-sorry to be thick but is & an ampersand?
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The Chancellor has been "negotiating" with Fred Goodwin and Andy Hornby. Why? It is a scandal that honour has left the senior echelons of the banking industry. These two men in particular should have resigned or been asked to leave weeks ago. Both had expansionist and risky strategy that has backfired, albeit at no financial cost to them. we assist in the redemption at the banks and the same teams are in charge. This is where madness lies.
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I wonder whether the banks will really WANT to let gov.uk effectively buy (preference) shares. The banks will be happy to continue sniffing around for a while yet to try to find their liquidity elsewhere, so they can return to their original ways of business and keep (or better said, eventually reinstate) their nice profits for their shareholders and not give divis to the general public (ahhh, government coffers).
Why do I wonder about this? Well, has LIBOR dropped yet?
Yawn....
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In times like this, I think we should remember the words attributed to Sir Richard Mottram, former Permanent Secretary in the Cabinet office:
"We're all ******. I'm ******. You're ******. The whole department is ******. It's the biggest ****-up ever. We're all completely ******".
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any sign of the balance sheets yet? Can we see our national balance sheet too? Why can't we have disclosure and transparency like USA?
Apparently their national debt clock has now run out of numbers-wonder what ours is....and do we have any gold reserves left cos is thought it was all sold off....
We should have all mortgage rates reduced, fuel and oil costs halved, taxes reduced. Alternatively all individuals and small businesses should register as charities and have a vat exemption certificate.....
Cloud cuckoo land I think
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#196
re Northern Rock
No, NR shares had become worthless on the open market, only once Govt. intervened and replaced NR lost equity NR once again became viable again - had they not intervened shareholders would have got nothing what so ever and depositors would have lost everything whilst leaving mortgage holders in limbo. If anything Govt. are paying far to much for the bankrupt company - there should have been no compensation for shareholders, just protection for depositors and mortgage holders. Had the shareholders actually scrutinised what their board was doing in their names they would not be in the state they are now, but of course as long as the large dividends kept rolling in each year...
Strange how all these failed shareholders were so quick to accept the realities of the capitalist system when the going is good but want the rules changed when the horse falls at the second fence!
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#201
Yes it is a ampersand.
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Armageddon is not next, that is the one after. The next one is a/an ++++++++ occurring in the derivative markets. A 12.5% distortion could take out a years World GDP. When,what, where, who would it go to?
+++++++* unable to use an appropriate noun as the market could unwind/implode for a variety of causes/reasons.
I think the problem could be shown in an analogy.
It was thought that the derivative markets had two main types, actual markets and meta-markets. Actual markets worked on supply and demand principles, and meta-markets were like betting markets.
Meta-markets were therefore thought like people betting on the Grand National. The horses didn't know their prices and ran their race accordingly. In theory therefore, one could have any size of a meta-market. Perhaps why we could have a derivitive amrket many times the actual market. Brokers or bookies or exchanges, simply facilitated the deals. Belief in efficient, effective and fair markets allowed the games/sport to continue.
But there are obvious assumptions that do not appear to be matched from the analogy to the markets.These perhaps point to concerns regarding the derivitive markets.
Forinstance, are humans AS INTELLIGENT, or is that ''dumb'', as the honest racehorse ??
settlement dates, cash,default,....
And so on....
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Certainly the pumped in cash can only really make a difference if we the consumer, who are in fact the reasons for these institutions existence, can be convinced that if we take out credit, we will still be in a position to repay in X months/years time, and not redundant due to the onslaught of a full blown recession. Additionally, companies who wish to borrow to invest will only do it if their end product will be sold, to us again.
If a bank can't convince us to borrow, it can't lend, and if it cant lend, their goes it's reason for being. Never really bought into the feelgood factor, so much as the feelatrisk factor. I feel at risk right now, so won't be borrowing for any reason.
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boilerplated
Thank you-I'll remember in future!
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Why such doom and gloom?
Also, are you being investigated by the FSA?
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Calm down Robert. You over react to everything.......
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#201 Tigerjayj
I have no idea why my #182 looked like that!
Can any of the HTML experts suggest a reason?
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Are there any Policemen / women, Nurses, Teachers, Local Authority, Forces staff and other public sector workers reading this?
YOU WERE REFUSED A PAY RISE THIS YEAR SO THE BANKERS COULD RUN OFF WITH YOUR MONEY!
The police weren't even allowed to strike to protest. Is that a fair an just society?
Do not enforce the law of the Bourgoisie.
WORKERS OF THE WORLD UNITE!
The time has come Comrades......pick up a copy of the Communist manifesto and all will be explained.
The only country who isn't panicking is China. They have been protected by their socialist principles, free trade and free markets represent the freedom of the Bourgoisie - not the worker.
They may have started on the road to capitalism - but they will be turning around as we speak.
1917 was too early, and required too much force. This time it will be an spontaneous uprising prompted by the lack of food and the loss of everyone's material posessions.
1917 was isolated - but this time it's global. There will be no intefering from external Bourgoisie nations.
Even if it doesn't happen this time - there will be a next time. It is inevitable, the Bourgoisie will create the revolutionairy proletariate.
The fall of capitalism has begun. Even the most ardent capitalist supporters have admitted that "The credit markets will never be the same again".
The system does not work - it was proven in 1929 and it took 10 years of hardship to get out of it.
Are you all prepared to live with poverty and unemployment until 2018?
Don't think public sector jobs are safe either. Where do you think the Local government will find the cash they have lost in iceland?
.....from service and job cuts.
The government just blew all the national savings which could have helped us through the recession.
It's all over folks - bar the shouting.
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May I just mention to you Earthlings that a more pressing problem is awaiting around the corner:
21 December 2012
The Sun will cross the Galactic plane (strong gravitational effects from the SuperBlack hole at the centre of the Milkyway)
Plus, planet-X (Suns twin Dwaf Star) is getting closer sending comets from the Oort cloud earth bound.
So....can you hurry up and sort the money problem out so we can afford a party while watching the firework display :-))
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Why Armageddon? There is no king of the north nor a king of the south and I am not aware of any financial market being based in Megiddo.
I think the best parallel is the collapse of the South Sea Bubble.
If you hadn't noticed some time ago that the financial markets were out of control, generating cash at a rate of knots then I can't help you. Two years and more ago I kept asking everyone I met in business what was holding the markets up as there was absolutely no real value there. Each time I was told the markets could not be wrong. Then I saw the rate of money growth and got very scared.
Now it is the rate of money decline which is driving the markets in the other direction. It is all about stretching elastic, now it is broken and nobody stocks it any more.
Time to retrench.
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Just to Inform you all ABBEY are adding 0.5% to ALL their mortgage tracker rates from tonight. Completely Undoing what the BOE did yesterday. I do not know how they justify this action!! No doubt other lenders will follow shortly!!!! this need to be brought out in the national media
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This comment was removed because the moderators found it broke the House Rules.
can anyone explain why Barclays and HSBC have fallen again today when the other banks haven't?
Is it cos they are standing firm and not taking a handout? If so, good for them!
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Barclays and HSBC have both stopped lending on property financing and further business financing which = looks like they are at their limits.
So the Mkt isn't going to see them in a positive light!
Other banks are known about.
On the Pension points above the core holding of pension firms should be property, which over pension term will always return a yeild which is relative to the cost of living at the time so no worries about stock price blips.
Aslo if pensions were the main holders of property then there would be a more stable property market.
Lending criteria should be linked to tax payments ie as a multiple of a persons tax bill that way real earnings can be seen, it would have the added bonus of getting tax from the black economy into out tax system. Maybe my idea is to simplistic?
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the1beard
Thanks for that! So what are Barclays doing with the money from the government then? Wasn't that 500bn to help them start lending?
Does this now mean that HSBC will have to join the 'Please Sir, I want some more' queue now?
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well now ..let's see..without denigrating the british bankers..how this plan does any more than remove earnings from banks inthe form of an additional tax..i dont know..why not just give a tax holiday? let;s leave aside the complete lack of integrity and rational thought behind the pixies in ireland providing a bail out in the form of guarantees worth $600 billion (as if ireland could generate that much new revenue in 50 years) what would be a realistic solution. Governments used to run fiscal positions as a stabilisation of economic booms and busts. Of course, this has gone out the window because of the corruption of politicians and their collective dismal quality. How many politicians have even completed economics degrees let alone "felt" them workingin practise. Similarly, since central bank officials and regulators are trained..what use has their training been in preventing the build-up of excess. All care and no responsibility for civil servants is the norm here. Assuming the current batch of regulators has any clue about how to fix problems they have been part and parcel of creating is flawed logic. What we need is social engineering of the financial system so that can not run independently of the society it is supposes to serve at societies expense. Making profits by making people poorer simply is not sustainable during a period of diminishing resources and rising populations. Here's an idea. It seems to me that, globally, around 60-70 trillion us dollars exists in "unnecessary" transactional debt. Assets for this debt dont exist, there is no balance in thebalance sheet. You can make up your own numbers and since the money has no value, the numbers are irrelevant. Why not come up with a banking solution by looking at what we want the solution to look like. That shouldn't be too hard. The next step is ownership of the "gap" between what we think should be a solution and where we are now. I will leave aside the retributional aspects that should be brough to bear. That is for finger pointers. The "gap" is already owed by the taxpayers within global economies. It can be be dressed up as a lamb, but it is still mutton. It is a sunk cost. There may be a value, but blood/stone stone/blood. These transactional debts where there is no clear asset on the other side of the ledger, need to be removed from the balance sheets of all companies and parked in a recovery vehicle. The recovery vehicle cannot be staffed by bankers since we know that bankers do not have the ability to run banks with assets backed by transactional debt of this sort. Unfortunately, a new agency is required, along the lines of FEMA. Should help with the employment problem also. I think around 100,000 people will be needed to maintain the assets behind the transactional debts. Now, new institutions that are structured and capitalised according to the social good they provide need to be formed. That is, if an existing institution can demonstrate that is can provide valuable services to 500,000 people, then we know what a fair amount of equity and debt that new company should have on its balance sheet. Or we can work it out. We have the brains. In case you think that this is too radical, then develop some of you own themes, but keep in mind, the market is close to halving in six months. That sounds pretty radical to me. Having a government intervene in deleveraging and in markets, simply prevents and prolongs the agony. Socially re-engineering the rules, the faulty system and the faulty regulators is a much better solution.
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#134, yeah it's all the banks fault. Damn them and there offers of money, smooth talking salesmen who forced me to take out a mortgage. How was I to know that a toilet in North London wasn't worth 600,000GBP or that a loan means I have to pay it back along with this thing called "interest".... and I have always been able to roll over my debt into a new credit card or equity release loan, I mean house must go up because "it's not like they are building any more" and if I had rented then I "would simply have been paying someone's mortgage". Oh and somehow it's all Thatcher's fault as well - ( despite the fact that a similar incipient bubble was quickly burst under her watch ).
Life in La-la land where you are not responsible for your failures and facts don't matter must be real fun. You should buy a flat there, I have a feeling lots of people are going to want to move there.
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let's see what happens tomorrow - a rumour posted last night says we won't have the markets to look at once the g7 meet anyway-they'll be closed for a while!
If that's the case then will we see fraud prosecutions and seizure of bank CEO assets? Will we see heads roll I wonder?
Back to my post re the missing 900bn dollars, another random thought to add to the Paulson and Iceland joke-if it were the case then how would Paulson explain to the people on main street that Russia owned the Federal Reserve?
Altogether now.....we will do everything we can .....!
Honestly, it's just a joke-Really! But I bet it ends up on a news report somewhere!
LOL!
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oops! Should have been on the other blog! The one about the vortex!
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Your not all quite getting it are you.
Our economies are being crashed, there is nothing mistaken or suprising, this is and has been the plan for years now.
Crash the national economies so you can build a global one. Simple as that.
Sub-prime is not the cause of this it is just one of the many tools used to instigate it. The end of the M3 index is the biggest smoking gun in all of this. It was equivocal to hiding the bills under the mat in the hope they would go away.
By the end of this there will be no dollar, no pound, be no national control over anything.
You only have to read the writings of those who are perpetuating all of this to understand it.
They wanted this depression and they are getting it. Why the bbc are still trying to convince you that we are in a redeemable situationn i do not know.
Peston should be telling everybody straighht what is going on. A big massive theft. The biggest heist in History and we are the victims.
They create a problem then will offer us a solution, a single global financial order, which would of course require a single global political order to oversee it.
We are essentially heading not back to the 20's with this one but back to the 14 centuary.
We should be getting told to get ready to make sure we can feed our families, because the next stage if this is going to be a fight for food.
There is nothing you (we) can do to stop this short of a popular uprising and a storming of parliament. The only way we are going to survive this as free individuals is to accept that we will have to fight for our freedom one more time.
I know this is not going to happen, as folks are still fast asleep, i will get mocked and derided for even saying such a thing and the people of the west will march into economic slavery without ever educating themselves as to why.
In a way we deserve this, its the end of our world as we know it. We can choose to either take control of it ourselves or let the paulsons of this world continue to define it for us.
This is the endgame
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Dear Robert,
Please tell the Government to:
a.Limit the stellar bonuses for any Bank official whose Bank uses the Government rescue/aid packages. 10% of the previous levels still looks quite healthy.
b. Permanently outlaw any and all forms of shorting - it just reinforces the get-rich quick mentality, based on empheral 'assets'. It's a bet that engenders a lack of confidence in any given entity that is being shorted.
c. Give us a tax holiday - rather than bolster the Banks. We'd spend the money on the high street for Christams (or pay off our credit cards?). There are margin/bottom feeders out there that will make money out of these injected Tax monies. It feels like a bigger scale version of when the £ got out of the €, when Mr Soros made £m's....
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Robert, according to Wikipedia there were many "Financial Experts" who attended the
Bilderberg Group meeting 2008 (June 5-8) at the Westfields Marriott in Chantilly, Virginia, United States:
Including
• Keith B. Alexander (2008), current Director, National Security Agency
• Roger Altman (2008), former United States Deputy Secretary of the Treasury
• Harold Ford, Jr. (2008), current Chairman, Democratic Leadership Council, former US Congressman, Vice Chairman, Merrill Lynch & Co., Inc.
• Robert Gates (2008), current United States Secretary of Defense
• Richard Holbrooke (1995 - 1999, 2004 - 2006, 2008), former U.S. Ambassador to the United Nations
• Vernon Jordan (1979-1985, 1987, 1989, 1990, 1991, 2005, 2006, 2008)
• Henry Kissinger (1957, 1964, 1966, 1971, 1973, 1974, 1977-2003, 2004,[6] 2005-2008), Secretary of State, 1973 – 1977
• Henry M. Paulson, Jr. (2008), current United States Secretary of the Treasury
The list goes on so is better if you check yourself...
Anyway because the Bilderberg Group holds "Private Meetings" many theorists conclude they have a hidden agenda.
It can be seen from this list that there were alot more "Financial Experts" at this meeting than previous years. May we all ask what did they already know about the problems with the banks then. Is it a coincidence that after this meeting a global financial crisis has occurred or has this crisis been cleverly planned? Let's ask the Bilderberg Group attendees to comment and produce the minutes of their meetings! They owe us this "Right" in the name of "freedom of information" act during these difficult times. Lets clear the air so we can be sure there is no financial "New World Order" agenda!!
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Where does all this money come from?
(Presuming it was not under the mattress) How is it being financed?
Is it = printing money? Weimar Republic?
What are the likely effects of so much "new" money washing around the system? eg Is it likely to be inflationary?
Where can I find out more about these points?
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The economy is moulded by consciousness. If there is uncertainty or insecurity in the group mind then the markets will reflect this.
The thing is, is that consciousness if evolving at an ever increasing rate. Humanity is awakening to truths about everything. There is no hiding place for anything that is rotten, and our financial system has had a bad smell coming from it from the begining. This new awareness that money is valueless and is only based on confidence is the truth that is left standing in the subconscious of the group mind which causes major insecurity. This crash has happened because the financial system was designed to collapse from the start, money is debt and more of it until the system bankrupts itself, which is now happening.
http://uk.youtube.com/watch?v=65-vfc40pcc&feature=user
The evolving human mind is can no longer support a system full of holes. We are too aware of the rot. This is a natural event as we move into a more sustainable way of life.
Evolution means - more becoming possible. More change, more insecurity in the mind, less stability for economies.
Humanity picked up the mind as a tool hundreds of thousands of years ago, with which to navigate reality. The pace of change in the world today is becoming very hard to manage for the mind (which can only process 24 thoughts a second) and we have been living in an epidemic of stress for nearly two decades now.
A short vid on inuition. Watch more on this guy.
http://uk.youtube.com/watch?v=uIDNtH8wOJg
The intuition is faster than thought, thought takes time, intuition is timeless. The mind today is too reactionary and fear based to navigate to a healthy future. The only survival tool that puts in the right place at the right time is the intuition, as we have to be fearless and come from the heart to be there.
If you are reading this saying how crazy you think it sounds it will be because you fear the truth, the truth always hurts, if you only identify yourself as limited to personal thought. Humans have infinite potential today, there is nothing to fear anymore. Come out of your head and be in your hearts, and you will fearlessly know in all circumstances what needs to be done. Love of all is the key.
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All doom and gloom? No, it has happened before; we are still here now!
One thing basically puzzles me: could someone kindly explain why Banks lend to each other? Seems counter-productive, somehow!
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I find it ironic that a national or global crisis
of whatever nature can change the fortunes
of a Government leader.
Remember the Thatcher Gov. of the early 80s,along comes a nice little military
exercise in the South Atlantic and she,s "top of the pops"
The P.M. owes dept. of gratitude to the "high rollers"of the fanancial world.
He certainly looks the business NOW!
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