Rescue plan due in hours
The Government is poised to announce details of a comprehensive rescue package for the banking system.
It will include a proposal to inject capital into banks and to provide a standby facility to ensure our big banks have enough cash to fund their day-to-day operations.
In a UK context, this is a very big moment.
It is the government's attempt to stabilise our banking system.
I'll file more as and when I have more detail.
UPDATE: 20:03
As I said this morning, the amount of capital to be invested in our banks by the Government on behalf of taxpayers will be up to £50bn - which is what most analysts estimate is needed by the British banking system.
And there will also be a promise that if any bank has difficulty raising funds from wholesale markets - which remain chronically seized up - the authorities will fill the gap.
I presume that will require the Treasury to provide additional financial help to the Bank of England (that's more taxpayers' wonga), since the Bank of England's balance sheet is probably not big enough to fill our banks' wholesale funding gap on its own.
These are big sums of our money being put at risk to stabilise the financial system. It matters to all of us that the ambitious works - not least because the reluctance of our banks to lend to companies and households is sending the economy into recession.
For what it's worth, one banker - who runs one of our biggest banks - tells me that he is optimistic that it will bring a bit of calm to the extroardinarily turbulent banking market.
It's also a big moment for the Prime Minister, Gordon Brown. This is the first genuine, full-scale economic crisis he has had to face since he entered government, as chancellor of the exchequer, in 1997.
His place in history will depend on whether taxpayers' cash is being used to slow or stem the downward spiral in the economy or whether this is good money disappearing down a deep black hole.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~28~RS~)
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It had better work... this is their/your last chance!
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"comprehensive rescue package for the banking system"
Please, please make it so!
My fear is that it will be Poulson MK2 - insufficient but also too expensive.
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Excuse my ignorance, but are the Building Societies covered by the government's planned financial guarantees?
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robert preston claimed last night that the banks had asked the government for £50 billion as a stand by,result turmoil on the markets today.
the banks claim no such request was made, whos lying?
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Bring out your devalued pooonds.
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So will Brown/Darling announce a rescue package I moved 74million out of UK today to Ireland couldnt wait any longer we had to be certain wages salaries and suppliers could be paid.NEED I SAY MORE????
MODERATORS PLEASE DONT CENSOR THIS.
THIS IS WHAT RESPONSIBLE COMPANY OR BUSINESS OWNERS HAVE TO DO WE CANNOT WAIT UNTIL A UK CLEARER GOES BUST.........................................................
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I do not have a lot of confidence in it and I have not heard it yet.
The knowledge of the persons involved in it is enough.
It should have been here for UK banks a month ago, I think it is too late, I hope it is not.
Back to my plot tomorrow, potatoes will be worth more than money soon!!!
regards
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Sounds good, Robert.
But what the government must do is screw very very good terms out of the banks.
Existing bank shareholders need to be diluted big time, and suffer the penalties of not having controlled their stupid boards of directors.
Additionally they must make it a condition that no bonuses can be paid this year to any executives of banks helped in this way.
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Where is the money coming from? How much? From tax payers? We're broke already - "the cupboard is bare".. there is a long way down to go in this business cycle, and the government may need to eventually print their way out of the problem i.e. would we risk consistently high/hyper inflation with such a move?
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I simply want to say that Robert Peston has ben brilliant at informing us all what is going on and helping me and my wife decide what to do with our life's savings.
Yesterday my wife and I went to a couple of banks to make sure we protected our savings by not having everything in one bank. We live in Castleford Yorkshire and in the Abbey northern humour was rife.
There was an elderly lady who was telling an adviser " I am not interested in interest rates at my age". There was a young man in army uniform getting some cash out and he was with three colleagues also in uniform. Another woman came into the bank and looked round. She said loudly: " I know things were bad but I did not realise the've had to get the army in"
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Very very bad news.
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Robert,
I can't believe the Government are going down the nationalisation route once more. The bank brands of UK are being badly tarnished as the Goverment lets their share prices collapse and then steps in at the last minute when all has failed. This must be bad for Britain.
The Irish full guarantee was a much cleaner solution and has removed all its bank turmoil even as they looked down teh abyss. Meanwhile our politicians sit on the sidelines waiting until another run on a bank occurs, then stepping in and breaking up the bank. So much brand value and business competitiveness is slipping away. Gordon - wake up - smell the coffee. Preserve what little is left of our banking system and follow the Irish.
Nationalisation will be a disruptive, messy and ultimatley expensive solution for tax payers either directly or indirectly via their shareholdings in the respective banks.
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I do not understand how the UK banks can be "stabilised". If the banking system AND Building Socs pick up the tab for failed Icelandic banks etc etc via the FSA every failure in this country will continue to weaken both. Presumably in theory when the last bank goes the Building societies might not be far behind?
Where does the Government get the cash to inject capital. Prints money and adds to inflation? Liquidity problems should be solvable but it seems to me that solvency issues are the real problem and we are now in a scramble to see who can pass off what on to who and divi out the huge bill.
Banks and borrowers have been reckless but how could a government stand back and watch the vast debt increases that have occurred over the last five years. It is there to govern. It did not need clever regulation: just a Treasury to take a macro view of interest rates that reflects the wider needs of the economy and not just inflation. The Treasury bought into it to because its coffers were being filled for its various crackpot initiatives.
The budgeting for the next Olympics is probably a reflection of the lack of financial acumen at government level. - And wouldn't it be welcome to have some of our gold now. - and where is our great EEC - everybody seems to be operating by different rules. Will this crisis finally expose the weakness of "federal europe."
There may be suffering from some of the problems that have come via USA but lets recognize that a much of our plight is of our own making.
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And how exactly will the government be injecting capital into Building Societies with no shareholders?
Building Societies have been responsible, and how is the government rewarding them? By supporting failing banks, and giving them an unfair advantage against the responsible Building Societies.
After walking over competition law to grant Lloyds a de-facto oligopoly through its HBOS takeover, perhaps we should not be surprise for this government's distain for those who have played by the rules.
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Bank share price drop today (courtesy of Peston exclusive) to ensure Govt doesn't have to pay much for its equity stake in Banks?
All will have to be nationalised yet (and no, I'm a Tory) - Broon acts too slowly and in too limited a way. To stop a run you need almost instantaneuous action (ie not like Northern Rock) - its too late already.
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How much money does the government actually have to prop up the banks? Does it have an infinite amount? Is it going to run out?
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My company has a deposit account with the Yorkshire Bank, a member of the National Bank of Australia group.
Will the UK government's rescue, investment, guarantee or whatever package happens, include what are effectively foreign banks?
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Why doesn't someone ask the smirking Gordon the Golem what happened to his claim to have ended the cycle of "boom and bust"?
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I sincerely hope that any rescue capital made available to banks will involve an equity transfer to the government. It is outrageous that Taxpayers are funding this bail out without any access to future upside when the economy gets back to normal. Exisiting shareholders in these banks should see their ownership diluted in consequence of this.
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It's well overdue time for this kind of "plan". As for it being a "rescue package", the banks themselves said that they were not bankrupt; just a little short of the readies to transact normal business.
If the government didn't step in, I'm sure one or more of the foreign banks and/or sovereign wealth funds will !! After all, these are good assets , not toxic assets !! And they are well worth acquiring at a discount !!
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This is just throwing even more good money after bad.
There is a myth that abounds that suggests that the Government MUST do something and so is panicking into coming up with ever more elaborate, but ultimately futile and extremely costly measures to stop an economic Titanic which is already sinking.
Make no mistake the banks are flat broke - as a result of the reckless neo-liberal policies over 3 decades - and whatever this does, it will not kick start the economy, which has depended on credit. The money will purely be used to stave off the amount of bad debt that will snowball rapidly as businesses fail, unemployment rises and people start defaulting on their mortgages.
The time for specific action was 7 years ago when the Bank of England foolishly followed Greenspan in America and made an already bad situation worse and cut interest rates to stave off a recession and in the process stoked the flames that have led to where we are today.
In reality, the only way forward now is to let the market run its course, i.e. do nothing. As a case in point, the $700b Paulson plan that was meant to save the World Economy is now but a distant memory. The system is dead and no amount of jump-starting it will have any beneficial effect.
We are entering into a long dark depression. Thank you James Callaghan, Margaret Thatcher, John Major, Tony Blair and Gordon Brown.
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Moderation is taking too long. Find a way to speed up the process.
The least that should be expected if re-capitalisation by the taxpayer is the chosen mode is that share options should be forfeited {see Fuld at Lehman}. Desirably options exercised during this crisis should revoked/rescinded or failing that undertaken at the price prevailing when the option began notwithstanding any 3 for 1 like that done by RBS
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Have you heard of "The parable of the unmerciful servant" ? You are about to see it played out in the financial markets.
http://www.thebricktestament.com/the_parables_of_jesus/parable_of_the_tortured_debtor/mt18_24.html
http://en.wikipedia.org/wiki/Unmerciful_Servant
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THOUGHT YOU WOULD ALL LIKE TO KNOW THERES FREE MONEY AVAILABLE AT MY PLACE TONIGHT ONLY I DONT SEE ANY POINT IN PAYING IT IN TOMORROW AS I WILL END UP NEVER SEEING IT AGAIN.
SHOULDNT A NUMBER OF PEOPLE GO TO PRISON FOR THIS MESS AND BE DISQUALIFIED AS COMPANY DIRECTORS SO ALL YOU BANK DIRECTORS PLEASE FORM AN ORDERLY QUEUE.
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I have to ask Robert, you didn't have any holiday booked any time soon did you? I think you may qualify for most of 2009 off given the demands of the job recently (maybe there won't be much business left to report on by then anyway.....).
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Damn!
I thought we had a scoop :-) No doubts it will be a half baked hairbrain idea that will
a. Cost me (the tax payer) more cash. and
b. Not work!
It seems to me the route of the problem is Libor, time for the BofE to lend directly to the banks taking the commercials out of the picture?
Do that and seriously reduce interest rates and we have a change of avoiding a depression!
I can't listen to anyone seriously contemplating higher rates, that would be catestrophic!
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Interesting times, Banks knowingly lent too much money and then demand the government rescue them. Taxpayers will be footing the bill for many years to come and the current government are unelectable now.
Any chance of some of these bankers paying back some of their salaries and bonuses as they were based on false assumptions - or will they reduce their salaries as a result of the difficulties that they have put their companies and the shareholders in.
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Channel 4 reports that it will entail GB PLC taking an equity stake in all the High Street Banks. It's not clear yet if this extends to HSBC, the strongest, most resilient, of the banks so far or indeed to the building societies, private entities who do seek funds in the open market. Mr P. will do doubt provide the detail.
When a house, literally, starts to collapse, shoring up the bedroom ceilings wont stop the roof arriving on the lounge floor.
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Whoever your source is at the treasury should be criminally prosecuted for leaking the details of yesterday evening's meeting. How the market is supposed to return to any sort of order when the content of highly confidential meetings between the Governor of the BoE, the Chancellor and bank CEOs is splashed across the BBC and Bloomberg is beyond me. The results have been all too obvious, and catastrophic. Pathetic government and pathetic journalism.
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Without seeing the other comments awaiting moderation, I cannot say if this has been mentioned or not, but why do we have this interminable wait for news and information?
The government is causing yet more problems by delaying its announcement, let's get it out in the open so people can see some leadership for heavens sake!
Peter
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So here we go. Not content with squandering the millions we held in gold assets now Brown and Darling are giving hard earned peoples tax to people who have no idea of the concept of the value of money.
This is going to end in an even bigger disaster than ever now.
What happens when they realise that there is not enough taxpayers money and we have thrown away every penny we had?
Nothing will ever be the same again anyhow. We can't go back.
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Hi
On behalf of Her Majesty, I have been asked to offer you whatever you want for your business. Infact I might only take a small part of it, so you can do whatever you like, and all those capitalist taxpayer fools will pay your wages, and let you run your business how you like. Sound ok? I'm off to bed now, so just let me me know by the morning. Cheers.
A Darling
From your friendly Labour Government
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Did anyone else notice? Someone appears to have bought almost 30,000,000 GBP of shares in Barclays just before the bell today, lifting the price by some 40 pence. Has the tide turned?
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this is very good news - sounds like the govt is doing the best thing it can do. unfortunately though, what happens next is really outside the control of anyone in this country. it depends on other governments - in the usa, in europe, and in china and the middle east. let's hope they all do the right thing over the next couple of weeks. then there should be a strong rally in the stock markets - an excellent opportunity to dump your remaining shares!
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Well, I feel a bit sorry for AD - all that way to agree a proposal less substantial than measures already in place. Hope it was a good lunch. Clearly Europe a non starter - lets hope that tomorrow's 'rescue' is full, comprehensive and rooted in national interest (assuming the powers that be have determined what that entails). Lets hope for (1) a public stake in the banks (2) a few sackings (3) a few pounds of flesh - I suppose a few stones would be too much to ask (4) an Ireland type deposit guarantee. From a purely selfish point of view, the thought of having to split up my savings/redundancy pot into chunks is depressing me - I know I should have done it already - but its a pain.... persuading someone to let me open an account with them - tried it yesterday, took hours; losing interest on bonds etc. No doubt a bit of pain for the current holder of my funds too - may be relatively secure but who knows. So, I'm hoping that whatever is announced will rescue me from having to spend the day doing my little bit to add to instability. Last thought for now - please, whoever makes the announcement, do not say 'We will do whatever it takes...' Blah blah.
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Maybe I missed it the day it was explained to us all but what i don't understand is now that we are ina global economy what is to stop the banks lending to people/businesses outside the UK that may be willing or able to pay a higher interest rate than we are. how is the Uk tax payers money going to be ring-fenced so that we don't subsidise or fund non-uk companies and business to the detriment of the UK economy. Damn, I forgot, we work and compete in a global economy. Tough on us if we lend money to our international competitors to the detriment of the UK. We should get our act together in the first place. Tell you what, let's go one better. Lets give our money away to non-UK companies and other governments so that they can prosper while the UK goes down the pan. Hold on a minute though, we have done that once before. It's called EU subsidies. Like Jeremy Clarkson once intimated, why should we have to pay tolls on a Spanish motorway when we helped pay for the damn thing in the first place.
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Where does this leave Building Socities!!??
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UPDATE: 20:03 - Robert Peston gets the scoop of the decade..
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Is this the moment when all the bitter posters slag off Robert for 'causing' the spike in bank shares tomorrow? Thought not.
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I've discussed this with a few ex-banking people I know. One who was a senior figure in a city bank for many years says that the bankers are running rings round the government. His impression is that their are many in the City making money and that they could sort this out.
My instincts are telling me that something very very bad is happening here.
Nothing will ever be the same again. Also this could now turn into a much bigger horror story than any of us could imagine now.
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I think what the governements are doing is absolutely crazy. I would not give these banks one cent unless they back it up with good collateral.
These banks have been milking us over the years with charges, high interest rates etc etc. Now they find themselves in difficulty and they come to us the tax payerto bail them out. SO that they will milk us some more.
As the Pope said. Capitalism and Communism have both failed. This is one great example. Problem is that certain people have become millionaires from these follies.
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On the hoof policy making and annoucement have been awful for the Uk economy. The government seems out of step with the pace of events. if it does note get a grip soon then the Uk economy will be off a cliff
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Having read the blog comments this afternoon I find astonishing that the views of many that believe that RP's comments are in fact significantly contributing to the paranoia that has swept over the market have been ignored.
Please BBC show a balanced view of public opinion - isnt that what we pay for?
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I am expecting a Tax refund and I am not going to pay any BBC license fee/tax either. I prefer SKY anyway!
The beeb should just ask the Treasury for direct funding.
Robert - tell your money masters for me...you seem to have a direct line to them.
FWIW
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If it turns depression into recession, then it will have been worth every penny. Let's hope that this puts a bottom under the markets.
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Well this is it, do or die. As I see it, if tis works we get away wit a mild recession, if it fails not only do we have a full blown slump but we have a Government that cannot afford to help the ordinary man-on-the-street because all its money has gone on trying to save the bansks.
Fingers crossed...
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#5
Mirror, mirror on the wall...
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So most analysts estimate that the British banking system requires about GBP 50 billion.
Would these analysts be in any way related to the analysts that determined that RBS and HBOS needed to raise GBP 12 billion and GBP 4 Billion respectively by way of rights issues earlier in the year?
I guess its lucky that events are moving so fast that there is little time to reflect on this mornings pronouncement that the Government will not allow any depositors to lose money. I have seen quite a few people crossing the screen on the BBC who clearly believe that they have lost money through Icesave.
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Peston - You appear to have some pretty top notch banking and governmental insider contacts - any chance of sharing the name(s) with us all. My guess it's Mervyn King!
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If I was a Premiership footballer with a load of money in a bank account ...I would be very worried! right now
But I'm not.......HA, HA!
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well done peston, looks like you brought the banking system to its knees yet again
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#5
Well you are living up to your name!
1) Robert Peston's job is to report. Do you seriously believe his blog and reporting has affected the outcome of this current crisis? If you do you are living in La La land. If Robert hadn't broken the news of last nights meeting someone else would have.
2) Get a grip - we have got to where we are not because of irresponsible journalists but because of irresponsible bankers.
3) Be thankful that we have a media that we can rely on to get to the core of the lies, deceit and greed that has helped us to get into this fine mess. One day you might just realise that.
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No doubt these shares will be sold at a loss by the Tories to their business pals as soon as they get into power.
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I keep telling people 'This is it'!
I keep expecting the ATM to tell me as it is saying to some Icelandic customers 'This service is temporarily unavailable'.
If financial meltdown is a possibility then how do we know when it is here?
I suspect I will regret not buying a very large quantity of decent claret. It would soothe the pain and be a tangible and tradeable asset.
Get some sleep Robert. I think you will need it.
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If the plan is to borrow ideas from Buffet, as the suggestion was this morning (i.e. non-voting preference shares with high dividend, plus equity warrants) then it has my full support. And I suspect it may turn out to be a whole load better than the Paulson plan which could see US taxpayers paying for the loans to fund the investment for 25-30 years - i.e. as long as the original lending.
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Re Post 5: You seem to be following a fairly consistent theme of the day - namely spitting invective at the author and accusing him of having all manner of powers and of abusing those powers to exacerbate the overall problem.
I suppose it would be expecting a bit too much for any evidence to be cited in support of these accusations.
How about Robert Peston has a known loathing for Manchester United and so he deliberately spread false rumours in the US and manipulated the NYSE to cause the bankruptcy of Lehmans knowing that this would lead to the consequential collapse of AIG and thereby deprive Manchester United of shirt sponsorship income. (I guess WaMu has to be written of as collateral damage)
You could go further - a man in a pub mentioned that a disproportionately large number of Manchester United supporters had invested their life savings in the Icelandic banking system. Being part Icelandic himself he found it relatively easy to persuade that Government to commit financial suicide in order to further punish Manchester United supporters.
What about mentioning his little Englander mentality which fuelled his desire to unleash his powers of evil against Hypo Real Estate.
You want to try and get a grip, all this talk of lynching people just generates bad karma.
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No way should banks be bailed out for free! For years they have ridden the wave of excess profits at the expense of every person and business in the UK.
In the recession of the 1990s they contined to make vast profits whilst the rest of the country suffered - many a good business was closed and many an honest person had their home repossessed when it would have been possible for more supportive banking institutions to have alleviated much of this suffering.
If Labour were to offer support to these greedy businesses, above supporting hard-working people who are losing out everyday to rising prices, flat wage rises, a shrinking job market and utility companies making excess profits, it would be unforgivable! If the taxpayer bails the banks the taxpayer should take the future profits.
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Robert Peston should phrase what he writes carefully to avoid fuelling the panic in the market. It is important that the press reports the facts as they stand instead of twisting them to sensationalise the news.
His claim today that British banks (RBS and Barclays included) "asked" the Chancellor for funds was very categorically denied by both banks - infact by an official press release by RBS.
Clearly there were discussion on funding last night .... but I doubt if what Robert Peston said is exactly accurate - neither Barclays nor RBS would go on public record to deny it if it in fact was the truth.
Mr. Peston I am starting to doubt your credibilty! People in your profession should report facts and avoid sensationalising issues with a bit of twist (no matter how minor) here and there.
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Seems to me there could still be time to pull this back from the brink, would some measure like the below help or hinder?
Investors/Speculators
Provide material incentives for investors to go long - very long. Reverse taper tax relief on capital gains. 5yrs 10% tax relief, 20yrs 100% tax relief.
Depositors
Provide believable, not 100%, guarentees for retail and commercial depositors, paying a rate of interest that reflects the risk to depositors (sort of reverse of the "typical APR depending on circumstances" we are used to seeing on other loan adverts.)
No tax on interest earned.
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The Dow Jones losing nearly 5% today is starting to look the norm.
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I hope the Government extract promises from the banks not to abuse the public by increasing their charges and margins, and that they support individuals and businesses. The hiking of bank margins and the calling in of debt all over the place are hurting the very tax payers who are funding this bail out.
The Irish Government have extracted such undertakings from the Irish Banks.
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And if tomorrow, he doesn't provide a higher guarantee for saving deposits, then expect an unpluggable withdrawal of the higher deposits.
Starting with mine asap.
A harsh measure, but that will teach the blaggards to treat the depositors movable cash as not worth protecting.
When the Banks have defaulted then some hindsight analyst might say
'Well the primary responsibility was to protect the depositors. Everything else develops from the Depositor base. They didn't do that so the money went away and now they are bust'
Bankers partnering with Governments.
That sounds like a Toxic Mix.
Doohhh !
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Mr. Peston,
You need to shut up, or be shut up, until you can report what is happening or has happened, rather than speculate wildly on what might happen, and cause immense shifts in markets. You are being irresponsible.
Yours,
A saver, investor and shareholder who used to think he might have a pension...
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7. At 7:08pm on 07 Oct 2008, orangewilliamx wrote:
robert preston claimed last night that the banks had asked the government for ?50 billion as a stand by,result turmoil on the markets today.
the banks claim no such request was made, whos lying?
Clearly Robert Peston ..... the banks would not go on record to deny this if that were not the case .... RBS came out with an official announcement. Peston needs to stick to facts, stop sensationalising the news and be a resposible journalist - currently I do not see any of these traits in him.
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where is the moderator??? is he very busy trying to get the money out of Landsbanki?
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If the rescue is big, bold and simple. If the communication and the liason with our European neighbours is well executed and not bungled - it might work!
Gordon Brown could restore both our financial fortune and his political fortune.
Time will tell.
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Guys - it won't work. I don't think people realise just how out of control this situation is now.
If you look under the covers and read some of the more academic/technical blogs and websites you'll see that the portents are bad. The TED spread is wild; today, to all intents and purposes, the Fed became an OTC derivatives dealer (standby for the infinite printing of dollars); Hank's 700 billion dollar TARP has just become a pebble tossed into the boiling sea; right now the DOW's dropping like a chickenwire submarine; REITs are collapsing; gold producers and mints can't keep up; watch the LIBOR to see the tipping point and look out for gold soaring through 1,500 dollars.
There's a growing likelihood of a full banking system shut down; a greater chance of this than of any government bail-out working.
I'm drawing a month's worth of cash because I think we can expect an extended bank holiday any day now.
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Robert
I have just watched your program on BBC4 I was amazed to see the difference in tone to that of your interview with the HBOS BOSS . It seems that you are beginning to see that the problem is related to totally unregulated , virtually incomprehensible methods that the moneyed use to extend their fortunes to the detriment of us all . This of course has its roots in the Thatcher/Friedman school of free market , no strings attached financial system they espoused. The present situation is that the governments are now trying to regain control of their own economies - those taken from them by speculators who follow Thatcherist model.
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While the reach of the banking crisis defies description and has been the root cause of destruction of wealth on a massive scale affecting every man, woman and child in the UK for years (possibly decades) to come. (Reduced pension funds, inability of ordinary people to raise a mortgage easily, property price crash and so on.....) I for one hope that this expensive but necessary bail out works and it is given time to do so.
In part this situation is due to the crass stupidity and greed of individuals at the very heart of the banking system. In part lax regulation. In part government in the UK overseen by a former "prudent!!!" ha ha Chancellor who presided over the whole sorry mess for ten years, took the credit for rising house prices in the good times and raised taxes and spent all of the surplus revenue on grossly inflating government spending at every level - never mind the pension timebomb that these new civil servants have in store for us when they come to retire. Not their fault but an indication of the mess of the public finances of UK PLC and what lies in store.
Nevertheless, while the prospect of a taxpayer backed bail out sticks in the craw somewhat, I would suggest that if we dont or worse, we do this and it doesnt work-then the ramifications for EVERY sector of UK PLC will be very severe indeed for years to come.
i for one hope that it is enough (is £50bn enough?) and they all start lending to one another and eventually some semblance of the new normality will return. fingers crossed.....
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I'm fast forming the opinion the the Fractional Reserve Banking system has been a scam perpertrated by the west to defraud the middle east of the wealth that their natural reserves have brought them over the last 40 years.....as well as the chinese of their manufacturing output for the last 30 years. The dollar will imminently collapse and become worthless hence making the sovereign wealth funds valueless.
Unfortunately for them, much of their wealth is currently either dollar or Euro denominated!.....they have/are being sh@*fted.
This does not bode well for world relations.
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Good! Positive action at last! This will be seen as a 'good thing' when we reflect on the happenings of the past fortnight.
Government and bankers working together...good things could come of this..whether they like it or not...
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The government is going to find £50 billion to prop up the banks. At the same time, it will stand by as thousands of post offices are closed in order to save a couple of hundred million pounds at most. The post offices should be retained and the Post Office Card Account should be expanded so that it offers a day-to-day banking service for all those who do not want to get sucked into the clutches of the high street banks.
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NOOOO. No bailout - at all. Let them go down, let the market sort it out and get it over with. How can we allow these idiots to spend OUR money in giving it to private banks
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As you noted a while back CDS positions will still implode in the next few weeks - where will this leave a mere £50bn
It will not get any better until all leveraged positions have unwound or been covered by Government (taxpayers) money.
It will be interesting to see the next crisis unfold.
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Why should the banks be bailed out? It is not they who have gambled with risks they chose to ignore. The directors and shareholders should have understood the risks and been more cautious.
To answer my own question, if banks are not rescued then we all face loosing our savings, investments and pensions; but there should be restrictions on the level of risk allowed with public owned funds. Even the most simple understanding of finance leads you to see that the kind of risk based lending that banks have indulged in during the last decade and that customers have lapped up could not be indefinitely sustained. It really was just a matter of time.
Oho so wise after the event!
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I do hope we the taxpayer get a very large chunk of equity for our capital injection, at least 51%, and that current shareholdings are comensurately diluted. This would be the very least I would accept for buying out a busted flush. If you knowingly trade while insolvent you are comitting fraud. Having a basically sound business but running out of cash is usually the banks trigger to pull the plug and call in the receivers/vultures to pay the VAT, tax and banks. I think we the taxpayer should be similarly sympathetic. Of course our 51% would allow us to sack the board and call them up in front of a house of commons committee to explain themselves. While we're at it, what were the pension funds doing lending the ftse shares to the hedgies? what did they think they wanted them for?!! Why can't the pension funds match their liabilities (+30yrs) with their assets (long dated Gov. bonds) as opposed to ridiculously volatile equities, shorts and commodities. Not risk matched. Lets hope this washes out the clowns and brings in some sense. Rogcay.
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The pyramid is now collapsing fast! There is no amount of fed, government, BOE, central EuroBank etc money that will plug the gaping black hole of world finance.
In 3 weeks we will have 2 large National Banks
(not RBS!) that will be being propped up by the taxpayers. It will take 5/6 years to return to normality and that will be after the 2nd World Depression!
It is going to be a hard road back! Don't believe the economists or anyone who is in the industry, we are heading for financial armageddon. 40% of Britains houses will be nationalised as banks are sucked into the Nationalised world of debt and drudgery!!
Prepare for a crime wave and scenes reminiscent of the riots of the 80s.
Bankrupt countries and the demise of the Euro are on the way!
Our only saving grace is the pound, it might help us climb out of the hole first, with a massive push from China who will be the financial rulers of the universe!
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If this is the case, then the hedge funds can now make serious money out of the UK because if the banks can go one time for capital to the government then they will keep on going back when they are forced into a corner. And hedge funds don't need short-selling to achieve that. This would be equivalent to a repeat prescription for a chronic illness because the banks will keep coming back for more capital. More of my tax for institutions that can't manage risk.
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what the BBC or any other organisation have failed to inform the british public is that in the U.S. that when foreclosure occurs on a property. the debt is against the property, not the individual, therefore people can just walk away from any debts, unlike this country when financial institutions will chase you to the end of the earth to get their pound of flesh
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Nasdaq and DJIA both down well over 5% today. US bail out seems to have had no effect. Why will ours be any different? Just chucking good money after bad.
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Please can we have a modicum of sense here.
post 11 says:
'Existing bank shareholders need to be diluted big time, and suffer the penalties of not having controlled their stupid boards of directors.'
Many of us hold bank shares via pension funds, life assurance or in ISA nominee accounts. There is no way we can influence directors, let alone control them. Thankfully, there were signs that some pension funds and trustees were beginning to speak out against mismanagement or excess, and they should be emboldened to speak out more often in future.
But let us not imagine that the obscene rewards taken by bank directors were unusual. Building society directors have been swilling at the trough as well, perhaps with even less justification, and how much good has it done building society members to protest against this by voting????
The whole financial culture has been corrupted progressively over the past two decades. Yes, it needs a drastic cleanup, but let's not imagine that expropriating shareholders will solve the problem.
If the problem is – as it appears to be – one of liquidity rather than insolvency, wiping out shareholders will only make it more difficult to raise capital in future, except on confiscatory terms from the likes of Warren Buffett or the state.
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Robert,
I don't know where you got your information from this time but your 'mole' has got his wires seriously crossed.
My mate Gordo phoned me earlier to tip me the wink about the content of the plan. Since you're a mate in the business, if you know what I mean (nudge, nudge), I'll let you in on it as long as you promise not to tell anyone....Deal?
Gordy is about to:
Announce the issuance of the UK's totally new, debt-free, 100% reserve currency. It will be called Sound Money or Tally for short.
Every pound sterling in existence will be exchanged for the new currency on a one for one basis whether note, coin or binary.
The old pounds will no longer be considered legal tender but will only be able to be exchanged for the new notes.
The issuance of the new money will be totally under the control of the new UK government which will be staffed by financially literate people and be for the benefit of the population it serves and no-one else.
The Bank of England will have its charter revoked and its owners will be removed to ply their money-changing usury wares elsewhere (a boat is currently moored down the docks for the bounders).
Because the new currency is not debt-based or fractional it will not suffer from the now famous Boom and Bust cycle (this means Gordo will have to find some alternative rhetoric but thats a minor inconvenience).
Neither will the new currency rely on the 'growth' paradox thereby stopping the inexorable destruction and overpopulation of the country and, if the UK's model is copied by others, it may just save the planet as well.
The 3000 very expensive laws which have been brought onto the statute books over the last 11 years will all be repealed saving oodles of cash.
Withdrawal from the European corrupt gravy train called the EU with immediate effect saving endless amounts of our money.
The £12bn project to create a national spying database to intrude even further into the public's lives via the internet will be scrapped.
George Orwell's book 1984, originally meant as a warning, will no longer be used as the roadmap for domestic and foreign policy.
All PFI contracts will be called in and the schools and hospitals run for the benefit of the people whom they serve rather than the fat cats that currently milk that particular dripping roast.
Plans to cover every square inch of this small island in houses will be scrapped.
British troops stationed all over the world will be recalled back home and we'll stop pretending we have an empire any more. It was fooling no-one anyway.
Every Quango in the country will be routed and replaced with....well...nothing, because they serve no purpose and are not required.
The number of civil servants (government employees) will be reduced by 90% thus redressing the current inequitable position where 20% of the population generate revenue in real jobs to keep the other 80% in the lap of luxury.
Now it'll need a bit of tidying up but you get the drift?
er....that's it.
Now a deal's a deal. Not a word to anyone. you promised.
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WOW!!!...I've been reading Pesto's blogs for over a year now,....and they have just gone into overdrive today!...poor old moderators!...
Holy Moly!
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This plan does not have a hope in hell of working. They are just throwing public money at the banks in the same way that Lamont tried to keep the pound in the ERM.
Every taxpayer will end up something like 2 thousand poorer, and the banks will not survive anyway.
Why cannot they just admit that the whole banking system is knackered. Let them go to the wall then in time they will be replaced by the likes of Tesco and the Building Socs.
Obviously the short-term liquidity crisis will be disastrous for many businesses, but this problem will remain with or without the bail-out. The 50 billion would be better spent returning 50 p in the pound to savers, while at least maintaining the value of sterling.
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Rob....please slow down a bit; if only for the sake of your family (and the rest of us).
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The US markets have closed over 5% down.
Bank of America has lost over 25% of it's value today.
THE BAILOUT HAS NOT WORKED IN THE USA.
Why are we following?
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My money is on the deep black hole. This £1,000 for every person in the UK will probably get us through to Monday - what then - not many of us earn £1,000 a week we can burn. I have voted with my feet and am moving all our money (business and personal) to Ireland.
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All this happened because Brown, Darling, the Bank of England and the FSA let it happen. People don't die in masses on the roads: because there are driving laws. If you don't regulate the bankers they will act recklessly "because they can". The government is guilty of total failure in their fiduciary duties towards the wealth and financial security of the people who elected them and put their trust in them. If they would run a company like that, they would all be in prison.
Now Brown and his gang are using the taxpayers money to buy up the bad loans of the banks and "sanctimoniously" are promising to make the taxpayers partners in the "eventual profits" of this scheme. Let everyone make a note of this and wait for the profit cheque from the treasury when thats coming true. "Arrogant odious lot"
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Robert,
According to the contributor BMB on the link below, your comments wiped £19.5bn off banks' share prices today.
http://ftalphaville.ft.com/blog/2008/10/07/16733/the-royal-bank-run/
Are your actions any better than the 'spivs and speculators' that people were railing against just a few weeks ago?
BFC
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32.
yes. careless talk costs jobs. it seems some people are more in love with a 'scoop' and making a personal reputation than they are with the effect it has.
no doubt if someone had leaked the secret d day plans they would be up on the blog?
financial plans like military plans need to be kept secret until acted out. the bbc did the same during the falklands when they blabbed before the event that goose green was to be attacked in a dawn raid. Luckily the argies thought it misinformation. Just because you know a secret does not make it wise to yap?
markets buy on rumour and sell on fact. this constant reporting rumours is irresponsible. something a yapparazzi might do?
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Is anybody else out there thinking this is a great time to buy? I have just tonight taken a risk with some of my money on HBOS - Not sure how long I will keep them though!!
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29 you must be joking. The situation (which may be catastrophic from a debt-addicts point of view) has been brought about by low interest rates. Low interest rates means people are invited to borrow money. But people are now up to their necks in debt as this "financial crisis" is a debt bubble deflation. You can twist and turn. There is no more cheap money out there, sorry!
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Did anyone else notice that Iceland sold the north pole and all the oil under it (and our energy future) to the Russians for a mere 4bn Euro? Bargain of the millenium!
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Gordon must be bold and take a risk here- not in his nature so I fear it will be too little and with too many conditions but I like the idea of prefs with warrants- will protect the taxpayer but not my persoanal pension that will undoubtedly have banking shares in it that will be moribund for years- but I would prefer to be poorer than broke.
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I don't believe it (and yes that is with the meldrew intonation) just tell us you are going to guarantee savings and cut interest rates.. then confidence will rise .."remember the value of shares may go up or down"To plagarise another BBC catchphrase "Don't Panic" if you are not selling your house or shares then it doesn't matter .Brown should tell the banks to stop gambling our money (put it in bullion )and stop stupid bonuses for fat cat high flyer "merchant bankers"(apply rhyming slang for quote) we don't want nationalised banks draining tax revenue we just want to safeguard our investments .... use tax money to shore up the money we have already invested and let greedy institutions go to the wall . We would have more confidence knowing our pensions are safe than owning/bailing out part of a failed banks after selling their assets
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Osbourne is right. Save small businesses. They are the future!
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Question : have you created all this chaos today by inference that 3 banks sought funding...?
Just because RBS did not comment (but LTSB Barx did), that does not mean RBS DID ask for extra liquidity and the other banks did not...
... or even that any of the banks did
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Personally I wonder how much Mr Preston's comments have contributed to this mess! A large ego with a need to be fed has created a huge kick back. But no doubt a great scoop.
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Why so many comments awaiting moderation? At 22.00 64 comments are still to be published. I hope for the sake of his reputation Robert Peston hasn't fouled up big time.
I have said previously that IMO his sensationalist breaking of the Northern Rock "crisis" the exacerbated the whole situation. Now we are told by the BBC that the banks are denying that they asked for the money he stated.
Who is right? If it is speculation on his part then RP should consider his role at the BBC.
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Maybe the plan will calm the FTSE, I would like to see it. However the Paulson plan has made no difference to the Dow (I believe it doesn't pay out for a few weeks though - so will it make a difference eventually - but my impression is time is running out). Anyway my main point is the Dow will drag on the FTSE even if the UK plan is a good one.
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The rescue of British banks, depending on how it is structured, is potentially the biggest windfall for the British taxpayer in a generation.
As share prices in the banking sector rise. as they will, the British taxpayer is going to make a real killing.
At their present low share price British banks are a buy, providing the toxic debts are ring fenced.
Buy signals will have been flashing up among the world's leading players to acquire the entire British banking system on the cheap from Omaha to Beijing.
Sorry Mr Buffett this time the benefits are all ours, preferrential shares and all.
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Re the Icelandic deposits situation.
I note that Iceland have passed emergency legislation apparently allowing for their FSCS-equivalent scheme to make repayments in kronur. (Source: bullet list at the end of http://eng.utanrikisraduneyti.is/speeches-and-articles/nr/4489 .) To my knowledge the UK press haven't picked up on this yet (and it's not clear what the FSCS/FSA have to say on the matter). The UK press have rumoured that the ISK is going into free fall, so when I get my Icesave compensation, will it be worth more than a barrelful of pickled cod? You're well placed to find out for us, Mr Peston! :-)
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Blimey!.....I wonder how many of the smart peops, that have been on this website over the last few months, proclaiming that they got out of the housing market at top price, 12-18 months ago, put all of their money into an Icesavers acccount?
Oh dear!
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so, we as taxpayers are *forced* to give 'our' money to the banks so that they can then lend it back to us....???...and for a handsome fee too no doubt!
When the govt gives our money away it should at least attach requirements for its repayment, including interest, and refund that interest to us, the moneylenders, in the form of increased personal allowances. At least let us benefit in some way......
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VERY SAD TO SEE I AM BLACKBALLED FROM POSTING BY THE MODERATORS.
CENSORSHIP BY THE BBC NO NEVER.
PERHAPS I SHOULD GO OVER TO CHINA WHERE I EMPLOY OVER 3000 PEOPLE.
THE CHINESE GOVERNMENT DOES NOT CENSOR ME NOR DOES THEIR MEDIA.
WELCOME TO CONTROL FREAK BRITAIN.
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£50 billion is peanuts compared to the cost of a bank going under. Let's hope that we don't have the rumour mill aka Robert Peston casuing panic in the markets tomorrow, we rerally don't need anymore unsubstantiated tittle tattle at this time.
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PLEASE!.... LETS NOT FORGET THE IMPENDING ENERGY CRISIS......THE LIGHTS ARE DUE TO GO OUT SOMETIME IN 2012!
Think about it!....who needs a few poxy banks?
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How interesting. It is 10:23pm by my clock, yet no comment since 7:49pm has been moderated on this blog post.
Are the mods waiting for the announcement from the Chancellor before allowing any more conjecture on this topic?
If so, or even if it is just a technical problem, it would be very polite to actually say so...
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As a condition of bailing out these banks all the money set aside to pay bonuses, share options and dividends should be paid directly back to the government/tax payers with immediate effect. Until every penny is replaced these bankers should learn to live within their salaries like the rest of us.
I am disgusted to learn of the money some of these top bankers are STILL walking away with despite having driven their companies into the ground.
Time for the law to change to control people who are unable to control themselves.
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INVESTMENT ADVICE:
If you purchased $1,000 of Delta Airlines stock a year ago, you would have $49.00 left today;
If you purchased $1,000 of Enron stock, you would have $16.50 left today;
If you purchased $1,000 of WorldCom stock, you would have less than $5.00 left today;
If you purchased $1,000 worth of beer a year ago, drank all the beer and returned the aluminum cans for recycling, you would have $214.60 today.
This is called the 401-Keg;
Based on this example, the best current investment advice is to drink heavily and recycle.
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And how 'helpful' to Clown, burning with class hatred for toffs up at the big hoose, that his dithering has wiped out middle-class investors in the banks. Now the government picks up prererence share in major banks for a few p on the £. Nationalisation by the back door and a deliberate act to pauperise the middle classes out of sheet spite and class envy by the cadre of 'ex' Marxists in the cabinet.
All the while Peston claims his is just a lucky 'jounalist'. Lord Haw-Haw couldn't have done a better job for his master.
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the £50 billion payout to save the banks is ridiculous. I understand that banks are very important but they were always rich and so cannot expect to be saved all the time. Small companies don't get saved by the government but that would be far far cheaper and very good for the economy.
And £50 billion (thats £50,000,000,000,000)
divided by the population of Britain equals over £80,000 for EVERY person living in Britain.
it's almost worth just giving it to everyone so that they spend on the economy!!!
BEN
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I think that the feature on the economic crisis was far too biaised against the Government for which I hold no brief I might add. The use of comments by a former chairman of the Royal Bank for example, (he walked away with a fortune from the company) was ludicrous in that he had been asked what his take was on Alastair Darling's performance so far. His comments had been taken at 10 this morning and before the action taken tonight so they were pointless and damning particularly so when considering he had personally been pointed out as a "fat cat" by Mr. Darling himself on his "retiral" from office and he did say he would get his own back. Hence the bias.
If Robert Peston was the editor of the feature he was wrong in using him along with the prattle of Osborne who should be part of a consortium trying to help the situation rather than attempting to gain Brownie points at the expense of the Public.
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All these comments about building societies are missing the point. Building societies are not allowed to borrow significant sums on the inter bank market. Their balance sheet is propped up purely by cash deposits from savers.
That rush to demutualise in the 1990s was about ambitious and foolish building societies trying to become banks so that they could grow funded by bank borrowing. If they had been a Building Society Northern Rock could not have happened in the way that it did. That is not to say Building Societies are safe... they (more or less) only have one asset class - mortgages, but in this crisis it is banks not building societies that are under threat. UK house prices have not fallen far enough yet to threaten many building societies.
Building Societies may well have problems in future ... but it will be in 6 months after the UK housing market has fallen about 10%+
Putting £50bn into bank equity is like putting £500bn into the interbank loan market because of the the way bank funding works. It is in effect 2 x Northern Rock for 25% of the cost and a chance that the tax payer makes money.
It gets my vote.
Buy bank shares tomorrow... its a one way bet in my opinion coz if it does not work then the lunatics have really taken over the asylum.
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Robert Peston's reportage on this continuing global financial crisis has been excellent...
As one of many millions of taxpayers, I don't want to see any of our money being siphoned off into "bonus-land" while liquidity continues to be stifled within the markets...
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It has been proven that a stable financial system is all about confidence.
Confidence.
Yes, that's the confidence that Robert Peston and the BBC have continuously sought to undermine over the past days and weeks with their fear- inducing speculation and unnecessary hyperbole.
How many times did he use the word 'toxic' to describe a debt. What is a toxic debt? Did he mean a debt that may be worth less than its total value?
When the government has exerted every effort and invested £50b of our money to bring back confidence, the market will return to stability.
We will then want to examine the role of the BBC in its reporting, and to what degree it was responsible for creating the crisis of confidence that has undermined our financial systems.
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The UK Government (AKA Us Tax Payers), are going to set up a fund to bail out the banks ?
The banks have billions of £s that they are holding on to because they don't want to risk lending that money to other banks.
So why when they have all this money do we the Tax Payers need to allow our hard earned money to be used to bail out banks who have billions of £s in there control ?
I own a small business but is the Government going to help someone like me ?
The simple answer is NO they are not, they are more than happy for my business to fail because of the current banking issues.
Our so called caring Government gave me some advice, the only thing they can do to help my small business is to advise the people who work for me to sign on for JSA and for me to do the same ....
But they are more than happy to ringfence £50billion to keep the banks going who already have billions of £s ....... is this really fair?
The banks created this mess and in reality the banks can fix this mess by starting to lend to each other again and stop holding the money.
Why should I have to pay my Tax bills not only personal but business taxes to bail out banks when I as a small business get no bail out or help to keep the business running?
Someone please explain this to me.
Fed up with our Government as a life long labour supporter I am now no longer going to vote for Labour EVER ......
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sorry i was wrong in my last message. it is about £810,000 for every one from adults to babies.
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Nice Touch... "Dither" until the bank stocks plummet and then bring out a package to buy the debt based on the current stock price as of today. Masterfully done.
(Rolls eyes and groans)
Devaluation, inflation, recession, depression.
Dogs bark, Cats Miaow and Labour ALWAYS leaves government with the country in tatters.
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Has anyone realised that tomorrow is the 18th anniversay of the UK entering the European Exchange rate Mechanism (ERM). Lets hope tomorrows annoucement goes better. We can only hope.
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As I see it the banks have gone to the Government and said "we're not going to lend to each other unless you give us a pile of cash".
Sounds like a good wheeze to me. It constantly amazes me that no-one has turned to the banks and said "and what are YOU going to do to sort out this 'crisis' in return for the cash?".
I also find it amusing that people are blaming one journalist for the share price falls today. I thought people in 'the market' were supposed to have good judgement, I thought that's why they got paid so much. If they go into a screaming panic because of one news story, even after its denied, it doesn't say much for the vaulted 'wisdom of the market' does it?
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Robert
I am really mad about this. Funds will have to be found up front. This will add to Govt borrowing. So much for the masters of the Universe. Warren Buffet was right that financial markets would eventually be undone because they became so complex that they went beyond understanding. I really want vengeance. The masters should be identified and made to pay with a one off retrospective tax hike to cover some of the bail out costs. To much wealth is tied up in useless assets (Damian Hurst) - lets free it and get the economy moving people. Lets have Government by the people, for the people not for the masters !!
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CLUNK
The penny drops. I should have known.
The signs were there with the HBoS/Lloyds thing. Early morning HBoS share tank followed by announcement of 'rescue'. That information could only have come from the government and now, after a day of further de-ramping from anonymous sources we have the 'white knight' of the government again sweeping in to 'save the day'.
At rock-bottom price. In time for the Nine O'clock news. So that the directors are utterly desperate to avoid queues around the block after the BBC puts handy, easy-to-understand, graphics up for all the voters about how their banks just lost 40% in their share value today.
Gordon Brown has grabbed the kudos for the 'feel-good' factor and socialised the tax receipts on the bank borrowing on the way up. And now he's going to acquire practically everybodies mortgage and all their savings at massive discount on the way down. Ie socialise the assets. And then blame the banks for 'irresponsible' lending. The same 'irresponsible' lending that made his previous tenure as chancellor look so good. Machiavelli would be so proud.
And he thanks the banks by a) bailing them out with timely, fair-priced, BoE loans twelve months ago ie doing the necessary the day the news of Northern Rock broke or b) having plausible deniability on a bad news day via the grateful-to-be-in-the-loop-Robert-Peston, trashing their share price and buying everybodies house and savings at massive discount.
Now the only question is where are most votes to be had. How will he realise his discount assets? Punishing the voters who borrowed too much. Or punish the voters who saved too much.
Ohhhhh. Now let me think. Punish the people who drove his 'miracle' economy by borrowing and squandering on their ludicrously over-valued house. Or punish the people who didn't buy into his 'miracle' and saved their money instead.
Tough one.
I've an awful premonition I'm about to be reminded of the difference between a legal guarantee and a political 'guarantee' on how 'safe' my savings are.
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This comment was removed because the moderators found it broke the House Rules.
This is a very sad day for the 60 million people in the UK who have worked hard to earn that money that is being given away to the banks.
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Robert
Your speaking style on the radio drives me to distraction (often, I turn it off) but your journalism is superb.
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#4 PurpleJulia: Building Societies are generally covered by the FSA guarantee. (That is, I don't know of an exception to that statement, but don't want to say they all are without being 100% sure). Check any you want to know about at the FSA website www.fsa.gov.uk.
#20 retiredhatbox: Yorkshire Bank is covered under the FSA guarantee under the FSA registration of the Clydesdale Bank (which is as you say owned by the NAB)
The "horses mouth" for information about FSA-guaranteed information is their website at http://www.fsa.gov.uk.
They also have a consumer-orientated website at http://www.moneymadeclear.fsa.gov.uk.
If you can't find the relevant information there,
you can also try my website at http:///www.howsafeisyourmoney.co.uk.
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Well I'm willing to put out a prediction or two. RBS, HBOS and LLoyds will continue to sink as the Ftse dives another 2/300 points. The Dow will likewise fall another 4/500. Why? Because we are now at the point where governments, in desperation, are guaranteeing everything. The Fed today opened up its short term lending facilities to non banking corporations! Pepsi, Disney and Goodyear... for example. It is desperation obvious to investors and creditors alike. As while the Fed and the BoE are lending yet more billions domestically our international creditors, eg China, will get v.nervous as to our ability to repay our debt to them with cash that ain't still wet!
Last week, the idea that a country, such as Iceland would be in the dire straights such as it is, was unthinkable. By this time next week we may well find ourselves as a nation in the same place, or worse. It should be noted that on Friday, the process of unwinding Lehman's credit default swaps begins. It is the killer bullet that it may not be possible to dodge.
NB/ the moderating performance here, tonight, is either a concerted effort by the BBC to stem 'internet rumour' or complete rank incompetnce. Sort it Auntie!
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On September 25th I asked if Robert Peston was a harbinger of the socialist control of the UK banking system?
My remark seemed to pass un-noticed.
Now we know the truth of it.
Events have vindicated these comments, even in the absence of short selling by hedge funds.
This nationalisation is potentially a great coup for the British taxpayer, reaping huge rewards in years to come. Providing it is not mishandled by the treasury and does not become a bankers benefit.
Think Warren Buffett's bail out of Goldman Sacks, widely viewed as a profitable bail-out by the wily Nebraskan. The terms of this bail-out of the UK banking system should be be no less demanding or profitable for the UK taxpayer.
Potentially this temporary socialisation of the UK banking system should in time provide massive windfall profits for the UK taxpayer and plug the huge gap in government funding.
Today the Bank of England needs to kick start an ailing economy and its new investment with a shock 1% drop in interest rates followed by a series of others to make this economy and its new investment truly competitive globally.
A kick start for the UK economy and the City.
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I am outraged by the audacity of this government and the banking system.Japan lost their governments trust and now I know how the entire nation felt.
If consumers were not enticed into the low interest rates in the first place and the media did not bombarded us with adverts of borrowing money all day long I am sure our nation would feel allot better.The rates did increase over the past years quiet considerably.
Quiet frankly I am disgusted that large corporations,organizations and banks are so badly managed financially.I refer to Northern Rocks,Lehman's and Enron's of this world.
Our government is constantly warning us on health issues , global warming , education ,crime and nations with weapons of mass destruction to name a few.
The fat cats running our government have presented fine leadership skills by luring us into the U.S - George bushes gang tactics.
"Come join my gang yawl and lets go beat up the middle eastern nations - The oil prices will go up , this will dent our consumers cost of living"
If we were not involved in the Iraq - Afghan War in the first place surely our financial situation would be in a much better condition.
With the cost of Wembly stadium a total shambles and lets not forget the ridiculous dome costs of 2000 , should our warnings not be pointed to our governments policies.Are we being led down the garden path here ? Lets see how the costs for the olympic village spirals out of control.
Who leads their nation into WAR , where killings and murder are a everyday event. The government is more concerned with scaring people into believing they are doomed
When I say our government , I am referring to our U.S government. that's who's leading us isn't it.?
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i wish peston would keep his GOSSIP to himself how much did he cost all of us today. OH THANK YOU BBC
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I truly hope that Brown disappears down a big black hole of his own making and then the economy recovers.
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If the issue is a lack of confidence in the wholesale markets thereby preventing interbank loans isn’t the answer to address the lack of confidence?
Govt could guarantee interbank loans to UK Banks rather than recapitalise them which could just be good money after bad if the confidence issue isn’t sorted.
Or have I missed a trick here!
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One interesting aspect was seeing opportunistic investors step in for a valuable asset...buying at the bottom of the market....
Russia has it's new friends in the middle of the submarine routes into and out of the North Atlantic,
The old East v West Cold War ended when Reagan and Thatcher out spent the old USSR... now it's the new money emphasising a deeper level shift in Political power, whether Chinese, Indian or Russian
While on the wider aspects of the current events in the Financial world (and not really heading on a very oblique tangent)..... Does anyone know if the total cost of the Iraq war in dollar terms is more ----or less, than the total amount so far spent by the US treasury in trying to avert whatever it is they ARE trying to avert by propping up Wall street??
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I note that the the degree of BBC censorship is increasing as the tension rises and reality dawns on the people choosing to blog here. Scary, eh guys?
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A wrecks queue plan sounds about right for the multiple pile up of stock car niage dominoes that brought an end to the end of boom and bust
One can only admire the stoicism and agility of those standing next to the last dominoes with a view to saving them and whats left of the good ship lolly pop ,from going up up and away like the bare stern of the titanic
Just as there were not enough lifeboats on the Titanic there is not enough credit left in the system to sustain the ARM mortgage book and the banks grab and hoard lifeboats handed out by the FED rowing them away half empty
The New York times bares a major responsibility for calling Dr Nouriel Roubini Dr doom ,thus reducing his image to that of a Donkey ote fighting windmills [ albeit a Benjamin in animal farm for those with eyes to see] ]who also foresaw and publicly outlined the inevitable domino run to destruction to no avail till one second to high noon .
One can also admire the risk management system that aligned the dominoes like drunks after a stag night ,even Osamas jaw must be dropping in disbelief and jealousy at such cunning
OOh! and that first domino was a gem ,those cheap teaser mortgages given to poor black people by the subprimessists upwardly revising to 12% after two years ,in the hidden smallprint [potentialy sweeping away capital gains, deposits and credit rating thereby turning the mortgagee into a mortgage slave or a tenant serf]
Well suprise suprise ! that jingle mail domino fell the wrong way dropping onto the mortgae brokers floor with an unstopable curse that started a chain of events that resembled the colapse of the floors in the twin towers
The twin towers[world trade center]being the symbolic warning and precursor of the judgement to come seven years hence[now]
Well that domino sequence has come to hit Golieths in the head [CEOs]]
From Osama to Obama Golieths [ugly]bite the dust ,hit in the eye with a sling shot dominoes ,the events timed by fate to occur before an election to stop the carpet baggers running away with the stolen goods in front of the camera .
History is poetry in motion an inescapable symmetry of rhyme and reason that inevitably puts the booty on the other foot
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I suppose tomorrow we will find just who was telling the truth re needing the money or not.
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Perhaps if Robert Peston had not headlined the problems at Northern Rock, there would not have been a run on the bank? This seems to have been a pattern which he has continued. And where did the appellation, 'The Rock' come from? I thought that was the title of a Nicholas Cage film. Several bloggers have complained about RP's tendency to put forward rumour as news and thereby create panic in the markets. I have been wondering if some of his 'insider' knowledge could be connected with the fact that he is related to a member of the House of Lords. And, while I am on, I have to say that RP, along with Stuart Machonie, Michael Buerk and the frightful John Humphries, has the most irritating voice in British broadcasting. All those whoops and hesitations and inappropriate stresses at the beginning of sentences. Much as I love listening to Evan Davies on the Today programme, he would be infinitely preferable as financial/economic correspondent. It is getting to the point where I simply will not listen to or watch the news because I dread the appearance of RP.
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me again!
All this bitching about Robert-give it a rest and look carefully at some of the little sentences..
The EU are going to check that the bank rescue plan complies with state aid rules-I dread to think what that means given the sausage, banana and aubergine regulations! We'll probably find the answer is 'no'-we all know Europe hates Great Britain to be better than any other state, and I have a feeling that we will have to modify the plan to soothe their battered egos! God forbid that our financial position becomes better than theirs-look how they despise us for not having the Euro!
the bosses of Lehman are to get $400 million of 'retention' bonuses while the rank and file (main street employees) are not even going to get redundancy because the company went bankrupt-perhaps this has contributed more to the fall of the DJ today?
All banks have denied they would accept a financial bailout. This 'rescue' appears to be just pumping more money in without actually asking for much back. I would imagine the banks will try to ensure this package is delivered with no strings attached. They will only be contrite if made to face up to their greed and arrogance. All our government has done is safeguarded their flow of party funds.
I feel so sorry for everyone who has lost their money in banks-that package should top up the losses so our public don't lose.
How disgraceful that Europe have left Iceland out in the cold-will the icelanders have to speak Russian now? Will Russia overrun Iceland and ban the rest of us from the waters around there?
HSBC may be strong now, but isn't it an Asian bank? If so, some guy(not Robert) said on the BBC news tonight that the troubles in Europe this week will spread to Asia next week! Watch their markets carefully-those of you bitching about Robert can bitch about this other guy instead!
Thank you Robert for everything that you are doing-why can't Gordon Brown or Alistair Darling say something straight away-why wait until 7 am tomorrow? Oh, let me guess, they're tired or have other commitments-they're just as arrogant as the banks they are protecting.
I don't think this will work-I am put in mind of king Canute!
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Just a simple lay-man's question. Just a few weeks/months back we were inundated with every broadcast and newspaper headline about the enormous profits in millions and millions, by each and every one of our banks! What's happened now, where has it all gone?
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# 15
You cannot be serious about your Irish banks comment? Have you bothered to look at what's happened to the share price of the quoted firms that were given the government guarantee here in Ireland? I know you haven't. So I'll tell you what's happened. They've had share price falls worse that RBS and HBOS. Therefore, the real issue based on the Irish experience is whether Ally D's plan will actually produce the desired result of restoring confidence. It's aim is to make UK banks more attractive in the interbank market. Guaranteeing interbank deposits (the Irish solution) hasn't worked, so why should government investment?
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#98 atheistpolitics
If true (and if the mods deal with this in my lifetime!) please quote your source.
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# 36
Unfortunately 30m shares in Barclays is only about 0.3% of its issued share capital. I (like you I'm sure!) wish I had GBP 100 million to invest in Barclays, but it's not a big deal in the overall scheme of things. Barclays is still a GBP 25 billion comapny even after recent price falls.
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# 62
None of the banks disputed anything in RP's blog about Monday's meeting. I've criticised RP's concentration on the negatives of the current crisis in several posts, but to suggest that he was dishonest in his reporting of Monday's meeting, as several people have on here, is unfair. All that RBS, for instance, said about it was that they didn't ask for capital. They didn't deny the meeting, didn't deny that capital injections were discussed, didn't dent that they told Ally D to pull his finger out and put forward a proposal. They just said they weren't the ones who asked for the capital.
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#115 Lovelymutant
Yours has got to be the best advice ever - I'm busy following it!
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#113
This slow down in moderation started with the BBC Have Your Say site today I commented earlier that there may be a blog black out-currently the Have Your Say site has over 700 comments awaiting moderation.
A censoring of public opinion perhaps to avoid offending our politicians and letting them know what their country really thinks!
Night all! Robert, please keep going, you are brilliant!
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# 86
I wouldn't worry about the impact this will have on your pension. Most fund managers I know have already sold their holdings in banks.
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# 115
Best post on here!
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Welcome to the Gordon and Darling show...
"My efforts over the past ten years means that the UK is well placed to withstand the current economic turmoil caused by high oil prices...." er your turn Alistair......
"People can use their accounts and carry on making their mortgage payments in the usual way........"
all together now
"we will do whatever is necessary to hang on to our gold plated pensions......"
goodnight folks
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Nice one, those folks who whinged about this blog to the beeb!
Now they are presumably doing some extra filtering, so that they can say they responded to criticism.
So you've caused ALL the blogs on the beeb to be interminably delayed, sweet!
With friends like you.....
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I agree that in these extremely fragile circumstances that the £50bn government rescue is sensible.
However, if we, the taxpayers are going to become investors in these banks, then we should insist on EXPOSURE DISCLOSURE.
By this I mean that any bank that takes advantage of this taxpayer generosity, should disclose their current (and updated) exposure to "TOXIC DEBTS".
I believe that the Credit Crunch has been exacerbated and prolonged due to the continuing lack of trust and confidence between banks. This is because nobody knows how deep in debt each bank is in.
If banks were obligated to reveal their levels of exposure - even in private to the Authorities, then someone can begin to grasp the extent of the problem. After all, if you don't understand the extent of the problem, how can you hope to implement an extensive solution?? The problem is banks don't want to reveal this information until it's too late, for fear of the implications.
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Has anyone noticed that the FTSE100 was at 4,445 on 1st May 1997, when Labour came to power, and has been flirting with this same price point for the last two days, with overnight futures passing below it?
Mr Gordon "hubris, no boom and bust" Brown's boom and bust would therefore seem to be complete! Best man to take us through a difficult economic period my a*se!
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#84, couldbeat -
I agree this is important, what it means is that those mortgage-backed securities weren't really backed by mortgages as we in the UK know them.
They were backed by walk-away-if-you-want-to mortgages.
Chalk and cheese, but I doubt very much that anyone here buying a security of this nature would have been informed of the distinction.
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#115--Priceless!!
By the way, sat down with my financial advisor in Nashville today, and he reports that most of his clients are relying on the BBC to get some semblance of impartial news...
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Yellow journalism can be defined as inflammatory, irresponsible reporting that exploits, distorts or exaggerates news to create sensations or attract readers.
You, Sir, have taken it to a new level.
What is slightly bemusing is the motive. Surely merely creating sensations or attracting readers can hardly be worth the price that was paid today as a result of the uncertainty.
The uncertainty, was not your creation. However, the panic today, was.
The rescue package, if indeed required, would have been passed without your contribution to the mass panic and erosion of confidence.
Many are likely to look forward to a judiciary / parliamentary that examines the leak and the decision to deal yet another blow, a useless one at that, to a wavering economy.
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So, can anyone explain to me, in this current 'financial melt-down', how credit card companies can still offer 0% on purchases for the next 12 months?!
We never had it so good, eh?
Why do we all "blame the governement"?
Whoever was in power right now we wouldn't be happy... we all want someone to blame but we all turned a blind eye as house prices were rising and the markets were boyant.
Now we are all going to feel the pinch -partying away for a number of years - and now the less-than-sensible ones have got a really bad hangover, if not alcohol poisoning! The sensible ones will have had a good time but will no doubt be clearing up the mess of the party goers who are now too ill to help... And to stretch this poor analogy a little further: some off-licences made a killing in the process.
We never learn, do we?!
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I suspect it smacks of what was once called Lemon Socialism, but, wouldn't a more straightforward solution to the banking crisis both in the US and elsewhere simply be to create a national bank (I'm not as clear on BofE) as a depository institution, making loans as any other bank ought to, and then forcing the existing banks to either find a solution to their problem or dry up and blow away? I suspect that, once the ball started rolling and there was revenue as well as outlay, the overall cost of such an exercise would be less expensive than buying bad existing investments (which will certainly lose money in the near term), and given a choice, the bankers would find a way to get back into the game rather than miss their exorbitant bonuses.
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BTW, has anyone noticed recent internet traffic stats?
https://www.linx.net/pubtools/trafficstats.html?stats=year
That chart is showing the LINX smashing its own records, particularly since the end of September.
The choppiness toward the right, starting in late April, is also curious.
Right now (3AM), traffic on the LINX is running 30% above-average.
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post 108 Bank RS Licker
No, used profit from my house for day trading and now currency trading, very profitable especially betting against the Brtish Pound
Shame on you for hoping that people lose their money in Icesave, muppet
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I'm intrigued by the increasing number of people 'shooting the messanger'. And saddened, as it's probably an indication for real people losing real money.
Is this the downside for all this modern-day, nanosecond connectivity for information? I guess in 1929 people had to wait several days for the report in the newspaper. I read once that the best tool in trader's armoury was Yahoo! instant messenger.
I'm sure the BBC has editorial guidelines for reporting on wars, but possibly not financial wars... (Well, it's probably got a few now!)
I for one assume that RP works his 'style' (which is one compelling reason I read his blog) within a strict context of allowed content. Read any blog and you're getting information through the eye's of the owner. That's the whole point, isn't it?
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I think you'll find you read it here first a couple of days ago. I'll be glowing for the rest of the day.
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The next question to resolve is functional incompetence in the banking sector. An agreement set up weeks ago when the participants were present has just been dishonoured by a retail bank because they lost their notes: fortunately it's not a great crisis, but it is highly inconvenient because we're now widely spread and it'll be expensive to reconvene.
It's time to start firing, folks: we don't need staff like that.
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Why can't post at all now? Moderators, why won't you allow my post #87? I have checked the house rules and there's nothing in it which breaks them.
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Robert,
I don't know where you got your information from this time but your 'mole' has got his wires seriously crossed.
My mate Gordo phoned me earlier to tip me the wink about the content of the plan. Since you're a mate in the business, if you know what I mean (nudge, nudge), I'll let you in on it as long as you promise not to tell anyone....Deal?
Gordy is about to:
Announce the issuance of the UK's totally new, debt-free, 100percent reserve currency. It will be called Sound Money or Tally for short.
Every pound sterling in existence will be exchanged for the new currency on a one for one basis whether note, coin or binary.
The old pounds will no longer be considered legal tender but will only be able to be exchanged for the new notes.
The issuance of the new money will be totally under the control of the new UK government which will be staffed by financially literate people and be for the benefit of the population it serves and no-one else.
The Bank of England will have its charter revoked and its owners will be removed to ply their money-changing usury wares elsewhere (a boat is currently moored down the docks for the bounders).
Because the new currency is not debt-based or fractional it will not suffer from the now famous Boom and Bust cycle (this means Gordo will have to find some alternative rhetoric but thats a minor inconvenience).
Neither will the new currency rely on the 'growth' paradox thereby stopping the inexorable destruction and overpopulation of the country and, if the UK's model is copied by others, it may just save the planet as well.
The 3000 very expensive laws which have been brought onto the statute books over the last 11 years will all be repealed saving oodles of cash.
Withdrawal from the European corrupt gravy train called the EU with immediate effect saving endless amounts of our money.
The £12bn project to create a national spying database to intrude even further into the public's lives via the internet will be scrapped.
George Orwell's book 1984, originally meant as a warning, will no longer be used as the roadmap for domestic and foreign policy.
All PFI contracts will be called in and the schools and hospitals run for the benefit of the people whom they serve rather than the fat cats that currently milk that particular dripping roast.
Plans to cover every square inch of this small island in houses will be scrapped.
British troops stationed all over the world will be recalled back home and we'll stop pretending we have an empire any more. It was fooling no-one anyway.
Every Quango in the country will be routed and replaced with....well...nothing, because they serve no purpose and are not required.
The number of civil servants (government employees) will be reduced by 90percent thus redressing the current inequitable position where 20percent of the population generate revenue in real jobs to keep the other 80percent in the lap of luxury.
Now it'll need a bit of tidying up but you get the drift?
er....that's it.
Now a deal's a deal. Not a word to anyone. you promised.
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It appears we are at the point where banks won’t lend nor should they lend. With the massive amount of debt in the system and the inability of taxation or wages to hold up the system any attempt by financials to lend could put them in more financial danger. Until we come down to a point where taxation and wages pay the bills they truly should not lend. Lending in this environment would be asking them to take on huge risks as unemployment; indebted businesses and insolvent local and state government continue to fail.
Though you will hate this, you as Britain need to grab onto the EU in trade and political discussion so Europe doesn't fragment after this fallout hits home. You also need to find a way to distance yourself from America financially as it is very unlikely the US can find a way out of this mess short or long term. One way to distance yourselves is to pull out of the middle east. The US people and their government in aggregate are basically insolvent, as wages cannot rise to pay the taxes or debts we owe. With both a recession and wage arbitrage from globalization the only way is down and the central banks actions won’t force financials to lend in this highly leverage risky environment.
With the central banks talking about lending almost directly to business and consumers we are in very bad shape. Band together and help those in need to the best of your potential when you can if the time comes. Don’t allow this to turn into law of the jungle, as I fear it may in the US populace. Band together and you will survive this and come out of it stronger.
We have nothing to fear but fear itself. Be couragous and stand tall. No reason to cower as what will be, will be.
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“The ERM debacle [the UK's humiliating exit from the European Exchange Rate mechanism on September 16, 1992] was a once-in-a-generation turning point in British politics. And Brown spotted this at the very moment of crisis, according to Lord Elder, who was then Chief of Staff for the Labour leader of the time, John Smith. "John and I were in Berlin at a Socialist International event," says Elder. "Gordon rang up, when we were ejected from the ERM. He kept saying, 'You have no idea how important this is — we were always the Party of devaluation.' He kept saying it over and over again."
Hitherto it had always been Labour that was castigated as the Party unable to maintain a sound currency. Labour Chancellors devalued the pound in 1949 and again in 1967. Labour had been in office when there was a run on the pound in 1976. And the Party had been in power when the policy of pegging the pound to the gold price — the so-called Gold Standard — was abandoned in 1931.”
Robert Peston, Brown’s Britain, London: Shorts, 2005, 116
To whom should the present debacle be attributed, he on whose watch it occurred?
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I cannot believe that the opposition is falling for this plan. Last month, Lloyds were a strong bank and able to take over HBOS, RBS had just issued shares to shore up their capital everything was peachy.
Now share prices have crashed despite the banks still being the same and the Government is about to take 50% ownership at a write down. Big poll bounce as they are congratulated for sticking it to the banks.
Next year, its all history and shares are back to their norms and Gordon and Alastair re-privatise their holdings for a 400% profit and now have £200bn to reduce Government debt/increase spending just in time for an election announcement.
Someone in the media has conspired with the Government to achieve their return to power in two years time
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Dear Robert
"Whats the point of having a rescue plan if it does not work"?
Ice Save customers have been locked out and cannot get at their money, and Iceland is being bailed out by RUSSIA? so who has stopped the Britsih customers from getting their money?
Russia or Iceland."?
Iceland mysteriously owns half of Britains high Street, I smell a huge rat over this bail out, because IF another major bank is going to go under, then the same parameters will also apply, customers will have to wait for their money.
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How do I find out why my post at # 72 was censored please?
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#174 moraymint,
Haven't figured out how the moderation works. I thought my comment at #87 had been moderated out so I reposted at #169 and it worked !
Now that I know they have a cranky moderation system I keep copies of my posts so that I can repost if necessary.
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# 175 NorrieC
Yes, draft it in MS Word or something and paste it into here. I'm not paranoid or cranky or anything like that, but I do wonder if there is an element of censorship ('moderation') here, designed to prevent anything so outrageously controversial being published that is risks frightening the horses! That said, such a potential rule doesn't seem to stop Peston telling it as it is.
Power to Peston, I say.
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the relation between banks and the real economy is symbiotic but asymetrical, the economy is more the host and the banks more the parasite so that fixing the banks will help the economy but not enough a necessary but not sufficient condition to healing the economy which if other action is not taken will start to display some deathly symptoms which will make the banks ill again as well.
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In answer to post 68.
One of the main problems is not enough people do speculate on what might happen - hence the current mess we are all in. (I am also an investor,shareholder and pesioner).
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If the bankers, economists and govt. had speculated on what might happen with Fractional Rerserve Banking, leverage, invetsment vehicles and de-regulation, we would not be in this mess.
Energy depletion, over-population, famine, drought , war and disease are even bigger issues we should also be 'speculating' about.
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This 'scoop' was broken at just after 6.00pm and updated a couple of hours later...but still about 12 hours before any officali announcements by HMG to the nation or the markets....
Are we in for another 'scoop of the year award' here, following on from the great NRK humiliation?
You certainly appear to have your ear to the ruddy ground Mr P.
Another glass for us all, please!
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My concern is traders make money from buying and selling shares, with shares so low someone will buy and make a great deal on the low shares on our banks and other business shares.
Every one is concerned about the problems they can see, is the FSA making sure these problems aren’t being made worse with greedy traders not all but are there any bad apples not helping, or the traders clients making things worse, if you know what your doing is this a time to make real money on the stock exchange around the world, or is someone watching for all of us.
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Would this be a good time to peg the Pound to the Euro? I have not noticed anyone discussing the merits of consolidating with the rest of the European Union and joining the Euro Zone. Surely Europe, and the UK by association, would be stronger with one unified currency.
I can't imagine a better, easier, time to do this, as the UK could include pegging the pound to the Euro as part of a European EMERGENCY package, avoiding the messy business of having a referendum.
It has to happen sometime, so why not now when it can only benefit the economy! Well it can't make it worse - can it?
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