World back from brink
Argument will rage for weeks and months about the extent to which Gordon Brown was responsible for the economic mess we're in.
But it would be churlish to fail to note that the bank rescue plans announced by eurozone governments yesterday and expected to be announced in the US later today are variations on the template launched a week ago by the British government.
HM Treasury has led. Other governments have initially expressed severe reservations about the UK's prescription of injecting new capital into banks and guaranteeing lending between banks. But, finally, those governments have followed the British lead.
If HM Treasury were the corporate finance department of one of those battered investment banks that are now being rescued, it would be collecting a very fat fee.
And if you believe in the trickle-down effect on public opinion, what's striking is that business leaders, who only a fortnight ago had more-or-less given up on G Brown as the political equivalent of an over-leveraged business with the bailiffs at the door, are now buying shares in him again.
But in the scale of what's gone wrong with the global economy, that's all relatively trivial.
Far more important is that bankers and investors have become a bit more confident that the governments of the major Western economies are back in control of events, rather than running around putting out small peripheral fires while the main inferno raged.
Yesterday France, Germany, Spain, the Netherlands and Austria committed around £1,000bn to guaranteeing loans between banks and injecting new capital into them.
Today, the US Treasury Secretary, Hank Paulson, is expected to confirm that he's investing $250bn in US banks, including $25bn each in the three biggest and proudest, Citigroup, JP Morgan and the merged Bank of America/Merrill Lynch.
Even Goldman Sachs - once the bank which defined swaggering self-confidence - is being obliged, it seems, to take $10bn of US taxpayers' money.
And, apparently, all this money comes with the obligation to restrict executive compensation - though there's scant detail as yet about quite how much more than minimum wage the bankers will be earning.
One important wrinkle is that the capital injection in the US will be in the form of preferred stock with attached warrants to buy ordinary shares (common stock). It's similar to how the world's greatest investor, Warren Buffett, took his recent stake in Goldman.
The point of doing it this way is that existing shareholders will be diluted far less than will be the case at RBS and HBOS after the UK government completes its acquisition of controlling stakes in them.
But there's a risk for US banks and their shareholders in the Paulson plan - which is that recipients of Paulson's capital injection will be under greater financial pressure, to pay back the dividends on the preferred stock and possibly also redeem it, before a penny goes to existing shareholders.
What's happening in the US is less obviously nationalisation than what has happened in the UK.
But it still gives the US government vastly more influence over the behaviour of US banks than it's had for decades.
And the overall scale of the plan is, like that of the UK and the eurozone, without any meaningful precedent.
The US package includes the extension of deposit protection to businesses, to deter them from pulling out their funds to the detriment of individual banks perceived to be weak.
And the US authorities will provide a taxpayer guarantee to issues of new debt by banks, which is very much like what the British Treasury has done.
For me, the greatest hope that we're back from the brink of a financial-markets meltdown that could turn recession into depression comes from this new global action by governments to establish taxpayers as the formal guarantors of all lending between banks and big financial institutions.
But we should be under no illusion that these ambitious rescue plans are cost-free.
They heap on to the public sectors of the US, the eurozone and the UK undreamed-of levels of debt and contingent liabilities.
That will probably dampen growth for years in the whole of the developed West, as governments may feel financially constrained from spending and investing on other services and projects, and the banks themselves are likely to devote all their spare resources to repaying their debts to taxpayers, rather than financing proper wealth creators.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~33~RS~)
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Lloyds TSB - can somebody explain to me what happened to Lloyds TSB? They were the rock of stability which could take over failing HBOS - but as of yesterday they have become one of the failing banks receiving a Government equity stake. This makes no sense to me, unless the senior management of the bank have been cuckolded by the Government - I have a feeling they should have walked away from HBOS and from the Government's (i.e. taxpayers) money just as Barclays have. If I were a Lloyds TSB share holder I would be rightly furious now. It is clear that RBS and HBOS had become basket cases which needed nationalisation, but Lloyds TSB looks like a fall guy - a fig leaf if you like.
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Please folks, before you comment, do a little research into The Bilderberg Group
You'll find out that these pwerful elites from across the globe planned this at their meeting in Ottowa Canada back in 2006 stating that thye would start the collapse of the world economy at an appropriate time within 3 years.
This is only the start folks, do the research!
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Really.
Why would we believe you ?
Shareholders have only one right.
The right to be plundered.
They can be shortsold by hedgefunds.
They can have their companies confiscated by Gov't (after its been shortsold).
If their company is allowed to stay independant it can be plundered arbitrarily by the Gov't rewriting the rules.
So why buy Shares ?
And of course, the Directors can be corrupt.
You just can't trust the City and I'm sorry to say this action does not change this basic fact.
Only time and demonstrable regulations will do that.
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I'm not convinced... Throwing money at the problem works in general (as somebody will decide it's worth to fix it and cash the money); but it doesn't work when the problem itself is _too_much_money_ (debt). When it's obvious that it all started from financial institution lending too much, how can we ask them to lend as they were doing before it burst?
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Robert falls into the classic journalists trap - 'back from the brink' he has called the end of the bottom of the banking crisis!
He's lost a bit of credibility now.
Don't forget the Alt-A, Helocs, CDO's, CDS's, SIV's to be unwound - oh, and the little matter of OUR OWN SUBPRIME lending that is yet to be addressed.
Over? - it's only just begun.
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If everything is marvellous again then how come LIBOR didn't budge an inch yesterday?
The latest share bounce will do nothing but convince private investors, those who sold, last week in desperation, that the city is a massive scam conspiring against them.
No recovery can be sustainable unless house prices are stabilised. For now there are still likely to be no buyers and prices will continue to drop.
How long before the govt tell us that due to further defaults an extra 40 billion is required, and then another 40 after that?
A meltdown is an inevitable consequence of banker's greed, govt ineptitude and public ignorance combined with the fractional reserve banking system. To think this crisis is now over is just plain stupid.
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Gloomy thought that RP may be correct about the scope for investment in wealth creation. However, here is a hopeful sign. The steam room at Cannons in Leicester is full of business folk, with factories, talking about the economy and their own situation. Some worry about banks and credit, some about the slowing market but most want more flexibility and less 'restraint' of trade. Interestingly much of their capital comes from their networks in Asia. Just looked at from a U.K. perspective these are regional/local business folk. Actually they have interests around the world. I was most impressed by the guy with a factory in Leicestershire but 2 hotels in Dubai.
Shockingly, more globalisation may be the answer to more 'real' wealth creation.
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#2 I have just looked up some details on the "Bilderberg Group" and found that one of its founder members was...Dennis Healey.
As well as being the British Chancellor in the 70's, he also once appeared on the infamous TV show "Bonzai" trying to set a world record for the number of pound coins he could fit into his mouth.
Worried ? Not at all.
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As I predicted a few weeks ago....I still think the TSBLloyds/HBOS deal will not go through. It was a cosy arrangement set up by UK PLC to tidy both of them over the last month to stop a 'run on the bank'. The numbers suggest that nationalism of the banking system will mean that merging them isn't the way forward....I predict the deal falls through in the not so distant future.
Tight Scot
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Oh and other thought....surely the government is going to have to start nationalising the construction industry as well....to plug that hole as well....when does it all stop??
Tight Scot
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5-grave_sniffer :
Completely agree.
As far as others countries following the ULK 'lead' (like dumb sheep?):
Just because others are doing the same thing - that doesn't make it a clever idea.
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We should all be worried about the Bilderberg Group!
These people are insane. They've also planned for the North American Union in a few years time which will do away with America, Canada & Mexico forming one country with a new currency called the AMERO. Look it up folks.
Is it any wonder they are dumping the dollar?
Hyperinflation will allow them to do this sooner than later.
and remember, if the dollar goes the pound goes with it!
Do the research
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Just a thought to the predictors of more gloom. How about a 'tenner' a time from us blog commentators to be sacrificed to a good cause if we got it wrong. Moderator to rule. No appeals.
We could be rolling in cash and save the world.
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"HM Treasury has led"?
Was it not the Irish government who were first to realise the problem and made the first imaginative move to support their banks?
A move that is being copied everywhere else.
The move to nationalise the banking system is necessary and welcome to provide stability. However, it won't be long before financial journalists and commentators start examining this gift horse in the mouth.
The history of nationalisation in the UK is not inspiring. Coal, steel, shipbuilding, where are they now? As for government run institutions like schools and hospitals, they are political footballs driven mad by "targets".
Banks and the city are going to feel the dead hand of beaurocracy descend upon them. For them the champagne swilling days of excess and bonuses are well and truly over. The taxpayer ain't paying for that.
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Its just one big joke, a playground for the rich and connected. Shares will bounce up and down by ridiculous amounts, making massive profits for those that are able to play, payed for yet again by our cash as pension funds are shredded into worthless waste.
Make the next 'cash' injection £40 Trillion Gordon, its going to make no difference, Joe Public will always pay eventually.
In the words of the song:
It's the same the whole world over
It's the poor what gets the blame
It's the rich what gets the gravy
Ain't it all a bl**ding shame.
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The terms for the bank preference shares in the US are much better (5 percent interest) than in the UK, repayable whenever the US banks want to.
see Washington Post article:
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/13/AR2008101300184.html
The UK Treasury seems to be more interested in controlling UK banks and their lending and not very interested in the impact on the share prices of the participating UK banks.
Robert Peston with his constant leaking of confidential information helped the Treasury to buy those shares cheaply.
Is this insider trading (by government in this case)?
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I wouldn't be surprised if China invades Taiwan now...
GC
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Can we now look forward to the Post Office branch network being saved at a fraction of the cost of bailing out the banks? Or should their services be imposed on the counters of Lloyds TSB et al?
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What utter drivel
HM Treasury has not led
Luxembourg, Belgium and France recapitalised the major bank Dexia in September, purchasing shares in the Bank, and then guaranteeing all its interbank and bond borrowing
It was they who led. It was their template for success. HM Treasury and pussy-footing Brown followed meakly in their bold footsteps.
How much Brown has lied, how much he has deceived his electorate, and how much he deserves condemnation?
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How about ... the newly nationalised / government supported banks around the world should be restricted to ONLY lending to each other.
Surely, all other banks (including Barclays) now represent a risk?
This is the only way to ring-fence taxpayer's money around the world.
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First of all Gordon's plan is in fact the old swedish plan, (NY Times http://tinyurl.com/3m4e5p )
he is now being spun as the saviour of the world's economy forgetting that his policies created the problem in the first place.
Lloyds shareholders will surely walk away from HBOS unless the government is twisting the arms of the institutional shareholders.
I presume Gordon & Darling carried out "due diligence" before committing billions to these banks so that the taxpayer is not liable for the trillions of toxic debt in the system.
what happened to the "preference share" plan announced earlier that gordon has now abandoned?
why should anyone buy shares in these "nationalised banks" with little prospect of a dividend?
Why did Gordon invest £20 billion in HBOS when it could have bought the company for a lot less than that! in fact why save HJBOS at all, the other players will take up the slack.
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So Barclays still need the money, but are too greedy to agree to reducing execs salary?
Doesn't that make them worse?
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This is pure madness.
Nationalising Rachmanns property empire would not have nationalised the profits he made - his business was proftiable but bad - the state cannot run a bad business.
Nationalising Drug Dealing would not nationalise the profits they make - their business is profitable but bad - the state cannot run a bad business.
Nationalising the Banks will not nationalise the profits they have made - their business was profitable but bad - the state cannot run a bad business.
etc...
Tax payer money is only 'safe' while the financial madness (easy credit etc) continues - the buble burst being arrested temporarily.
Brown is counting on this to last to the next election -- but it still wont save him - unless people swallow the line that it is clever to spend other peoples money.
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Oh dear oh dear….. Robert have you been squelched?
All this elation is a tad premature!
We both know that it is not over and we are far from back. We are still on the precipice; the only difference being that the river below has begun to swell.
We are fully aware of what has been done and why it has been done.
One question; will this solution work?
Outside of the enormous debt and the obligatory cautious spending required going forward, why not tell us about the additional graves that have just been dug?
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Robert,
"dampen growth for years in the whole of the developed West"
Yes - about right I fear.
The similarities to previous slumps are too many for this crunch not being followed by a longish depression (al la 1930s). The home loans support company set up last time in 1933 did not close until 1951. so I guess we will be luck if this is over until 2020 or so.
Confidence (and hence LIBOR) will return some day - but not until the fully audited accounts are produced, and more importantly, believed. Things will be unstable on the markets until this has happened, for it will always be possible for rumours to spread and prices to be a changed as a result (this instability will benefit options traders, of course.)
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Dear Robert
Lets hope this is going to work, the Ordinary man and women have paid dearly for the greed of Bankers and Financiers, some have lost their life savings due to GREED.
God threw the Money men out of the Temples and Gord threw them out of the Banks. But There will be a ------"Revenge, of the Money men"
Now is not the time for Blame, the repair of the markets is first priority, BUT, there has to be a public inquirey into the actions of The politicians, and the bankers and who was to blame, as " Gordon Brown was best placed to influence the markets over twelve months ago and did Nothing then, so why now, and tax payers money"?
I do not care one iota about shareholders , "You takes your chance" so they say, and when they get "HURT " they are the first ones to complain and sod the rest of them.
Pensions are the prime issue they are people's lives, and to the Piriah's of the Banks get golden hand shakes for this crisis when so may have lost so much is immoral
"THEY DESERVE EVERYTHING THEY GET FOR BEING THE VUlTURES THEY ARE."
We should NATIOANALISE ALL THE BANKS PERMANETLY,that way we have the regulation inplace to control these Fat Cats,and their lavish life style of making profit out of the Misery they cause people.As much as i detest New Labour and what they have done to this country, Gordon Brown did the only thing he could do, BUT, at the end of the Day he is inplicated in the whole miserable affair by being Chancellor , and taxing Pensions, that is unforgiveable,
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Robert should take a look at the state of the bonds market today.
http://ftalphaville.ft.com/blog/2008/10/14/17019/todays-market-bloodbath/
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Well, we are back from the brink for now.
However, I am not convinced the credit crisis is over. Sure, its worst effects have been ameliorated for the time being but there could well be other complex financial instruments still lurking in someone's balance sheet waiting to leap out on the unwary. We cannot trust the banking class any more to be truthful.
We have to recall that The Treasury bail-out was based on a previous Scandinavian model and so is not Mr. Brown's idea. If there is any intellectual property it lies elsewhere. If Mr. Brown wants his triumph then we slaves must remind him that he is mortal; best done by voting him and his friends from office.
The idea of the taxpayer acting as the bank of last resort is distasteful but seemingly necessary. Yet, in this we begin to have the grain of a new political idea. Why should the taxpayer and the voter be required to accept full liability for the losses without being party to any profits? This is just not acceptable.
The position of the taxpayer within the prevailing constitutional arrangement has now got to be elevated to that at least of a shareholder in UK PLC. What role in such an arrangement can government have? Who are the masters now?
Time for some serious change, methinks.
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One interesting question that I have not seen must detailed discussion concerning is - where has all the money gone ?
Not all of it has gone to greedy bankers - even the best paid have not received billions of pounds.
Part of the answer I think is that it has gone to all of us who, over the years, have enjoyed cheaper loans than we ought. Loans who true cost was concealed in the maze of complex instruments.
I seem to remember a figure of 1 trillion pounds for private debt. Interest rates 2% below where they should have been compounded over 10 years - seems to give a figure commensurate with the kind of numbers that we have been talking about.
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What we now have is Britain and the US with semi-nationalised banks trying to compete with free European and Asian banks like Santander and HSBC. Fettered by interference and regulation and haemorrhaging the best talent to the other banks due to salary and bonus restriction, these banks are bound to lose out - and Britain and the US will lose out as well. Watch this space...
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I heard this morning that Northern Rock has now paid back over half its "loan" from the government as is announcing a new, wide ranging staff incentive plan this week.
Does this mean its now officially "recovered" and is the strongest bank in Britain?
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Oh well....
If Robert's sentiments are correct and we're "back from the brink", his job as the "voice of the crunch" is all but over.
Robert, you've made a name for yourself, and you've certainly enlightened and annoyed us from time to time.
Now... How about telling us who in the Treasury was feeding you the info before anyone else, and have you bought them the pint you promised them yet.
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So Shorts were allowed back on Thursday, build their positions through Friday and then get absolutely hammered on Monday.
Gotta make you smille.
Options expiry on Friday it's going to be a roller coster ride towards the end of the week.
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Robert
Everybody's feeling a little euphoric right now - not least Gordon Brown, I assume. However, let's not lose sight of the single most important issue here: the very banking system itself - that we, taxpayers, are now shoring up - is fundamentally flawed. We've bought time, that's all.
The system is predicated on debt as being the lifeblood of personal and commercial livelihoods. Debt in turn assumes economic growth in the medium- and long-term. Economic growth assumes infinite cheap energy.
If we think we faced a meltdown as the banking system teetered, it would have been nothing like the meltdown we are now facing - sooner than most people think - as supply and demand in the world's energy system gets seriously out of shape.
I'll lay money that you, Robert, are already acutely aware of the world's forthcoming energy problems (often just lumped under the catch-all heading of 'Peak Oil').
The banking crisis has merely been the warm-up act for, this, the main event:
http://tinyurl.com/3effzo
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so the Treasury and Brown have done a good job have they?
that's like saying the captain of the Titanic did a good job getting the lifeboats over the side
IMF - Iceberg !
IMF - Iceberg !
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Good grief.... If you drive a car over a cliff into the sea you have two options and two options only. Stay put and drown or kick out a window and escape.
All Brown and indeed other Govts have done is go for the escape option. Nothing particularly clever or surprising about that.
However, it's worth remembering that in our case it was Brown who was driving the car in the first place and he should not be allowed to get away with that.
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Correct me if I'm wrong, but isn't Gordon taking credit for something that was invented in Sweden? This kind of capital injection was done there successfully already in the 90s. All he is doing is thumping his chest as if he alone is responsible for saving the world. The fact is, he is responsible for wrecking it, at least the British part. The taxpayer should be credited with saving it, using a Swedish recipe.
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How do our robust leaders tell the nation in one breath that they will ban cash bonuses in return for bailing out the banks, yet the Prince of Darkness parachutes safely into his old enemy’s territory with swag approaching £1m - or more - if you consider the cost a Labour party donor would have to pay for a perrage.
I question whether Lord Mandelson of Foy is really a promotion from Prince of Darkness.
In short, Gordon Brown has done our city investment bankers proud, who will quietly continue to count their "non-cash" bonuses in share options, off-shore benefit trusts and the like.
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'Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
—Winston Churchill at Lord Mayor's Luncheon, Mansion House following the victory at El Alameinin North Africa, London, 10 November 1942.
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22. At 08:47am on 14 Oct 2008, apollo_mcqueen wrote:
So Barclays still need the money, but are too greedy to agree to reducing execs salary?
Doesn't that make them worse?
---------------------------------------
No - they are protecting the interests of their existing shareholders (unlike Lloyds TSB).
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Robert mentioned on the news last night that UK Government, Corporate and Individual debt totals 300% of UK GDP.
UK GDP is approx 1,500 Bn therefore total debt is 4,500 Bn.
What is the split of this debt and how does it rank in % GDP terms with other countries
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As Winston Churchill said in 1942
"This is not the end, or even the beginning of the end, but it may possibly be the end of the beginning."
Moral - don't expect quick fixes, it takes time to fix things properly, and in that time many thinks will go wrong and many people will get hurt.
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If, as you suggest..."the banks themselves are likely to devote all their spare resources to repaying their debts to taxpayers, rather than financing proper wealth creators"...then one of the remits of the directors appointed to the boards of the banks must surely be to see that this does not happen!
I hope the government will think long and hard about the appointments they make. No time serving geriatrics with a cosy relationshipship with the banking community: no 'worthy' board room professionals please. We need hard-nosed, no- nonsense types. Banking experience must definitely not be a pre-requisite, but experience of bankers should.
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39 DJVauxxy
Great minds think alike. I was writing as your post was being moderated.
Those people who think that everything is now ok are perhaps being rather optimistic.
I tend to think that following the current share price rises there will be a steady drop after the euphoria.
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How much has this cost the world so far?
How much have governments got left for service development, research, charitable giving, public sector pay etc etc.
What if it all goes wrong?
All our eggs seem to be in one basket.
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Has the world gone mad?
BBC news this morning reported the 5% inflation rate (which has been wrong for years since they stripped out the house prices from it).
They then said 'but it's expected to go down'
- on what basis???
As soon as OPEC and the Russians realise the world economy might not collapse, they will reduce oil and gas production again - increasing the price. Especially Russia who have amassed a rather large debt in buying the Icelandic bank and are probably keen to pay it off.
The bail out and return to 2007 levels of borrowing will increase the amount of money in people's pockets - and therefore push inflation up further.
We're even just cut the BoE rate which always increases inflation. Only those who were 'living on the edge' will perhaps not contribute to the inflation rate as they will be more cautious - the rest of us have just had our costs reduced and therefore feel richer.
Me personally - I now have an extra £150 a month in income (or rather reduced from my outgoings) - directly due to the Government policy of the credit crunch.
Are we throwing the fundamental laws of economics out of the window in this panic?
They always say, the first thing to go in a panic - is sense!
Where are the 'economic experts' who are advising the government? Once again the loss of independence of the BoE is going to create inflationary pressure for this country.
The world has offically gone mad.
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Just as Winston Churchill thrived in the second world war, so Gordon Brown seems to be thriving in this financial crisis, but Churchill didn't help start the second world war. What sort of person can only appear happy when we are all worrying about our money? And what financial crisis we he be thinking up for the future to keep himself amused? Perhaps a run on the pound.
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Home-grown subprime.
Where are they now? Binned? Or festering in bank vaults?
We should be told.
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# 11 and #18
The Bank of Ireland has been both condemned and praised.
The Post Office has been mentioned as being taken into the Government fold.
What is the truth?
Is our Post Office Savings Accounts as safe as the mainstay for the mass populations accounts?
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back from the brink? looks more like a dead cat bounce to me, but i hope i'm mistaken. nevertheless, i'll wait a couple of days or so until the rise in the market slows down, then flog off all my shares and dash for cash sharpish, because the illiquidity in the economy is not going to dissipate anytime soon. this government has a distinguished 11-year track record of throwing billions around like confetti with minimal results and a proven inability to micro- or process-manage, so i don't think that things will be much different this time around, no matter who the recipient of the cash is.
and as for the bilderberg group, yes, like the illuminati, they wait for us in the forest and tap on our windows at night .....
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In a few years the government will sell back to the people all the bank shares that they already own. It was a trick well learned with Gas, Electricity and Communications. I can see it comming.
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I really do have a wry smile at all this banking turmoil. Where does this leave these compare sites on line who put iceland banks at the top of the pile for "best deals". also who will ever invest in a iceland bank again?....also i notice we have "loaned" iceland £100m to help shore up icesave? ok great so ,i ,the tax payer, will be subsidising wealthy investors in icesave. is anybody going to help me now im on the scrap heap? yeah right.
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'Some men rob you with a six gun
and some with a fountain pen'
Woody Guthrie
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This is a classic bear market rally. The economic fundamentals are still terrible, the rally will peter out later this week in all liklelihood.
let's see if any banks go pop after the llehman's CDs situation is resolved on 21.10
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This comment was removed because the moderators found it broke the House Rules.
ARISE SIR ROBERT!
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Dead cats bounce higher when you throw them harder at the ground.
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Are you all missing the point of all this?
This is about consolidating banks in a move towards an eventual one world currency dominated by a single world bank, the IMF perhaps, the UN etc....
This is part of the New World Order that has only until recently never been discussed in the mainstream media.
Wake up people, this is all a smokescreen. This momentary rise in share prices is an illusion and the next part of the planned crash will come soon.
Someone asked earlier, "Where has all the money gone?"
The question is where did all the money come from?
The answer to that is that it was produced out of thin air. It doesn't have any material value and will only help create hyperinflation in the world economies leading to further problems in the banking sector and the wider economy will go down the pan.
Do some research as to the causes of this. It's not just a "sub prime mortgage" problem.
It's well known in economic circles in the US (Soon to be become part of The Noth American Union, look that up!)
100 Billion dollars would have paid every mortgage debt in America, so why have the banks been given/have stolen over 700 Billion dollars?
Ask yourselves what will happen after this bailout/theft of taxpayer's money when you next default on your mortgage payment.
Will they stop repossesions? I think not! There will be no bailout of the ordinary working people who can no longer afford their mortgaes due to hyperinflation and higher interest rates.
Doom and gloom? Maybe, but all I'm saying is do the research!
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ARISE SIR ROBERT,
I was an admirer of your splendid commentary until I heard you are a friend of "No Boom & Bust" Brown, and this latest posting shows this prejudice clearly, trying to sell Browns efforts as 'world leading' when they aren't.
Next thing you will be selling us a one world banking system and then one world government, and we will suspect you are a Bilderberger too!
We need to be headed in the opposite direction, community based currency and government.
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COMPLETE UTTER NONSENSE!!!!!!!!!!!!!
THIS MANUFACTURED FAKE CRISIS WILL BRING IN THE NORTH AMERICAN UNION......CANADA...USA...AND MEXICO JOIN TOGETHER IN A UNION WITH A NEW CURRENCY THE AMERO......
THIS WAS FIRST SIGNED IN 2005 WHEN (THE ACTORS) BUSH JR WENT TO CANADA WITH THE MEXICAN PREZ TO MEET WITH THE CANADA PREZ, THAT WAS THE FIRST SIGINING...OTHERS HAVE HAPPENED SINCE....
FBI,CIA,TAX, LAWS...ETC ARE ALREADY INTERGRATED,(BEHIND THE SCENES)THE LAST THING TO HAPPEN IS THE CURRENCY!!!!!..THE AMERO....
THIS IS CALLED A CONS-PIRACY,YES THE PIRATES STILL RUN THE SHOW WITH THEIR MONOPOLY, MICKEY MOUSE MONEY OR SHOULD I SAY WORTHLESS DEBT NOTES OR DIGITS IN A COMPUTER SCREEN.
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why do the media talk in terms of trillions and billions? in pure mathematics trillions dont exist.a function of a power of 10 exists.. so if a million is 10 the power of 6. what power to the ten is a trillion exactly?the point im making is none of this economic stuff is made up of any natural laws..its all off the hoof artificial garbage.arthur daley could do a better job.
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#46 TheresOnlyOneSoupey
Where did you find an extra GBP 150 a month?
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#41
The data you are looking for is here
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html
If we have a public debt of 300% as you quote, then Zimbabwe is in a better state than the UK.
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will someone please explain to me how the Lloyds TSB Board has allowed Lloyds' reputation and shareholder wealth to be destroyed in the process of becoming a minority shareholder in a much more risky banking group ?........surely everyone can see they are committing commercial suicide ?
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"... what's striking is that business leaders, who only a fortnight ago had more-or-less given up on G Brown as the political equivalent of an over-leveraged business with the bailiffs at the door, are now buying shares in him again."
Robert Preston (sycophantically trying to get a knighthood or something!)
1) You do not buy shares in Brown you buy them in companies.
2) The market went into panic selling and over-reacted. Hence, it bounced pretty hard at the bottom.
3) Most importantly, we do not know if Brown's plan will work.
I am very sceptical of Brown's plan. Labour have never acted in the interest of the British people. Furthermore, Brown is at an all time low in the ratings with an election looming. A politician is likely to try to just sweep problems under the carpet to win an election and then try to deal with them afterwards.
That seems to be exactly what Brown is doing. The root cause of all these problems is too much cheap credit that resulted in the country as a whole living beyond its mean. What we really have to do is tighten our belts and cut back to a sustainable level we can afford. Remember it all has to be paid back eventually.
However, what is Brown doing!? Nationalising the banks and telling them to go back to 2007 lending - in other words the crazy reckless lending that got us in this mess. Only this time, it is our money at risk - not the banks.
Basically, he is trying to re-inflate the credit bubble to make everything look temporarily rosy so that he can call a general election.
Only a fool would believe he has come up with a safe long-term solution simple because there is no indication as to how or when all this debt will get paid back!
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yippee stability at last lets all praise the almighty gordon brown and his merry men who robbed from the poor the give to the rich.
this crisis was well timed to make this useless government look great, planned??? could be the americans due an election and suddenly bush and his party ride to the rescue looking good in all media sources with brown and party following suit, in politics there are no coincidenses thus it may well have been a clever ploy the aid there re-election campaigns. would gordon call a general election soon ? wait and see once the markets and banks settle down we may well have a snap general election becouse its in the public's mind what a great job his party are doing.
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It's about time that those dirty bankers were put on a register. Wouldn't you want to know that there was one living near you!
Imagine what it could do for the price of your property?... oh!
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#52 - you need to read #34
There's a good reason to be investing in Iceland - geothermal energy.
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Flash Gordon Master of the universe He will save every one of us! Queen) You have to admire his ambition not content in wrecking GB he is going for the world
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In future decades, people will identify September/October 2008 as the moment power and influence passed from the West to the East. Last month I was in Hong Kong and China on business. We are increasingly becoming a political and cultural irrelevance to them. The Crash, and the long, slow climb out of it that now looms, has cemented that.
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Being a shareholder with Lloyds TSB for the past 15 years what has our government done to them. Their last financial reports for 2007 gave the following statement ‘Strong underlying profit momentum. Profit before tax up 6 per cent to £3,919 million not withstanding impact of global financial markets turbulence. Excluding the impact of £280 million market dislocation, profit before tax increased by 13 per cent to £4,199 million. Since then they have pressured by the government to intervene and help save HBOS and in turn appear to have been hoodwinked into becoming ‘a patsy’. What is their board of directors thinking of in still recommending this deal being agreed now! Lloyds TSB was a strong cautious bank who seem to have been sucked into this banking fiasco and have ended up taking the fall! Another nail in the coffin for a once successful British business. I will not be voting for Lloyds TSB to rescue HBOS in light that the government could have bought the company for a lot less than the proposed injection of tax payers cash! I am a bewildered shareholder!
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Too early to call it IMO, if LIBOR rates start dropping and the banks show an open accounting book then we can all maybe get the true scale of how deep in the do-do we really are.
I still think last week when all this kicked off trading in shares of the banks should have been suspended till the full package was announced/negotiatated which who have stopep dthe drip effect.
GW
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I'm glad to see the market bounce; I may be losing out on my bank shares but I'm not being trashed on everything else - and I'm still profoundly grateful for the Government's guarantee of the savings in Icesave. This is, in many ways, exactly the plan we needed. But there are several remaining causes for anxiety.
First - we still have a major debt problem, though it is now structured differently.
Second - I don't see how a nationalised bank will be able to foreclose on debts; it's only a matter of time before some tabloid paper runs a story on a family, complete with disabled child, who have their home repossessed 'by the government'. As a result, the integrity of these businesses (and of the credit system) might be further compromised.
Finally, I'm spooked by the apparent suggestion that lending for mortgages should return to 2007 levels: that was the maddest moment in a festival of madness. I felt property prices were overcooked by between 30 ad 40% at the time - and that was before the crunch and the coming recession. Anyone buying now is doing so only 105 - 12% below prices which were only sustained for a few months.
I won't relax until we've seen house prices go down as much as shares have done.
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Ha ha, I love the idea of Peston, Brown and Healey et al planning World events from a Dutch hotel. If these guys - perhaps with the exception of Robert who is simply being rather too kind to Gordon and, I suspect, has been told to say something positive for once for fear of driving us all to suicide - really are planning the end of the system, what's the panic. They're incompetent.
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Re: the numerous Bilderbery comments.
Paulson now dominating the USA finances is ex Goldman Sacks. Gavin Davies dominating Labour finance thinking in the UK is ex Golman Sacks. Lehmans their biggest competitor was sent to the wall by Paulson. Who picks up the tab for the meetings that Bildergers have every year is Goldman Sacks. Who offoladed most of their sub prime debts early and quietly, yep Goldman Sacks. The refences made to their Ottowa conference is worth looking into it is not just the usual conspiracy nuts here. There are too many coincidences about predicting the events and the individuals involved
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Can someone please explain something that is bugging me.
So the Treasury, faced with a collapsing banking system, pours in a load of money to prop all the banks up. And by a load of money we are talking a LOAD of money.
Then the banks manage to stabilise themselves, start lending to each other (now also guaranteed by the Treasury), and also start lending to us again.
Gordon Brown gets a big pat on the back for his swift and decisive move.
Even Mr Peston seems pretty chirpy today!
So far so good.
Here's the thing though. Whats the rub? What is the trade off? Whats the downside to all this?
It cannot all be upside, otherwise this would have been done before on a regular basis.
So again, who is losing out?
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"The HM Treasury .. would be collecting a very fat fee"
1/ the public are entitled to know who [which person] proposed the essential plan
i.e. the plan to guarantee inter-bank swap-loans for 5 years and to invest capital in shares [both preference for dividends/interest and ordinary for authority/control]
the job of the investigative journalist is to find out
2/ who are these wise people* [exceptionally skilled in banking lore and law and of exceptional integrity] who will ensure the banks are run as commercial successes rather than nationalised dinosaurs
[*certainly the IMF have a few]
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#64 "will someone please explain to me how the Lloyds TSB Board has allowed Lloyds' reputation and shareholder wealth to be destroyed in the process of becoming a minority shareholder in a much more risky banking group ?........surely everyone can see they are committing commercial suicide ?"
I am glad someone is picking up on this - the scandal of this bailout. Sir Victor Blank is best chums with Crash Gordon, so stuff the Lloyds TSB shareholders - this is a right royal stitch up and the existing Lloyds TSB shareholders are the victims.
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I probably fall under the catagory of very interested/slightly clueless when it comes to the current financial crises.
So could I get some explanation of where all this money is coming from?
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For a moment I actually thought that capitaliam was going to reach is grisly conclusion. To paraphrase Marx it is 'an inherently unstable system which will ultimately end up devouring itself'. It has been bought back from the brink to continue more or less unchanged. Until we as a people stop chasing the need to possess commodities for their own sakes, and realise that the simple pleasures in life are much more rewarding, the rich will keep getting richer and the poor will pay for it.
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hey #60
About there was someone apart from myself who knows what's going on.
Seem to be too many sheep in here content to be guarded by the wolves!
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finally, a little steadiness on the stock exchange? So why do I have the weird sensation you get on a roller coaster after along climb up? You know the one-that pause before you hurtle downwards? Anyone else feel the same?
My father used to be an investment analyst in the city but got out of it all in the 80's when it all went crazy-the same reason I left banking-corporate greed supplanted true customer care. He said then that Boone should play on the stock Market if they didn't have money to lose. He's always been very wise financially.
#43 I agree with you-suggested yesterday that boards at banks should have ordinary people in them and there should be noone on a board who could have a conflict of interest-is big bonus vs Customer care.
People vote with their feet-treat them bad they walk.
Home subprime? With the fall in house prices more and more people are being labelled as having toxic debt! My own situation has now become one as my mortgage is now 84 percent of value. If the bank lending criteria is now 75 percent loan to value, anyone with less that 25 percent deposit in their home is now a toxic debt!
How on earth are first time buyers supposed to get on the housing ladder? My PA just got engaged and she started looking for a house. She had never had a credit card or an overdraft. At 19 her and her fiancé have already managed to save approx 10 percent deposit but still can't get a house! I thought first time buyers were sought after and essential to property markets?
We need no stamp duty for the forseeable future and get rid of those stupid homebuyer packs-lenders and solicitors take no notice of them anyway! Bad enough to have to pay agents fees to sell, but the rest on top? It's total madness!
This needs sorting out in a hurry surely?
And where are the balance sheets and breakdowns of toxic debt? In the cayman islands maybe?
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70:
"Last month I was in Hong Kong and China on business. We are increasingly becoming a political and cultural irrelevance to them. "
So who or what exactly is going to support China's growing economy when the West stops buying up all the cheap tat they're producing?
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Mr Preston's hint of optimism is curious. Surely the bank bail-outs are at best a reasonable solution to a bad situation. But that doesn't make the new situation a good one. It's still bad.
No one but a fool wants government running businesses. We tried that -- for the War -- and in peace time the trade unions ended up running the country -- into the ground. Governments have no clue about running businesses. It's as much as they can do, or more, to run the damned government.
What we want is private enterprise running the banks not the government. The Chancellor says he "doesn't want to run banks". Ahem! Just wait! He will have to, so nationalised banks will become like all nationalised industries, run by job's-worth bureaucrats for whom customers are just in their way.
Prosperity will return, of course, but the after-shocks of the 2008 Great Bank Crash will rumble on until the banks are again fully in private hands, making loans on time-honoured financial principles known to all genuine bankers for centuries. Is RP's optimism not a tad premature?
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I would like Mr Preston to explain why as a respected journalist he has not challenged Mr Brown about the manner in which,for political survival reasons, he is taking the credit for the Bank Bail out scheme which was first used in Sweden and most recently by Warren Buffet to invest in Goldman Sachs.
Its one thing to have to suffer the indignity of having to nationalise our leading Banks but its compounded by letting Mr Brown take credit for a solution he has blatantly copied and not once given credit to the real originators.
A proper journalist should take him to task for this.
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Presuming the option for shareholders to take up the new bank shares is available, surely the market has some appetite to sweep them up and prevent nationalisation from becoming a reality? Are the banks really worth only 10-20% of what the market believed they were valued at a year ago? If there is a future for the banks, which one would think there has to be, is it not now time for the market to do everything it can to prevent ill-equipped civil servants from meddling on the boards? Of course tighter regulation is clearly needed but do we really want to see central government managing our banking system? They don't seem to have done a tolerable job of running any commercial business in the past - so what is likely to be different in the future?
It seems to me that there is a lifeline available here that can result in restored value to the banks' shareholders over the medium to long term, and that the market needs to have the bottle to back itself rather than take the easy option of taxpayer money. Grabbing the subsidy may relieve pressure short term but could spell disaster in the long run.
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Can we have a bit of perspective please? We can't start calling Gordon a saviour as the markets rise is just a surge, a quick reflex reaction. Him and Darling are franticly trying to bail out the lifeboat when it is nearly sunk and there might be another wave coming to fill it up again.
The stock markets have only gone up a bit relative to where they were months ago.
http://finance.yahoo.com/echarts?s=^FTSE#symbol=^FTSE;range=1d
Look what happened last month on 19th of September when FTSE 100 surged the most in history as banking shares raced higher after the US government unveiled a plan to bail out the financial system, http://news.bbc.co.uk/1/hi/business/7624961.stm - and then reality took hold again with the markets and confidence decreasing even after the US plan was passed by US Congress.
And yes, Gordon is trying to take the credit for coming up with a plan when the idea originated from Sweden and Japan. A bit like a boy that copies your homework and gets good marks and you get the blame for cheating.
For Sweden, the solution kind of worked in their instance but Sweden only got HALF THEIR MONEY BACK. http://www.telegraph.co.uk/news/worldnews/europe/sweden/3189982/Financial-crisis-Gordon-Browns-bail-out-recalls-Swedish-solution.html.
Japan did something similar as well but suffered a Lost Decade of stagnation, deflation and falling house prices. Japan, like Gordon and Darling, took too long to face up to their problems and hesitated and dithered. http://www.telegraph.co.uk/finance/comment/edmundconway/3138754/Gordon-Brown-must-grasp-the-nettle-of-the-financial-crisis.html
Darling Gordon may have made the right decision (eventually after much indecisiveness) but they shouldn’t have got us into this mess in the first place and this it is going to take a long, long time until we find out what the true result is.
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#68 And exactly how are Iceland supposed to export thier Geo-Thermal power ?
And this is your reason to invest in a Bankrupt nation ?
Best buy some shares in Northern Rock as quick as you can with your reasoning !
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#62 - I'm on a BoE tracker and thanks to the pressure on the BoE from the Government the new rate has made me better off (simply though - let's not get into the fact that ultimately we're all getting worse off through inflation).
It's party time for me - I might even buy several houses to celebrate!
Can't loose now - the more I borrow, the more I make (because I now part own the bank).
The laws of Economics have been turned on their heads.
Why - do you need to borrow some dosh?
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# 76 ListenUp asks 'what's the downside' of all of this ...
... the answer is that we have not solved the problem, but merely delayed the collapse.
See my post at # 34 for a more complete answer to your question. Bear in mind too that this 'bailed out' system is still stuffed full of toxic debt, credit default swaps and other exotic financial trading derivatives about which few people have the faintest idea what bombshells lay buried within. The clock's ticking.
What's happened in recent weeks is that we've observed one huge effort by the world's politicians to fend off the collapse of the global financial system - itself primarily a product of political behaviour: giving all of us westerners the sense of feeling rich without having to do much if anything in return - except borrow money like there's no tomorrow.
Tomorrow has just arrived, and from here on life is going to be a lot more painful. Thank the politicians for that - oh, and their best mates, the bankers.
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On 30/09/1999 an article written by Steven A Holmes appeared on the New York Times "Fannie Mae eases credit to aid mortgage". "Google" this and read this very interesting article.
It is obvious that the people responsible for this mess are all at the top. It started with the Clinton & Blair's administration, and who was the Chancellor at the time? The very same man who has now "fixed" the problem at our expenses. Sing his praises!
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#26 Solomanbrown wrote "I don't care one iota about shareholders - you takes your chance".
Surely we need shareholders. Companies need investment to grow. what we don't need is derivatives, short selling, complex instruments, call them what you will (con tricks?)
Shareholders take a chance of course, but rely on full information, boardroom control, effective regulation, and not being mugged by their own Government.
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#65 -- totally agree.
Robert -- given your "involvement" in the crash in the value of RBS, Lloyds TSB and Barclays sharevalue -- feel it is a bit rich to then make out the Gordon Brown's popularity is on the up ! If I was one of the shareholders of these banks I would be pretty annoyed ! It has been Brown's financial policies over the past ten years that caused the UK economy to be so fragile.
The impact on pension funds is massive and will take years to revoer their previous value.
BUT -- my biggest question is -- where or how did Brown/Darling raise these funds ?
What's has Britain's global debt increased to ?
Also we read that potentially RBS will lay off up to 25,000 employees -- am sure they won't be voting for Gordon Brown and his cronies next time around.
So all in all Robert -- Brown's popularity may improve in the short term but once the public at large realise that taxes must rise, jobs are lost and the current government continue to be out of contro -- the underlying resentment in the electrorate toward Brown & Labour will quicly return.
Bottom line the country deserves an election and the option to return to a democracy.
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#76
Here's the thing though. Whats the rub? What is the trade off? Whats the downside to all this?
It cannot all be upside, otherwise this would have been done before on a regular basis.
The trade-off has already happened. This was a very simple solution. It's apparently what the Swedes did when they had their banking crisis. It's a variation on what Warren Buffet did with Goldman Sachs. Various bankers were calling for this measure for months in their meetings with the teasury.
So Gordon Brown knew he had the UK banks over a barrel. Regular as you like (the banks) went to the treasury and 'fessed up - 'Look Gordon, this is really serious, we need some liquidity here or the whole system will fall over'.
Of course Gordon could have helped them out at that point. But no. Gordon Brown's borrow and squander bust has to be pinned on somebody else. The Americans. The irresponsible banks. Hence, once the very people who funded his consumer debt-fuelled 'miracle economy' went asking for help he knew he had them over a barrel.
He's had a full year since the Northern Rock heads up to provide support. But no. It's got to be all-night sessions to avert systemic wipeout and Peston blogging away driving the banks into more and more desperate concessions to avoid (yes, shareholder wipe-out) but also total economic collapse.
Far from the 'independent' BoE being the 'lender of last resort' it has been refusing to lend because Gordon Brown was pulling the strings until the banks were absolutely desperate so he could screw as much concessions out of the UK banks as possible.
Which, in a global competetive situation is not what you want to be doing to your own banks. Now they're utterly stuffed. They'll be paying off penal rates of interest for years with no dividends or possibility of growth. Meanwhile your foreign banks, also propped up by government, but on much fairer terms will be cleaning up.
But Brown doesn't care. He's identified his scapegoat for the voters. Yep, we're in a recession. But it wasnae me. It was the yanks and the banks. And I've punished the banks for you.
Meanwhile a generation of baby-boomers has had their pension funds trashed yet again. Another vast slew of workers are now effectively on the public payroll with all the efficiency and commitment to service that will entail.
Total systemic meltdown would have been bad and we must be grateful that the US, EU and UK finally pulled their finger out but the devil is in the detail. The government now controls 40% of our mortgages and is using their influence to force the nationalised banks to re-inflate the housing bubble to 2007 levels of borrowing. Levels we now know were only possible by using a cocktail of three-letter-acronyms and passing toxic time-bombs around and taking the price-tag on each at face value.
How can the banks possibly return to those levels of borrowing in the short term? It was lending on this insane level using radio-active collateral backed on the ability of some self-cert redneck in Idaho or Sunderland to pay his mortgage out of his incapacity benefit that got us into this trouble. And now, having trashed the banks, the stock market and all our pensions the 'cure' is to buy up the distressed banks for practically nothing, infuse them with 37bn of tax-payers money and tell them to go out and lend several multiples of that to the Great British consumer. Again.
We've avoided systemic meltdown for now. We need to spend a few years paying all that borrowed money back. A little individual and government austerity is called for. Otherwise we're storing up an even bigger disaster.
Otherwise this is just Robert Mugabes approach to economics. No money? No problem. Let's just put an extra zero on the banknotes.
Ludicrous levels of government, bank and individual borrowing got us into this mess. Encouraging borrowing back to the same levels is irresponsibility of the highest order. It's like Gordon Brown is sucking us all into some giant financial suicide pact.
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Despite the best efforts of the BBC to undermine the whole financial sector following the scaremongering success in casuing a run on a sound institution, we seem to have a modicum of sanity in the markets. The BBC is too often ahead of curve with partial information which is often incorrect enough in terms to cause public reactions that can affect the market.
If we can claim Icelandic assetts under anti - terror laws, I am sure there must be some legislation nannyed in by this lot which couldbe used to expose the moles in the treasury. These people must be pursued at all costs, because they have done significantly worse damage to the UK population than any physical attack has ever wrought.
I invite Peston to fess up his source, but expect will see that this government will once again cover up to protect their own. The only consolation now is that Brown has not yet had to cause the death of anyone (predecessor Tony B.Liar did, indirectly or otherwise) to justify his actions.
Pension funds should limit themselves to management of pensions and must no longer partake in supply of stock for hedges and activists. The risk equation for pensions must be biased to protect the future life investments of pensioners, potentially to the extreme in that any profit should be booked by the fund and any losses booked by the pension manager.
It is right that Chairmen and CEOs are being ousted now, but the unnaffected banks will now easily poach staff from banks unable to compete fiscally at the middle tier as well as the top echelon. That labour market is not one that can be regulated effectively by governments, because short term finance supporting long term debt is a market that will likely always exist. So you cant link the comp of a trader in the short term stuff to the closure cycle of the long term stuff - is it possible weight value against the underlying security and not the mark to market price of the derivative? The price of the short term product seems to be based on the liquidity in the refinancing cycle and a shortfall in cash for the traders next candy&candy flat rather than the foundation product.
Hector Sants has for some time been interested in exploring compensation based on a longer term risk measure as opposed to short term profit. Perhaps the FSA should get together with some financial modelling types to see if they can come up with approved models that put some science into answering "How much can I trust this bank?" After all Switzerland have cultivated a "Low risk" and "High integrity" image around their banks wihich seems to be sustained despite a number of recent non- trivial issues in the largest ones which culminating in significant exposures for one of them to this toxic stuff.
I would also like to ask how ML and others can propose to take advantage of our tax system to book global losses here to offset profits for years to come and avoid any tax, there must be some way of ensuring that this accounting practice must stop.
Finally, the auditors - here they come, graduate on the team fresh from a consulting engagement with another bank on hiding profits in tax advantageous locations. These conflicts are rife and have been ruthlessly exploited by banks for years, how can that be stopped? Senior management of auditing firms signing off annual reports must take specific responsibility here. SOX legislation can hardly be said to have been effective in attributing any acountability to auditors in this environment, all they do is quote management signoff. Any ideas on that?
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#80 helenhay...
All this move by the Government has done is stave off the collapse of Capitalism for another day.
In fact the 'just one more...' bailout means that the next one will be 10 times worse than this one.
Socialists believe that Capitalism requires 'one last push' by a revolution in order to bring in the Dictatorship of the Proletariat.
...however, I'm not so sure now.
To compound this problem, last night I re-visited the marginal utility theory. I haven't read it since college - but now I am a man with sense I realise the theory is cobblers.
Where was the diminishing marginal utility affecting and reducing prices in the last 10 years?
Why did people buy second houses in Cornwall in order to stay in them for 4 weeks a year at the most? Surely you wouldn't pay full market price for an extra house - it simply doesn't reward you because the main purpose is shelter - and you're never there!!
If marginal utility theory worked, then there would be no waste - people wouldn't buy commodities that they didn't get satisfation from (or at least they wouldn't pay full whack for them).
This idiotic theory is what apparently replaced the Labour Value Theory (by Marx) and is the fundamental basis for all our western economies.
So that means there was no boom because people used their 'economic rationality' and stopped buying goods and services because they were no longer getting the same utility from them.
No one bought things they didn't really need, no-one bought things to 'keep up with the Joneses' and the guy who lives down the road doesn't have 4 Porsches because he didn't buy Porsche 3 & 4 because the price remained the same and his enjoyment was decreasing.
Even me and my 'missus prudence' admit that we have splurged during the boom times and bought items which didn't really reward our desires as much as the monetary value on them.
You imagined the whole thing folks - according to 'western economics'.
The driving force behind prices is how much money people have, it's blindingly obvious - and if this latest boom does not prove it then nothing will.
This surplus value is taken from the worker at the point of production - just as Marx said.
So where are the capitalists to disagree with me? Come on - defend your system.
.........silence......
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#94 - Great post, sums up my feelings.
I just hope the voters out there can see these smoke and mirrors tactics by Mr Broon.
GW
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88. At 10:49am on 14 Oct 2008, SoapboxJoe wrote:
"#68 And exactly how are Iceland supposed to export thier Geo-Thermal power ?"
Well, they could, for instance, use it to perform energy-intensive operations such as electrolytic extraction of metals, and export the end products by sea. Agreed, not sure you want to invest now for a recovery in 20 years' time.
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This comment was removed because the moderators found it broke the House Rules.
This comment was removed because the moderators found it broke the House Rules.
#92 Netmanster wrote:
"Companies need investment to grow."
Hmm - not quite. Companies need investment to support growth when they have the right products at the right price that people actually want to buy.
When you get to the situation that companies are actually only surviving through shareholder input and increasing borrowing (like lots of 'global' corporations - GM perhaps?) then that company distorts the market, prevents meaningful competition from smaller businesses and will collapse - eventually - in a deflating economy.
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96 - Theresonlyonesoupey.
You're absolutely right - the whole of the Western economics has been based on a lie.
How can market economists talk about 'herd mentality' when discussing the markets - and yet claim there is 'rational ecomonic behaviour' expressed when producing theories such as mrginal utility.
I don't know that much about it - but what you say makes sense. My purchases are not restricted by the expected utility of the good, but more to do with how much money I have in my pocket.
It's frightening to think that the great minds of Economics came up with this theory in the first place.
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I don't blame Gordon Brown. He just happened to be at the helm when the ship was topedoed. Yes he was Chancellor for 10 years, but it is a global systems problem rather than any one person.
Whoever was Chancellor in the UK would have been powerless to make the necessary changes whilst the USA was suffering from a serious case of tunnel vision.
GB and Darling do seem to have influenced the latest attempt at a solution and, dare I say it, if the USA and Europe are following Britains lead (at least to some extent) GB and Darling have shown a bit of leadership on the world stage. Credit where its due (sic) !
Returning to the blame game. The root cause is Thatcherism and Reaganomics, aided and abetted by all of the subsequent political leaders in the UK and overseas who failed to sufficiently regulate the "market will prevail" philosophy.
G7/G8 leaders in particular should have spotted the potential problem and stopped it. That's what the forum is there for. But it is a collective responsibility.
And last but not least, the biggest culprits are actually the irresponsible merchant bankers who were using the light-touch regulation to make hay while the sun-shines and to hell with the consequences. They have shown that they can't be trusted and tighter regulation is essential...
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So we are back from the precipice. We can all go out and celebrate. It was all a bad dream. It was never going to happen anyway, was it? Is everyone mad?
Senior banking executives have brought shame on a proud nation and just about managed (and may still manage) to bring a Kingdom to its knees. No point in blaming the USA. Our banks messed this little lot up themselves. (A defence of ‘poisoned loans’ from America is no defence at all. It only serves to emphasise the depth of bank board room incompetence).
The banks, however unbelievable, made basic mistakes on a grand scale.
Their poisoned chalice contained cheap loans at crazy 'loan to valuation' percentages. Their security was the seemingly never ending spiralling increase in property values.
Some banks even let you self-certify your own loan.
To make things worse and just to ensure that things would really go belly-up, the Banks started drinking from the American poisoned chalice, buying up debt that has little or no chance of yielding anything near its purchase value. Apparently, nobody knew what the value of these chits were to start off with. It turns out that nobody knew how to value them anyway. Stupidity in the extreme. Now explain to me why any board member of any bank that purchased such debt should hang on to their job.
There is, I hope, still a lot of blood letting to be done within the bank boardrooms. One or two high profile resignations is nowhere near good enough. Whole boardrooms need to be cleared out. I will take my chances that the incoming board members could not possibly be as disastrous as the outgoing incompetents.
However, I do feel a lot of sympathy for the rank and file employees of these once noble institutions, including branch and district managers. They were merely the conduit through which the money flow got to the unsuspecting 100%-125% mortgage takers, the buy-to-letters, the psuedo property developers etc, etc.
If we are all brutally honest with ourselves most of us have all been a load of merchant bankers, stupid beyond belief in allowing ourselves to buy in to the illusion of psuedo wealth.
Some used their psuedo-wealth to finance ‘buy-to-let’ property or splashed on that dream round-the-world cruise. Psuedo-property developers appeared from everywhere. (Some lucky ones made pots of money). We all had our weakness. We bought in to the ‘personal property wealth’ hook, line and sinker. We were all rich ‘cos our houses were worth more and more each month. Wow…free money. We went on a decade long spending spree.
Now we are beginning to realise just how expensive these forays away from our normal conservative financial paths have turned out to be. How many of us thought, …..well I’ve always got the £500K house to fall back on if things really go belly up. Trouble is the £500K house is fast heading south toward £400K or even less. That Beemer which is sitting on the driveway cost £50K. The new kitchen cost £30K. The dream holiday cost £20K…….etc. All bought with psuedo-wealth.
Mr and Mrs average is probably still paying that little lot off on the never-never. Hands up those carrying thousands on the credit card (or cards). Many will take years to pay of the loans that financed these little luxuries. A significant number are now caught up in the negative equity trap (possibly on multiple properties). More will fall in to this nightmare trap in the coming months. Those who have bought a property in the past 2-years and financed their purchase using an ‘extreme’ mortgage will be particularly vulnerable, unless they manage to maintain the same level of income through the present (and future) turmoil.
I too partially bought into the illusion, but 'screwed the nut' some time ago, mainly because things didn't quite feel right. I am by no way fully insulated from the oncoming deluge of financial misery about to envelope us all. So, but for the grace da de da…......
We might be breathing a little easier this morning but don't stop clinching those bum-cheeks quite yet. For the vast majority of us, there is still much heartache to come. The coming recession will affect just about every family unit in the UK.
Now we can worry, how far will property prices fall. How safe is my job?. What if I have to sell up in a hurry? We all now know that smart money left property investment at least 12 to18 months ago. Buy-to-let is now no place for the amateur. Psuedo-property developers have all but disappeared, so have most of the professional variety.
As is always the case, the poor and the elderly are most as risk, especially as our government appears to have emptied the coffers in financing the total incompetence of the financial sector.
The full consequences of the past decade of financial mismanagement has yet to hit home (unless you happen to be a share holder in any of these failed or near failed banks). I fear that most of us haven't yet started to feel the pain of this whole debacle. Well, it’s about to be unleashed in the coming months, nee weeks (even if the banking thing finally settles down). More bank mergers are still possible in order to stave off further collapses. There may yet still be full nationalisation of 2, 3 or 4 of these former 'financial pillars'. More tax-payers money could still be required to further prop up the banks. Business collapse is almost inevitable and on a significant scale. Small businesses are particularly vulnerable. Big business is not much better off. Cash flow is fast drying up. We all hope that the latest government initiatives manages to free up at least modest cash flow in order to stir up a stagnant pool.
We can shout and scream all we want. Most of us are at least a little guilty in financial over-indulgence during the past decade to some extent, some more than others. We need to start buckling down and prepare for the coming storm. Lucky those that have paid of the mortgage, zero-balance credit cards, no significant loans, a decent income and a bit in the bank to-boot. Spare a thought for those not quite so fortunate.
It's hard to see a positive slant anywhere in this whole sorry mess, save that we can only hope to come out of this most dire of situation in one piece, perhaps a little wiser and a little stronger.
For me, it’s back to basics, consolidate what we manage to hold on to, keep the head down, hope that that work doesn’t dry up and….. keep smiling. It some how makes it easier when a significant majority of us are about to be caught up in the same nightmare. Good luck to all of you with your own forth-coming personal financial trials.
But crisis over? Oh no. Not by a long shot.
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#34
Moraymint,
Have you seen zeitgeist addendum on youtube (13 parts - about two hours) discussing energy and the venus project.
It states that we do not need oil and that goethermal, wind, tidal and solar energy is more than enough.
Interested in your comments after you have seen it.
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Many ridicule the "return to 2007 levels of house mortgage lending" But if this simply means returning to the number of houses for which loans were made available in 2007, rather than to the actual total amount of money rashly loaned in 2007, and if individual loans were now to obliged to be transacted on a prudent, repayable basis, would this not make good sense?
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People keep asking,
"What's the downside?"
Well, the downside is that this will solve nothing and is only part of a complete plan to bring the world's economy to it's knees so that the rich and powerful, who by the way, engineered this collapse deliberately and have just pulled of the biggest heist in history, can consolidate their wealth in banking monopoly to screw every penny, cent, rouble and yen out of every ordinary working person on the planet through the control of credit to create a subserviant population who will be basically nothing more than slaves to the banking cartel.
AGAIN, in case you missed it first time round, research the Bilderberg Group, including who attended their annual meetings and you'll see some very powerful people involved. These people decided they were going to do this within 3 years of their meeting in Ottowa, Canada back in 2006.
Please do the research before falling into the trap of listening to the lies and hype that the mainstream media, unfortunately including the BBC, want to feed you.
GET INFORMED!
WHEN IS ENOUGH?
TAKE A STAND!
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This may prevent a disaster turning into a panic/recession but when all the dust has settled people will ask 'now why did that happen and what are the consequences for us?'
And then in addition to some banking practises that get reviewed there will be a good long hard look at the regulatory framework and government actions in the years up to the start of the credit crunch. When that happens I suspect that Saint Gordon will be downgraded to just a 'umble heretic.
The debt levels and liabilities that Brown and Darling has landed the UK tax payer with are huge and make no mistake will have to paid for - potentially when they re both a footnote in history. Twas ever thus with politicians..
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"103. At 12:03pm on 14 Oct 2008, TGRWorzel wrote:
I don't blame Gordon Brown. He just happened to be at the helm when the ship was topedoed. Yes he was Chancellor for 10 years, but it is a global systems problem rather than any one person."
You have to do better than that! Number one, Gordon Brown created the regulatory framework in 1997 which has so spectacularly failed to do the job. Number two, Gordon Brown spent and borrowed with reckless abandon during the years of growth, when he should have been prudent and run a Budget surplus to help when the bust came (but then he was "an end to boom and bust"). Number three, economists could see we were in an asset bubble at least 3 years ago, but Chancellor Brown did nothing to deflate it - on the contrary, the Government did everything it could to inflate it further. Number four, Brown replaced the well respected RPI with CPI which has no credibility and prevented the Bank of England from taking the property bubble into account when setting interest rates.
Brown has piloted the UK economy into an iceberg and does not deserve any thanks for trying to get people into the lifeboats. He said "this country is well placed to weather the credit crunch" when in fact it is in the worst place of any western economy, because of its balance of payments problem (structural), its fiscal deficit (now structural and caused by Brown) and because financial services are such a large part of our economy and they have gone down the pan.
All we have to look forward to in the future is rising Government debt, a collapsing currency, tax rises and spending cuts!
Oh thank you so much Mr Brown!
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#60, 81
Agreed.
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How do you regulate and control the banks to comply with the Govenment's wish to see Interest Rates fully passed on to borrowers in order to help ease their present fiscal pressures? In essence they cannot directly control a plc but what I suggest they can do though is to incept a Windfall Tax based on a capping of Lenders rate increases. The Treasury should not collect this Tax but the offending banks not complying in passing on full rate cuts to all applicable products should then be made to hold those funds and provide them to First Time Buyers at preferencial rates to Real First Time Buyers, thereby helping to re-stimulate the residential property market.
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#103
I don't blame Gordon Brown. He just happened to be at the helm when the ship was topedoed. Yes he was Chancellor for 10 years, but it is a global systems problem rather than any one person.
I blame Gordon Brown for the UK's financial catastrophe. He was uniquely positioned for the past 10/11 years to ensure that our banks didn't do anything silly.
Instead of which he deliberately engineered a government squander-fest that has doubled national debt even before these latest bail-outs. Even prior to these bail-outs Gordon Brown had increased UK national debt by more than every chancellor in history added together.
And as all this feel-good borrowed money washed its way through the newly flush public sector workers and off-balance sheet PFI construction workers the rest of the UK workers had to borrow money to 'compete'. They had to borrow money to compete for the available housing and their desire to keep up with the neighbours. But it was no problem. Their house 'went up' by 10% last year. There would be no more return to boom and bust. This was all a sensible and sustainable life. Gordon Brown kept telling them so.
And Brown didn't care where or how the banks were getting the money as long as he could stand up every budget day and go on about umpty quarters of continuous growth blah blah
And when the yanks and the banks called time on this debt-fuelled feel-good squanderfest that he'd spent the last decade reflecting in the glow how does he react?
He blames the banks and the yanks for stopping lending so much money. No introspection that it was precisely this borrowed money that maintained the illusion of his miracle economy for an entire decade. Oh no. Having basked in the borrowed boom suddenly the impending bust is somebody elses fault.
And having hoovered up the UK's banks at fire-sale prices he then proposes to borrow another 37bn to launder through the nationalised banks in order to attempt to re-inflate our consumer-driven, debt-fuelled 'miracle economy'.
The man is a clear and present danger to the entire UK economic system. The proof is there in the full year it took him and the brinksmanship he displayed in rolling out a financial package that informed commentators have been calling out for many months.
And finally, having rolled out a package he couldn't resist screwing the banks for 12% interest rates. Probably chosen so that it wouldn't be the 13% that Labour like to trot out and hammer the Tories with because it happened one afternoon for about two hours under Norman Lamont. And then, having totally screwed our banks and rendered them uniquely incapable of competing with their European counterparts he orders them to re-inflate the housing bubble by lending all of our 37bn (and then some thanks to the wonders of the banking system).
Gordon Brown is an absolute catastrophe.
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I notice Brown is prancing around in the glory of the "decisive" action in buying up shares in the banks in exchange for counterfiet money created out of nothing while the rest of the world apparently follows.
Trouble is he wasnt the first to do this.
That dubious honour goes to Tone's old mate Mugabe..
May I be the first to nominate Robert Mugabe for the Nobel prize in economics for his trend setting economic activities.
I'm off now to get my wheelbarrow as I'm going down to the caspoint, must dash.
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Dear Gordon..
As a new part owner of the 4 major UK banks I would like to release the following statement.
We have reviewed the current litigation for the over-charging of bank fees and in light of the findings we would like to commit to a FULL and COMPLETE reimbursement of all the fees we have charged customers over the last 10 years.
We feel this is only fair and right as we did rip the consumer off - but now it's time to pay it all back.
No consumer will need to claim for the refund, we will simply refund through accounts or by cheque for existing customers.
Ex-customers will have to contact us but we have a record of all the charges so there will be no need for ex-customers to have to supply the evidence.
We apologise profusely for being a bunch of tw*ts and we hope the public can find it in our hearts to forgive us.
Regards
RBS, HBOS, LLoyds TSB, B and B, Northern Rock and Barclays
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Is what is happening to HBOS and RBS Nationalisation? From my memory of nationalisation just after the war this seems to be a different fish altogether. Then the government simply was the 100 % owner in a business free of shareholders and run by civil servants. Now they appear to be participating in a private business albeit as a major shareholder.
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#106: stellarbluesky
"Many ridicule the "return to 2007 levels of house mortgage lending" ".
As you say, if this were done through prudent lending/borrowing then there is no problem.
HOWEVER, if you have prudent lending then it will not return to 2007 level. Those levels were based on liar-loan (self-assessment), high income multipliers and 125% loan-to-value. The banks are now trying to be prudent, but the fact is that at current house prices, very few borrowers have sufficient income and deposit, which is why people are not getting the mortgages!
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Dear Newsreelsneil,
Best be careful what you say, or the Bilberries will get you...
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Now that Gordon is congratulating himself on saving the world from itself. Would it have been too too generous of him to mention that the SWEDISH GOVERNMENT used this present financial rescue plan first in the 1990's to save their own economy. A little credit (pardon the pun) to the Swedes would not have damaged him at all. In fact it may have made him look as though he had really looked for a solution instead of dithering and creating this mess.
http://www.time.com/time/business/article/0,8599,1843659,00.html
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Here Here, Well written #103 and #109!
Gordon Brown is utterly useless! His rescue plan is not even his own plan. (For that we have Mr Buffet to thank, so please Mr Brown, do not try to take any credit for the idea.)
As regards the investment, this is going to cost UK plc a huge amount. (To be picked up by the next govenrment, which is an horrendus though for them.)
There is going to be much less government money to spend (as it will have to be borrowed or printed, in either case the implications for inlfation are scarey) on much needed public works due to this bailout.
I also find it scarey that the government is willing to gamble our money when private finance (and belive me it is available) is unwilling to touch the banks with a barge pole.
The lending levels for 2007 were unstutainable by any account and for the government to impose this on any financial institution is not only reckless, but also illustrates how little the government actually understands the problem.
Finally, with the banks not paying any dividend for the forseeable future, with the punative repayment conditions placed on them by the government and the deleveraging which is happening right now (and leverage was one of the reasons they were apparantly so profitable.) I very much doubt the goverment is going to make any inflation adjusted profit from this gamble.
As an aside. interesting how the governments around the world can find the billions needed for this bailout but can't find the millions required to meet some of their commitments to the Third World.
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#103: TGRWorzel
#109: has already explained how if Brown was at the helm then if was his fault. I would only add that the failure to include house prices in the inflation indices meant that the BoE kept interest rates unrealistically low for too long. My personal opinion is that the market should determine the interest rates, i.e. libor rate, rather than a state body try and artificially manipulate the markets. Attempts to artificially control currency exchange rates have failed (e.g. Bretton-Woods and ERM), and people will realise that the same applies to interest rates!
Now for my attack on Globalisation!
One of the characteristics of the Blair-Brown era was that they run around like they are running the world, and totally ignore running the only country that they were actually elected to run.
They only have the power to run one country, and if they stuck to that job then they may just be in with a chance of doing a half-decent job. However, if they try being World Leader Pretend then there are too many things beyond their control and there is a high risk of failure.
When it does fail, it is not enough to just say "it is a global problem" and nothing they can do about it. However, the truth is that they should never have let themselves get into this problem in the first place.
For example, when we run into problems with power generation, they will say it is because of Russian gas prices. In truth, it will be their fault because they did nothing to ensure more coal and nuclear plants were build. OK, they did some deal on the nuclear plants, but when they are not ready on time, they will blame the French and say yet again: it is not their fault/nothing they can do about it!
Note: I am not saying we end global trade. That has been going on since the time of Marco Polo and will continue as long as anyone can build a sea-worthy sailing ship.
What I am saying is that the UK leaders should put the UK first and act to ensure stability and security for the UK rather than chase the fanciful notion that other cultures will idolise them when they thrust democracy up them.
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If I were the opposition - I would stand down now and not contest the next election.
It's a complete stitch up - let those who create it - clean it up!
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"the fat cat" (10.40) asked who will buy China's cheap tat. Things have moved on from Barbie and her dodgy accessories. In case you missed it, they put men into space again last month, including a space walk - all in preparation for a Chinese space station. Thirty years ago, Japan was churning out "cheap tat". No one can accuse them of that now. Twenty years ago, Taiwan and Korea too. Five years ago, Vietnam. While we in the west have been wallowing in benefits and counselling, people in the East have been working flat out.
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But aren't US shares still tanking?
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57
What unusual hobbies you have !
Surely a dead cat doesn't bounce ?
Would it not be a sort of thunk squelch noise?
This is not an idea I have tested personally, nor plan to do so in the near future......
I wonder if the same rules of physics would apply to journalists, politicians or bank directors ?
Two of those three are likely to have had many big dinners !
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122
When wages have fallen enough through inflation we can turn out cheap tat too !
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Lot of interesting Conspiracy theory stuff here.
Never heard of Bilderberg before, but if they rule the World as alledged do you think if I asked them nicely they would fix the Street Lights down my road?
As Adam Weishaupt knew back in Bavaria, in the 18th century, you can't rule the world.
You can try to encourage people to change their behaviour, but there is little else possible.
As the old saying goes 'you can lead a horse to water, but you cannae make it drink!'
Adam Weishaupt's group was established 'to perfect and ennoble mankind'.
Given they would have had one hundred and twenty years to create this Utopia, they haven't succeeded yet......
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Correction twohundred and twenty years!
Doesn't time fly.
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"WORLD BACK FROM THE BRINK", NOW WE"RE JUST ON THE EDGE! IT LOOKS LIKE A VERY LONG, HARD FALL, NO MATTER HOW IT'S PUT. IT SEEMS THIS MESS IS TOO BIG AND TOO CONFUSED TO MAKE BIG STATEMENTS RIGHT NOW, FOLKS CAN ONLY TAKE SO MUCH JERKING ABOUT.
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'What's the downside?"
I'm not sure yet.
But I suspect the fact the my 1st time buyer nephew has just bought a flat for GBP150K that was asking GBP450K not so long ago has something to do with what it will be...
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http://seekingalpha.com/article/99846-lloyds-tsb-is-a-class-action-lawsuit-shareholders-only-remedy
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