Collapse of confidence in banks
As I said this morning, this is not a bank rescue plan. But if it had been, it would have failed miserably.
Barclays' share price has fallen again today. At the current price of 90p, this bank's entire market value is £7.5bn. And remember, this is a bank that said on Friday night that its profits for 2008 were considerably more than £5.3bn.
In other words, investors currently value this giant international bank at a little over one year's profits. Which is little short of extraordinary.
And let's not even mention that Royal Bank of Scotland's shares are down by more than 50%, on the supposedly reassuring news that taxpayers will be sharing in its future pain.
Confidence has drained from the banking system. And to state the obvious, today's myriad announcements from the Treasury have not succeeded in rebuilding that confidence, which is so vital to a functioning economy.
UPDATE, 04:20 PM: What's going on? Why have shares in RBS, Lloyds TSB and Barclays all been knocked?
Well investors have been well and truly spooked by the sheer size of losses at Royal Bank - especially since these have been incurred before the recession really starts to bite on the ability of households and companies in the UK to pay their debts.
But the other concern is that the banks are - in a way - in the process of being nationalised, without the bother of the government taking control of the shares.
The fear of investors is that with taxpayers providing so much support to the banks, any spoils would go to the state in the form of fees, and to UK households and companies in the form of lending mandated by the Treasury at uncommercial interest rates
As for shareholders they would receive the slimmest possible returns for years to come.
Comments
Sign in or register to comment.
The Scrooges in Hard Times
It is the banks
That are the scrooges
This Christmas past
Tightening the screws
On credit fast
Customers squeezed
Businesses strangled and seized
Starved of credit, entangled
In this credit crunch pain and unease
Homeowners who face repossession
Retail chains facing a tough recession
Yet these Hard Times are the hauntings
From the Spirit of Greed Past
Billions of pounds in bonuses vast
And short-term profit nets recklessly cast
Unregulated, unchecked
Bouncing to a taxpayer bail-out cheque
And now it’s all hands on deck
As the shrinking sinking ship of the economy
Bound, anchored and drowning in debt
Is fast in danger of becoming
A wreck
Complain about this comment
Are we sure that this has nothing to do with short selling?
I have yet to hear any rational explanation of how this practice can be of any value to anybody but the sharks who fill their boots.
Why was it allowed to happen again?
Can someone please explain?
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
I get the impression that many folks - not least our 'prudent' government - are surprised by this seeming endless sequence of bad news. (The ones who are not completely punchdrunk already)
They shouldn't be. The dominos fall slowly in these circumstances.
Complain about this comment
Confidence, Banks in the same sentence?
Robert,
Labour have thrown their last dice, and already we can see the effects of their 'policy'.
My god, someone pull gordo aside and tell him to call an emergence election - We are in DEEP trouble!
Complain about this comment
RBS, make that over 62%
Complain about this comment
So what you are saying is snapshot share prices no way reflect the true market value and the market's perception always exaggerate reality and emotional identification is a mild form of hallucination.
Complain about this comment
The trouble is that UK plc's credit rating is probably falling almost as fast as a bank's share price.
When people wake up and smell Flash's hypocrisy, "I am really cross with RBS!", what will happen?
How does he think we feel with him in control of the national piggy bank?
One word, Incandescent!
Complain about this comment
Investors paving the way for a run on the banks?
Time for plan C from Brown and Darling, here's hoping it's also "little short of extraordinary"
Complain about this comment
COLLAPSE OF CONFIDENCE IN THE
BANKS??
IVE HAD NO CONFIDENCE IN THE UK
SYSTEM FOR FOUR YEARS.
THERE IS STILL NO GUARANTEE ON
DEPOSITS OVER 50K SO WHATS THE
POINT OF BOTHERING WITH ANY OF
THEM??
WE EVEN PULLED OUT IF THE IRISH
SYSTEM BEFORE CHRISTMAS ....
Complain about this comment
Tell me Robert! What am I missing here. Three questions. 1 If the banks are to lend more money where is it come from - UK deposits? If so then spending must fall thereby extending the recession or is it to come from abroad - but why should it?
2 Or is it to come from Monopoly money spilling off the government's printing presses? Then can we stand by for rip roaring inflation?
3 If the problem is too much lending then how does more help? Or is it that some people should reduce their borrowing so others can increase it.
I am not surprised that I am confused but it is plain to me that the titanic brain of Gordon Brown is just as baffled.
Complain about this comment
I don't think it is entirely lack of confidence in the banks, but also a total and absolutely lack of confidence in Gordon Brown and Alistair Darling and the rest of this government to sort out this mess which is largely of their own making. If they hadn't allowed banks to lend in this cavalier fashion; or allow home owners to remortgage just to buy a car or go on holiday; or allow Northern Rock to give out 125% mortgages, which in reality was 100% mortgages and 25% unsecured loan. The list is endless. It was a complete failure of this government banking regulation. From the Treasury to the useless FSA and the Bank of England. We have been living in a false world of debt with a government who just didn't understand how it all worked.
Complain about this comment
I am sick of hearing about it not bieng a rescue plan , from my limited experience you cannot buck the market EVER.
Pour all the cash you like into and you will never increase confidence one percent .
They should have been put to the wolves at the startof this , the market would have shaped the outcome and what was left would have been stronger and able to ride it out
Complain about this comment
Confidence in the Banks collapsed a long long time ago. They need nationalising now not later - and the Government needs, as you rightly pointed out on the news last night, to completely overhaul the pay structures for all bankers to fit more in line with general industry and the civili service, health service etc - with immediate effect.
Then the public will be happy we are NOT HAPPY now (my wife was remonstrating with you on the news about this last night - not that you heard her!).
For anyone to say we need to continue to pay such high salaries to maintain the calibre blah di blah, is bunkum pay them all less and they will still work there - there are no other jobs..............
Complain about this comment
RBS shares 13p - ACurzon - you could nearly afford to buy now rather than set up your own bank - you could make an offer and then do due diligence then we'd all get to know how easy/hard it is to establish levels of toxic debt etc??
If its too high you could just withdraw your offer!
Complain about this comment
I would love to know if short selling is involved in these massive falls in banking shares today?
Complain about this comment
Robert,
Markets are valuing the banks as they see them, which is the banks are not viable business models.
Wake up please the party is over!
The City of London as a financial centre is finished.
In fact so is the rest of the UK, US and virtually all of Europe.
Complain about this comment
Today's wild and dramatic bank share price movements are alarming. I would guess that short selling is the main driver, now that it is allowed once more. It is time for the SFA to ban short-selling on fianncial stocks indefinitely. Otherwise a limited number of greedy funds will bring an industry to its knees.
Complain about this comment
So If I had the money, I could buy Barclays for 7.5 billion- write a letter to all the people who owe me money and say "forget it- your debt is written off"- or put the bebt in a toxic bank-get some nominal return, say 1%- and get a return on my money of 5.3 billion=70%
Would this work
This would be Master of the Universe Stuff
Complain about this comment
Owch, my post #66 on Robert's "saving the nation" thread starts coming true quicker than expected!
Likely next steps:
- legislative intervention to prevent banks falling into administration
- coupled with state control over lending amounts
- coupled ultimately with (full) nationalisation of key lenders
- and lots and lots of taxpayers' money sunk into the unholy mess
Complain about this comment
Robert
You must remember Sir Humphrey's first rule of government..
Don't believe ANYTHING - until it has been officially denied!
The taxpayers might have insured RBS's debts, but we cannot insure the value-losses on their assets...
That is what will drive this situation..
Complain about this comment
Can anyone come up with figures as to the maximum loan losses that banks will face under the insurance scheme?
If it could be said that such and such is just about as bad as things can get and no worse then surely that would put a floor under banks?
You dont have to agree with the insurance scheme to acknowledge that a major benefit of it will be lost without these figures.
Complain about this comment
Hello Mr Peston
The RBS share price is 10p right now (19 Jan 2009).
I have not heard this news broadcast by the BBC.
Can you please explain why?
The bank that owns NatWest is broke. Is this not newsworthy?
Complain about this comment
I know I'm just repeating what everyone posts here every day, which means the situation remains unchanged.
In short-
No-one knows the value of future bad debts at each UK and US bank.
Until we know, the uncertainty will cause investors to press the "sell" button.
The government tries to overcome this by promising "insurance" of potential bad debts.
So far government action hasn't calmed investors' nerves.
The government buying new shares in each bank just dilutes the value of existing shares further.
Then there's the severe recession to worry about, and the currency collapse, and the coming inflation, and the falling housing market, and whether China can uncouple itself from the USA.....
Complain about this comment
Those in the know are not saying, and those doing the saying dont know.
Complain about this comment
You may be right Robert, it's not a bank rescue scheme, it's a " try to rescue a few Labour seats in the house of commons at the coming election scheme ". Not even a help the economy scheme. A cynical attempt by incompetents to con the electorate.
Complain about this comment
If Banks can turn our homes and equity into financial products to trade and sell on the markets, why can't we? If peoples equity in their principal residence property was realisable they would not be insolvent, and debtors would not be able to force them into bankruptcy, and insolvency practitioners would not be able manipulate the problematic situation to the max by stealing all their equity.
Complain about this comment
Robert,
So will you take responsibilty for not questioning or repudiating the Government since last Summer/Autumn 08, when they undertook their disasterous banking plans ?
You did not question their plans which took Billions of Pounds of worthless UK bank debt off the hands of foreigners and brought it onto the UK Government's shoulders (ie onto the shoulders of our children, in the form of slavery-level future debt to overseas interests). And for no reason and no good, except to earn an extra few months of political rule at terrible, terrible cost.
Someone this morning commented that 'Robert Peston' is an anagram of 'Rotten Probes'. Does your name give you away ? (sorry for feeling so strongly, but in my opinion (my opinion only) you have not served the public interest in your BBC role).
Complain about this comment
As Pres Bush would say. You can fool me once but then you cant fool...but dont fool me...If you fool me once er dont trick me twice.. er.. Dose anyone know what the hell is going on, as under normal trading conditions I would be up to my armpits in bank shares right now.
Complain about this comment
Well, Mr Peston, would you buy shares in a bank knowing the next and final option is nationalisation and Gordon the Golem trashing your investment, like he trashed the investors in Northern Rock? What about those who coughed over £12 billion to RBS only to find the government now owns 70% of it?
Complain about this comment
Gordon Brown says the government will do 'everything it takes' to support the economy
RESIGN, YOU FOOLS!
GC
Complain about this comment
There is no technical 'fix' for sentiment.
Complain about this comment
I think you will find RBS are now down nearly 2/3 on the day.
Must be down to the fact that Crash has boosted our shareholding to 70%.
Is this a sign of lack of confidence in the bank or the UK government?
Complain about this comment
I am increasingly alarmed at the state of our Banks. I worked for one for 40plus years and have seen on the inside some of the pressure tactics to achieve targets including mis selling products to 'protect the loans'.
However the bosses must now learn old Banking practices and for once put the customer first!
Irresponsible lending has taken its toll for 'market share'.
The value of Banks shares have been damaged beyond belief and I am sure that the method of 'short selling' is nothing but spivs making profit out of someones misery and should not be allowed.They also affect the share price irresponsibly.
Complain about this comment
I fearthat the total nationalisation of RBS is but a breathe away...well done short sellers, you must be pleased.
Complain about this comment
Dear Mr Peston
The RBS share price is currently 10p.
I have listened to BBC news reports and there is no mention of this stark yet easily understood fact.
Why is this the case?
The owner of NatWest is broke and will need to be nationalised. Yet this does not merit a mention on the BBC.
Complain about this comment
Tweleve months ago RBS shares were worth 350 pence each, as I look they are now trading at 11 pence each, some 3% of their former value. Can't be much longer before we see the end of RBS and the start of HMG-RBS.
Complain about this comment
Theft Of Property is the Name of the Game
Ask the Divorce and Bankruptcy Courts how to lose yours
at www.gov.uk
Complain about this comment
If you had the available capital now....what would you do with it? Invest it in the British economy by means of an ISA designed to invest "safely" in the Footsie? Or put it in some dodgy foreign bank offering over-the-top interest rates on savings which are greater than those envisaged as a rate of return on stock market investments????
What this government has done in the recent past is to let those who have invested over years and years in an ISA lose money on their investments.
At the same time they have ensured that those investing in foreign banks, have lost nothing...including the returns they were promised!!!!!
What could Gordon Brown call this policy....what soundbyte could he choose.."British Compensation for Foreign Investments"?
No wonder he's left us in such a mess.
Complain about this comment
RBS shares are plummeting - will they be nationalised by the end of today?
Complain about this comment
How much has the British taxpayer now lost on RBS and HBOS shares? Must be a pretty penny.
Complain about this comment
The man in the street will not regain confidence in the system until "those responsible" for the fiasco are brought to book in an Enron-esque manner.
For years the banks have been practising profligacy and had almost entirely given up preaching prudence to customers.
This profligacy was driven from the top by a desire for enormous salaries and even more enormous bonuses. BUT, few fully understood the value of the investments they were making and the exposure they were creating.
"If we say we've made a big profit - we'll get a big bonus" - I'm sure was the mantra.
At best the management has been negligent in the matter, at worst it has been complicit in hiding losses.
Salaries must be cut across the board to the same levels of "mere mortals", recover bonuses when there is evidence of complicity - or even sterner sanctions.
If the staff don't like it then natural wastage is the way forward, as they are not to be trusted in Nu Labour's Nu Banks!
Only when these obscene practices of linking non-existent profits to pay are outlawed will confidence return.
Complain about this comment
Confidence comes from a leader at the top who shows courage honesty and knows for sure where they are going and can take the people with them.
The every day bumblings of our present leader just ooze uncertainty and so many U turns and reversals he is quite obviously disappearing up his you know what.
No one can ever have confidence in anything until this man steps down
The leader of the CBI should join him for I cannot believe that this man is truly speaking for business.
Seems more like he's joined at the hip with Brown.
Complain about this comment
"Confidence has drained from the banking system. And to state the obvious, today's myriad announcements from the Treasury have not succeeded in rebuilding that th a functioning economy."
This has nothing to do with confidence and everything to do with the FSA Failing in its job once again by allowing the ban on short selling to lapse.
IF you continue in this vein you should probably consider a diferent career as business editor is clearly not your forte
Complain about this comment
It strikes me that a very simple solution would be to get the banks to mortgage their bad debts over say 25 years. This way they would repay the taxpayer from future profits. The normal person has a debt in the money borrowed to buy a house. We would force the banks to come claen on their requirements. OK it will be a big number, but then it is going to be big anyway and we have have no idea right now just how big! The taxpayer will pay out on the insurance policy - bankers are probably a tad more intelligent than the politicians when it comes to negotiating a deal.
Complain about this comment
Exactly. The government's actions are destroying confidence in even the sound banks (like Barclays). Brown and Darling don't talk about rescuing particular bad banks. They just talk about rescuing "the banks". We really need to start discriminating - either someone is insider trading on a big scale at Barclays, or the current market valuation bears no relation to the real state of that company.
Complain about this comment
Nobody knows anything, or if they do, they are careful to hide the fact.
Complain about this comment
Possibly the biggest buying opportunity in out lifetime.
This has now got DOWN to the levels where the headless chickens are running wild fill your boots boys and girls this is where we start to make the money!
Barclays 90p
OMG
It’a NO Brainer
Complain about this comment
Gordon Brown spoke this morning of 'Irresponsible financial risk taking of the past'.
Maybe he needs reminding of his Mansion House speech in June 2004, an extract below.
How times change.
'Let me thank you first for the scale of the contribution you make to the British economy - the £50 billion of income, 4 per cent of national output, and the 1 million jobs that arise. And let me thank you also for the resilience, the innovative flair and the courage to change with which you have responded to not just the world economic downturn but to the greatest economic challenge of our times - the challenge of global competition. When last year, as we made our euro assessment, we conducted a detailed and in depth review of the British economy, we were able to conclude that because you, here in the City, had been prepared to change and adapt, to innovate and invest in the future, to embrace technological change like automated trading not as a threat but as an opportunity, and to acquire – from all over the world - the skills financial services need, London’s already considerable and historic advantages and assets - our stability, our global reach, our reputation for integrity, our willingness to be flexible - had been so enhanced for the new global era that, even in the face of a pre-eminent American economy and an integrated euro area, London has today '
Complain about this comment
Chaps, its no coincidence that short selling was re-enabled last week, scare mongering went ten-fold and bank shares took a historical dive.
Fund managers/traders have been sharpening thier knives for weeks and friday was time to carve the turkey.
Shorting is killing the markets right know and not giving a true value of companies.
Like Robert said how the hell can Barclays be valued at only 7bln ?
Complain about this comment
So on to plans I, M & F then.
Complain about this comment
Robert.
Time to get really worried!
How are the guarantees given on loans going to be priced?
Or, if the loans are going to be used to back bonds or other securities, how are the bonds going to be priced? Maybe a market will develop in these loan-backed securities which is how we came into this mess in the first place as pointed out by Stephanie Flanders before she went on maternity leave over fifteen months ago. Where is she now? We need her!
She may say that the game is up and that it time to create a new banking system based on the nationalised parts of the existing system whilst letting the non-publicly owned banking sectors go to the wall.
Complain about this comment
Confidence is built and destroyed by all manner of things - some rational some not. How much of this is present mess down to the media not just reporting the news but making it by spreading doom, gloom and pessimism?
Perhaps its not just bankers but journalists who should take some responsibility for the wreck!
Complain about this comment
If you held RBS shares today at 25 and thought they would be nationalised at 0, I suspect you would sell even at 1 if you could
That is what appears to be happening
Complain about this comment
RBS is now surely heading for 100% nationalisation. I hope the Government look after the poor RBS long standing employees who have been religiously topping up their personal share bonus schemes over recent years. Retirements ruined.
Complain about this comment
The problem is that until the housing market hits bottom the "assets" held by the banks are continually dropping in value making there position even worse.
As for confidence the whole system needs swept clean from the chancellor down....continually seeing the perpetrators of the crime telling us they know what they are doing instils no one with confidence.
We need an election and the boardrooms of the banks cleared.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
If we do nationalise all the banks what would make us different, economically speaking, from Cuba?
Complain about this comment
The share prices of the banks continue to collapse, despite the Barclays and HSBC annoucements.
The senior managers FSA who advised/decided upon lifting the short selling ban should be sacked, as they are costing the taxpayers about as much as the former managers of RBS.
What madness to lift the ban at a time like this.
Complain about this comment
Re RBS. How can a bank worth 12.5P per share pay out a dividend over 23.1 p per share in May?
For those of a weak disposition don't read this
http://www.investors.rbs.com/investor_relations/share_data/dividend.cfm
Complain about this comment
"Confidence has drained from the banking system" surprise surprise.
maybe it has something to do with:
bankers paying themselves obsecene bonuses
putting a short term buck ahead of long term viability
still being completly evasive on the level of toxic debt they hold
still hardly anybody has been charged and held to account for wrong doing
expoiting the credit cruch they caused by increasing their interest charges to small businesses
no solid proposals on what they are going to do to reverse the harm they have done
Only a fool could have confidence in the banks to show responsiblity and self restraint
Complain about this comment
This truly is the darkest of days for RBS, in the office today there was a quiet resignation we were going the way of Northern Rock.
How such a once great company and being great to work for it ended will take time to digest and understand, it seems to have been a drip drip effect that is now cascading. Also can't quite believe the short selling ban was lifted on Friday (the business day before this plans were revealed by HMG) Who on earth made that terrible decision?
Sad gee
Complain about this comment
#33 Ian_the_chopper:
"I think you will find RBS are now down nearly 2/3 on the day.
Must be down to the fact that Crash has boosted our shareholding to 70%. "
+
Do we have the appropriate representaion on the Board(s) now?
Complain about this comment
And the Shortsellers have been allowed to sell down the Banks again!
Complain about this comment
#31 Guy Croft
I totally agree.
"Gordon Brown says the government will do 'everything it takes' to support the economy:
RESIGN, YOU FOOLS!"
Complain about this comment
39:
He gave B and B to Santander for a song.
He allowed A and L to be bought up cheap.....
But what of the Spanish property crisis ?
They like our Housebuilders are suffering from a collapse in demand for new builds.
Ask any expat trying to sell in Spain !
Thinking of Housebuilders when does the Gov't plan to launch operation Nationalize on them ?
Complain about this comment
All this seems to be like 'shuffling deckchairs on the Titanic'.
We are sinking no matter what. This current waving of the arms won't help in the long term. The status quo cannot be maintained.
Please, however scary, would someone tell it like it really is.
Maybe it's not as bad as we all think but I fear it is. I suppose if the men or women in the street really knew there would be mass panic as all we have believed in for all these years is coming crashing down around our ears.
Monumental changes need to be made and I'm afraid changing political parties won't help either because both operate on now out of date economic systems.
I read somewhere recently that many of those who have gone into economics etc were often those who were considered thick at school and studied such things as commerce and economics 'cos there wasn't much else they could do. There may well be some truth in that with the way our current crop of bankers and politicians carry on. A sad lack of real intelligence and imagination.
What does give me hope is reading what many ordinary people are saying. We can't all be stupid can we Darling Brown?
Is there an alternative system out there.
Complain about this comment
Oh dear Gordon,
Your grubby little politiking has been shown up immediately for what it really is.
The vast majority of this country must be scowling at their telescreens when your frowning face is presented to them.
RESIGN YOU INCOMPETENT JOBSWORTH
YOU ARE KILLING THIS COUNTRY
WE WON`T FORGET YOUR CENTRAL ROLE IN THIS COMING TRAGEDY
YOU WILL BE PROSECUTED!
Complain about this comment
I hope the Pension Funds will have the strength of character to refuse to buy back the Banks when the Gov't tries to sell them back to them.
The Shortsellers are making money today.
Presumably they pay tax on that ?
Or does it count as Gambling income ?
Complain about this comment
Please may we have
...a well balanced detailed documentary on the Swedish experience in the early 1990s
....Vince Cable presenting Desert Island Discs since he's not allowed to take over
and...
nationalisation of the banks. You don't have to be old labour to do things like that (though they - and the Civil Service - might accomplish it with 100% ineptitude).
Suspend shares now, and carefully monitor how the Irish government deals with Anglo-Irish (including its now defunct and allegedly crooked CEO).
Complain about this comment
If Shortselling is a legitimate 'TRADING' strategy then any net profits should be subject to INCOME tax, (or corporation tax).
If Shortselling is just Gambling then it should be outlawed.
Taxed or Outlawed.
Complain about this comment
Erm I think someone has just put too many nought on their price, RBS shares are now being shown as
510p thats UP 1470%
Today has been another bonkers day!
Complain about this comment
RP Was quite correct to state this morning this recent attempt to inject capital into the banking system was about saving the wider economy and not the banks.
We are all in danger of exasperating this crisis for that is what we are in just as great as any in living memory bar possible invasion in 1940.
It appalls me that the majority of contributors on here still seem to think it is clever to make political points and promote their own self interest
We all have too pull together if we are to avoid a 1930's slump, it is worth remembering that unemployment peaked in the US at 30%
It is surely the duty of a government to avoid this at almost any cost.
If not, many taxpayers who throw their hands up in horror at liquidity currently being injected into the economy will find themselves out of work for years, it took 10 years and a world war to rebuild from the 30's slump is that what we really want.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
#50
"Shorting is killing the markets right know and not giving a true value of companies.
Like Robert said how the hell can Barclays be valued at only 7bln ?"
To me I think that we're approaching the bottom of the market - someone could make some serious cash by piling into these shares soon.
Complain about this comment
Stop blaming the short sellers, you have as much right to bet on a price falling as rising.
I am also sick of Brown and Darling blaming the banks for all this mess - like there mightier than thou.
Blame the government for this mess, it will be game over by February for the UK.
Get you money out of sterling before the quantitive easing starts......
Complain about this comment
We cant fix something if we don't know all of the facts. The Banks have been evasive and duplicitous in the information they have (so far) given.
If the Government (and therefore the Tax Payer) is to help them out, then all of the banks need to "come clean". It is the only way.
If you have an illness, a doctor will try and find where and what the problem is and what has caused it and try to find a appropriate remedy.
The banks will try the "commercial confidentiality" wheeze to try and keep it all hushed up - the Government should call there bluff and use any existing law (or even pass a new law) to force the banks to tell all. It's very high risk, but the levee is nearly breaking.
Complain about this comment
bank and other market shares were overpriced yonks ago with stock splits and more stock splits etc
Complain about this comment
With the huge bet this Government is taking with our money and the massive debt it is creating, the Country should be demanding an election now.
Complain about this comment
58: Cuba has great Cigars and good Doctors.
Complain about this comment
@50 Bull
"Chaps, its no coincidence that short selling was re-enabled last week, scare mongering went ten-fold and bank shares took a historical dive.
Fund managers/traders have been sharpening thier knives for weeks and friday was time to carve the turkey.
Shorting is killing the markets right know and not giving a true value of companies.
Like Robert said how the hell can Barclays be valued at only 7bln "
Its obvious really. The hedge funds were stuck in an uncomfortable position when Brown and Darling ordered the FSA to ban short selling. The FSA have allowed the ban to lapse and the Hedgies are back in with a vengance and are all out to teach Brown a lesson.
They are going to give him a right old spanking for leaving them high and dry in an exposed position, the only way to have prevented this would have been to keep the ban in place until ALL the hedgies had gone out of business
Complain about this comment
There seems strong concensus that things are likely to continue on a downward slope for the future.?
That interest rates are likely stay low and go even lower!!..
The question that i have not heard much of an answer or even attempts to answer is when the 'shoots of recovery' are likely to be!
When homeowners/business need to prepare for interest rates to rebound and start rising? Is it likely to be in 6 months; 12 months or because the economy is too fragile 2 year/ 3 years time?
Can UK lenders and savers expect a similar timescale to the zero % rate of interest that Japan experienced less than a decade ago?
Could that stagflationary period, exemplied by o % interest rates, last the 5 or so years that Japan did?
Anyonr havr a strong opoinion ...!
Complain about this comment
How does it go? ' The more things change the more things stay the same'.
Being Australian I think of the lines in an Australian song from the 1880s.
"The banks are all broken they say and the merchants are all up a tree, when the big wigs are brought to the bankruptcy courts
what chance for a broken down squatter like me.
Sort of tells it like it is today.
I wonder what constitutes a depression, I'm becoming depressed so think I will go and have a nice cuppa tea!
Oh, 'tis good to be a musician as we can always sing about things!
Complain about this comment
Seems we are in free fall at the moment. Another load of our dosh gone down the drain. At least the public are not so gullible this time round and are starting to question the competency of Brown and Darling.
Just keep an eagle eye out tomorrow. It will be interesting, with Barack Obama being sworn in, what little nuggets of bad news this Govt will bring out.
Experience has shown that on days like this all manner of things will be published by Nu Labour in the hope that the electorate will be kept in the dark.
Complain about this comment
I see there is a 'Global Derivatives and Risk Mgt show' coming along.
Is that like a Petrol Refiners and Pyromaniacs Confederation?
Am I right in thinking that it is the unfathomable risk these derivates may hold that is really the crisis?
If nobody can value them, then why did someone buy them?
Complain about this comment
It seems to me that banks can do whatever they think they need to irrespective of the governement requests and the perceived needs of the wider public.
The banks survival appears to take precedence on anything else. The public is not informed on whether the situation has progressed toward a solution over recent weeks. The government does not seem significantly more informed.... Instead we are continually told that current actions are insufficient and that there is a need for an ellusive world effort.....
As savers, we are thus expected to be good potential market losers either directly through savings/investment or indirectly through the government numerous reactions with taxpayers' money.
As long as this situation stays like this, the confidence in the banks valuation will remain abysmal.
I would be in favour of forcing banks to publish daily reports of their financial situation with the view of monitoring in real time their running cost to society and perhaps proving the situation is improving....
Complain about this comment
We predicted this woudl happen last week. Now the Government will be forced to have another set of emergency measures.
The handling of all of this alone demands an independent investigation.
Complain about this comment
There once were a couple of carpenters who built 3-legged stools.
The first one they managed to sell was brought back because it wobbled, so Gordy cut a bit off the leg that was too long and gave it back out to the customer.
When the customer got home he found it still wobbled, so took it back again. This time the other carpenter, called Ali, cut a bit of the longest leg and stated everything would be fine.
Unsurprisingly, it still wobbled.
After many attempts by both carpenters the customer finally had a stool that was stable ......... when he was flat on his @***!
Complain about this comment
Thank you for at last relating profits and share value to turnover.
Without knowing what percentage of turnover a profit or loss figure is it may impress those who know nothing (remember the Hoohaa a year ago about record profits!!!) but in judging performance it is pretty much worthless.
I still can't tell whether RBS's performance is better than Citigroups as your esteemed employer has seen fit to throw up the losses, but not put them in perspective. Sloppy and meaningless.
For Barclays to be only worth a year's turnover must mean it is believed to be sitting on some pretty heavy liabilities. A bit like Woolies - fine performance but not when £300 million in debt.
What about the real values - what is the asset value of our major banks? They must have property etc. And what about the liabilities - leases on loss-making branches etc.
I foresee fewer than half the bank branches being open a year from now - with lower turnover they just can't afford it. Prepare for a job bloodbath!
Complain about this comment
#58 dceilar:
'If we do nationalise all the banks what would make us different, economically speaking, from Cuba?'
Their currency would be worth more?
Complain about this comment
Paper trail
Wanless to NW
NW TO RBS
Wanless to NR
RBS to NR
What goes around comes around
Complain about this comment
Why act surprised? Who on earth would buy a bank share? Little prospect of a dividend for years to come.
Complain about this comment
Serial incompetence from the Great Leader and his sidekick - standing there telling the world that the banking system still hasn't come clean! No surprise that confidence slides further with the share prices!
Bring on the General Election!
Complain about this comment
In any other field "short-selling" or borrowing (for a fee) some stock to sell would be viewed as the realm of the confidence trickster - somewhat akin to hiring a car from Hertz and selling for cash at the nearest car sales forecourt in the hope that you could buy a replacement car for less next week!
Confidence tricksters or what?
Complain about this comment
Robert,
Surely what is needed is some mechanism to force the banks to come clean about the full extent of there exposures
Until that is done all attemts to restore confidence are surely doomed to fail
Complain about this comment
Do you know what I'd like to see -
a point by point guide to the banking and finance structure that has allowed this disaster to happen -
No! Not Robert Peston's guide - Gordon Brown's Guide!
So come on Gordon, pen a Guide.
Then we can all discuss it, mark it, and if necessary ask him for clarifications.
Complain about this comment
It is very interesting that Brown is now capitalising on what he claims is reckless lending by the banks for causing the current crisis thereby absolving himself. Yes they have been reckless but not to the extent proclaimed. In general they have maintained the sound principles necessary for good lending decisions but they could not have anticipated the substantial downturn in property values and demand for manufactured goods resulting in many people losing their jobs. It is the mismanagement of the economy by Brown that has created the current situation with many people being unable to meet financial obligations and thus resulting in the creation of so called toxic loans.
Complain about this comment
Update on the crisis straight from the office of the Great Pretender:
Gifted Gordon: What will we do, Darling?
Chancellor: We will do whatever it takes.
(later)
Gifted Gordon: Yes. As I said before we will do whatever it takes.
Chancellor: As I said before we will do whatever it takes.
(pause)
Gifted Gordon: What exactly is that, Darling?
Chancellor: Not a clue, sorry. But we will do whatever it takes.
Gifted Gordon: Yes we must keep saying 'we will do whatever it takes' however irritating it may be.
(continues..)
GC
Complain about this comment
Thought for the day
Politicians wave their arms about talking balls
They are testiculating
Come on everyone smile a little on the most depressing day of the year
Complain about this comment
Every single pound that the taxpayers are being asked to provide to the banks must have a reciprocal pound somewhere in the system that has either;
o been loaned and not paid back – therefore is still owed by someone;
o been used to purchase an asset whose valuation was not verified at best, or it was fraudulently sold (therefore why is there no redress to the seller, who must still have the difference and should be pursued for fraud)
o been paid to some broker, dealer, or, hedge fund manager as a commission for transactions that have proven to be duds (therefore fees, bonuses and commissions should be refunded)
I could go on, but my point is simple, the money hasn’t disappeared, it still exists, therefore use the law to recover it – don’t simply ask taxpayers to compensate for the behaviour of a bunch of overpaid duffers who appear to be above normal fiscal accountability.
Why is there no criminal action, sackings or redress been taken against the officers of the banks? At least take away their undeserved knighthoods and awards, they clearly are not merited.
Complain about this comment
To anyone with any shares, whether purchased directly or indirectly (i.e. your Pension pot and mine):
I have previously described the stock market as Casino capitalism, but I was wrong. In a casino, there is mostly some random chance of success, unless the machines and tables are bent/fixed by the operator.
In our Stock and commodity markets, prices have NEVER moved based on perfect information (so sacred to our economic theorists) but always move on IMPERFECT information and rumour because of differential states of knowledge in real time. All trades, except those based on pure pin-sticking are "insider" trades, some more so that others admittedly.
Good on you, short sellers! You make the case for true Socialism and Nationalisation better than any politician or Union leader ever could.
Complain about this comment
Oh,I see,the moderators don`t like my thoughts on the "capabilities" of Crash Gordon,the self-styled saviour of the world,hahahahahahahahhahahahahahahahhaha
I`ve got news for you BBC apparatchiks,Gordon Browner is is so toast he`ll need his own brand of toaster to prepare him for the satisfying devouring he will get from the electorate.
RESIGN GORDON!
THE MAJORITY DON`T TRUST YOU TO BE ABLE TO RUN A WHELK STALL!
YOU`RE FINISHED IN POLITICS!
GENERAL ELECTION NOW!
(I dislike the tories just as much,but there has to be a public rejection of the ZaNuLab "project" ASAP,or this country will be Zimbabwe mark2 by the end of this year)
Complain about this comment
... and ... I nearly forgot ...
I'd like to see The Cameron / Osborne and Clegg / Cable guides as well.
Oh, and did I mention the Darling Guide? If he was asked to sit in a romm for an hour or so, without Gordon, do you think it would be a different guide?
Oh - and maybe (topical this) a JKen Clarke guide.
Complain about this comment
When will politicians learn that you can't buck the market?
The normal laws of supply and demand ... (honourable) lending and borrowing, (true) asset valuations and natural resource constraints (our over-populated planet is running short of cheap energy and other resources we desparately need to sustain our unsustainable lifestyles) ... will eventually hold sway over anyone and everyone who tries to defy them. Supreme Leader Brown is no exception.
The situation is, to a large extent, a reflection of Gordon Brown's character: the man who thinks politicians know best (he in particular) and that Gordon's beloved State can do whatever the hell it likes, provided we chuck enough (debt and taxpayers') money at it, and keep spinning the story (that's your job Lord Mandelson). The Big Clunking Fist might be helpful for knocking about a few tiresome civil servants and hostile political colleagues, but after that ... forget it.
Call a General Election? You must be joking! Power at all costs, that's Gordon's mantra ... hence the forced departure of his predecessor.
I know I'm sounding like a stuck record, but those of us that monitor and interpret what's really going on and where this is heading and, moreover, operate in the real world (of running a business, in my case) ... we can see the writing on the wall. It doesn't make pleasant reading.
The party's over (yes, politicians, that's right ... the party's over ... finished ... ended) and now its payback time. For us and for our children: it's why the British people are getting more angry by the day with all of this nonsense. Throw in "secret expense accounts" for MPs at a time like this and one wonders just what planet these people inhabit?
We'd do better having a political party tell us just how they're going to manage this crisis for what it is, than to watch the likes of Brown/Darling thrash about fighting the last war (= trying to re-establish a debt-fuelled economy that, er, led us into this mess in the first place) and making matters worse with each new panic-stricken, wizard wheeze.
Bear in mind, this has now turned into a battle for survival of the Labour Party in power (perhaps survival of the Labour Party full-stop?) and has little to do with the best interests of 60 million increasingly furious UK citizens. How can it be when we're now in hock to the tune of squillions of pounds for years and years and years to come, without so much as a by your leave in Parliament? Who voted for that? Who voted for Gordon? He designed all this, for goodness sake!
PS When do we start preparing charges against a few senior bankers, by the way? There must have been some breaches of commercial or other laws in this mess somewhere?
Complain about this comment
Every new law creates a whole new criminal class overnight.
Complain about this comment
Does all the red on this screen mean that a (slow motion) run on the pound is underway?
http://tinyurl.com/xsnp
Complain about this comment
Gordon Brown should be in prison sewing mail-bags.He is the arch-criminal in this tragic play.Go on,moderate this BBC!
Complain about this comment
To echo many of the comments on the blog
The confidence in the banks will not return until we know who made the mistakes, they are fully vilified and the banks then put procedures in place to ensure that their profligacy is not repeated.
Meanwhile Crash and Bankrupt Ali run around offering blank cheques and saying the problem is elsewhere.
The markets don't know how many other skeletons the banks are going to produce.
The run on the banks has already occurred, that is why they have no liquidity...the large investment banks have already fled and repatriated what capital they could get out.
Complain about this comment
I don't understand how we stop a recession by giving banks taxpayers money for them to hoard, again. Why not inject the money back into the economy directly? High street vouchers, raise the income tax threshold etc.
Maybe it's just me....
Complain about this comment
Gordon Brown is an incompetent fool,a spendthrift waster of public monies.The BBC should be thoroughly ashamed of this grotesque sycophancy you`ve been displaying for the past year.
Complain about this comment
It would appear the Irish banks are in as deep as ours
http://news.bbc.co.uk/1/hi/business/7838185.stm
For those looking for the source of the problem the attached might be a good place to start
http://www.investors.rbs.com/investor_relations/securitisation/general.cfm
Complain about this comment
Fine, so it's a plan to rescue the economy with large parts dedicated to shoring-up the banks again.
As the banks have already had 600bn guaranteed by the taxpayer and we're having to stump up more, can you blame the lack of confidance that's followed. Will the banks want more in 6 months?
Will Hutton suggested some time ago that this is a crisis of confidence in EVERYTHING - not just the banks. Unfortunately, nobody believes anything that's said anymore and I can see why.
Examples of 'suspected' liars could include politicians, bankers, captains of industry, etc, etc, etc, etc
Complain about this comment
Surely the time has come for those of us in the wider economy to ignore the feeding frenzies which have become a regular feature of the markets following the various attempts on the part of the Government, Treasury, BoE, MPC, et-al and start acting as the arbiters and legislators of our own appreciation of the relative values of the plans being exercised at present?
The underlying value of today's plan is eminently higher than the value which the Markets appear to have placed upon it - the APPARENT ability of the various institutions to make liquidity available has now increased manifold and the reaction of the Market should (and can) be ignored, for fear of marginalising what is in fact a little bit of good news and another reasonably well constructed shot at helping to get the wheels of the economy moving again - albeit in a somewhat perfunctary manner. Let's show a little Dunkirk spirit for once eh?
Complain about this comment
#87
Good idea!!
Only one issue really.......who the hell could we trust to run it?
Complain about this comment
The banks are like heroin addicts needing their next fix, in this case the fix is another injection of taxpayer's money. How long will it be until the government's 3rd bank bail-out and the 4th? How long before the government realises it is throwing good money after bad? Banking has never been easier, or more rewarding - just sit back boys and wait for the next tranche of taxpayer's money to fund our obscene bonuses ad even more obscene risk taking. Instead of reforming the banking industry the government seems to be saying to the banks: "Carry on lending to people and companies who can't afford to make the repayments. Don't worry about bad debts just keep the lending going for the sake of Gordon Brown and the Labour government".
Lord Myners, when interviewed on the ITV News, said the BoE would only insure good loans. The banks are not going to want to insure the good loans - what would be the point! No, the banks are going to want the BoE to insure the loans they know are bad risks.
Surely badly run businesses should be allowed to fail so that this opens up the market to new, well run businesses. Banks would apply this philosophy to any other business so why shouldn't it apply to them? I don't accept the government's stance that this is happening to banks the World over. I think there are lots of banks out there that, yes are suffering a downturn, but don't have their books stuffed full of toxic debt - unfortunately none of these banks are British (still I think the Sun finally set when Blair became Prime Minster and Brown the Chancellor).
Complain about this comment
Dear oh dear oh dear
the price of RBS !!!!
well by the time this is finally moderated who knows
when I was writing at just after 4pm over 98 million shares had been traded in RBS today, whereas the average according to Yahoo is 3 million per day
Gordon Brown I think shareholders are voting to get out it shows what they think of the plans
Complain about this comment
The government might as well spare us the car-crash-tv of watching the share prices of all the major banks dissolve into thin air and get the full nationalisation over and done with.
That way shareholders get at least something for their holdings now rather than watch their wealth disappear.
Once we are through this storm the banks can be privatised once more and the system can be refloated, but at this point in time the government is acting irresponsibly by letting this charade continue.
Complain about this comment
I have been telling people since 2002 the bubble will finally burst. I just wish I had money ont it!
When i started work in the 70's hardly anyone owned a credit card and to get a bank loan or a mortgage was hard.
Since the 80's people have lived on credit, finance institutions have been lending beyond their means. First time buyers having to borrow 5+ times their earings.
I worked for Lloyd's of London back in the 90's and the insurance companies had a similar thing going on namely 'Re-insurance'. At the end-of-the-day, none of the companies had any physical money to pay out.
Now everyone has reached or even gone beyond their means, hey guess what? there's no money in the pot.
I tell you here and now that this is, if not will be worst than the depression of the 30's.
People were either rich or poor, there was no middle class. Today the middle class people have; mobile phone contracts, sky subscriptions, health club membership, a car or two that is either brand new or a couple of years old, MP3 players, DVD players need I go on.
Another thing, the internet, TV and other media rely heavly on advertising watch the internet, TV companies start pullng the plug.
They always said you need a war to boost an ecomony, look at these dates; 1918, 1948,1978 (thankfully no war), 2008 (??) every 30 years!!
I'm no ecomonist but even I can see we are in for hard times.
Complain about this comment
As the main shareholder in RBS, how many billions has the taxpayer lost on the stockmarket today?
Complain about this comment
@100 Rand
"I could go on, but my point is simple, the money hasn?t disappeared, it still exists, therefore use the law to recover it "
You can only use the law if someone has done something illegal.
Thanks to Browns Deregulation nothing has been done Illegally so therefore no redress in law
Complain about this comment
Why do I get the feeling that there is almost a delight in your boradcasting of the doom that surrounds us. As has been said before, difficult times require a balance to be struck on journalism when reporting times of national disaster. Maybe you need to consider whether your comments are in any helpful, or whether they are effectivley another helping shoulder to the wheel that is being pushed over the edge.
Scoop journalism might just have an unacceptably high price attched to it.
Maybe its time to try using your skills to negate some of the impact of the misery and offer some hope of restoring confidence.
Complain about this comment
Dear BBC/ITV/Robert
Might I suggest that this might be a fitting time to re-introduce "Spitting Image" to the TV schedule with the new current bunch of characters.
ASAP
Complain about this comment
I am sure that the last 2 days decline in bank shares have everything to do with short selling and greedy individuals undermining confidence in the bannks for profit. Whilst I have no sypmathy for the banks our ecomomy and lending is not going to recover when banks are weak and not able to fulfil their function.
I also agree with Robert Peston, who seems to be the only reporter that has a handle on this, that this isn't a bank bail out but an attempt to get lending going again and fill the voids in the financial system.
I find it a bit ironic that bank shares have crashed on a day when banks are being put into a situation when they can lend and therefore make money with the taxpayer taking the risk!
Complain about this comment
For those of you convinced that today's bank sharre price falls are all the fault of evil short-sellers, you might like to consider the following.
The government now owns (or will piost-prefs conversion) 70%-ish of RBoS. It is pressuring Lloyds to convert its prefs, which will result in a 50%+ state holding in that bank. The government is also making all kinds of threats to banks if they don't lend more.
The market fears outright nationalisation, certainly of RBoS and Lloyds. We know from the example of Northern Rock that full nationalisation will result in a share price of zero, ie no compensation to shareholders. Therefore, if the market sees a high likelihood of full nationalisation of other banks, and RBoS and Lloyds are likely to be the first to go in such a scenario, then it makes perfect sense to dump them now. 20p is better than zero. Nobody will want to buy them on the other side. Therefore the prices crash.
Will short sellers have joined the party? Quite possibly. Will they have impacted the price at all? very unlikely. The volume of sales is such that it's way higher than could be explained by short sellers. This is holders of these stocks dumping them before they are declared worthless.
Complain about this comment
Anyone for giving Scotland independence and letting them take the pain?
Complain about this comment
can anybody tell me what is going on in Ireland? I heared rumours today that if Eire attempts to keep to its Euro commitments then it will be technically bankrupt and will have to leave the Euro to protect itself. Does anybody know?
The latest proposals are supposed to get the banks lending again. However what fool would extend their credit lines when we are facing mass unemployment and massive business failures. So where does that get us. Extending debt is not the answer.
perhaps more importantly was the facility given to the BoE. OK so they can invest in private companies. However, I see no strategic plan as to where these investments can or should be made.
Complain about this comment
IR35
FOX HUNTING
Social Engineering
and others
where all bones for the back benchs of the labour party to allow PM TB+GB+Co to ruin this
"green and pleasant land" (Sir WSC)
While the UK burned they looked on blindly.
For the Real reason that labour should never ever be allowed run (ruin) this country again look to the
Family Courts and if you now what happend inside them ; the injustice, the rejudice and overt bias based on political dogma and Social Engineering etc just look to Bady P the epitath of it all.
They cannot run a court system without predeterming the outcomes let along a country.
Complain about this comment
re RBS shares
who wants a share of a 7b loss, oh somebody does, they are holding 70 percent. And there is head scratching about confidence in banks.
Complain about this comment
#73 - Good Point.
Can we have some constructive ideas on how to fix the worst econmoic crisis since WW2?
- 'Get Rid of Gordon Brown' or 'Blame Robert Peston' may reflect your personal viewpoints - but they don't exactly help fix the problem.
A Conservative government / New Messenger at the BBC won't dig us out of this hole.
Time to fix the roof - then work out who was to blame.
In that order.
Complain about this comment
Perhaps one of the bloggers who is more knowledgable about the stock market than me could clarify who would be the party most affected (apart from the shareholders) by the nationalisation of a bank that had been the victim of shortselling. I know that pre-Big Bang the stockmarket had all its trades settled on 'Account Days' which, if memory serves me correctly were fortnightly on Tuesdays. I assume all trades contracted up to the Monday before the account day were then settled on the Tuesday. Post-Big Bang I would have thought that the market would have moved to same day settlement or at most 2 day settlement. Pre-Big Bang I can see how shorting would have worked but post-Big Bang, unless the fortnightly settlement was retained I cannot see how it would work as at close of business the exchange of funds and shares would have to take place and the shorter does not have much time in which to obtain the shares for delivery. Assuming that settlement is still the same as pre-Big Bang if a bank is nationalised prior to settlement of the contract between a shorter and the buyer of the stock then the shorter is not going to be able to deliver the stock against payment. The buyer on learning that nationalisaion has occurred would cancel payment instructions and the shorter, if they had purchased the shares prior to the news would be left with worthless stock.
Apologies if the query is a bit rambling but unless someone of greater knowledge can contradict me I think the shortseller is the one left holding the baby.
Complain about this comment
Time for a taxpayers' revolt?
Complain about this comment
Even at 10p RBS is over valued if the government nationalise it.
It seems the Hedgies will get thier pound of flesh, Brown will have to nationalise RBS Bankrupting Britain, the IMF will come knocking, Brown will be forced to cut public services and devalue the pound officially.
We still wont get an election because of the size of the government majority.
If we are really really lucky the IMF may ask the queen to disolve parliament and force an election.
Complain about this comment
Somewhat surprised that our glorious leader Enver Hoxh......sorry, Gordon Brown, hasn't repeated his 1969 message:
'This year will be worse than last, but it will be better than next year.
Complain about this comment
Have RBS shares dropped like a stone because of poor figures or that Flash and Co will soon be running it?
A loss of £20b is one thing Flash running your company is another ball game.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
The present "Labour" government have embraced most of the other "Free Market" philosophies, so why not let the banks go to wall? According to Capitalist doctrine the fittest will emerge stronger.
Complain about this comment
It seems we have already gone well over the sensible size of taxpayer assisted bank support.
As it stands, the economy is no longer tenable in the normal circumstance of banking and insurance money creation - which the city and the country for that matter has relied on for decades.
It is now a very important question to ask that when a recovery does arrive, what will we be recovering to?
The answer becomes unsettling as it has
become very disturbingly apparent that the Keyesian solution the Labour finance team is dogmatically adhering to is out-of-date and pernicious.
It is no wonder that Mandelson is on this team, because if anyone can spin Labour out of this, he can. There's no applause for Cameron or Clegg either, who seem only concerned for Labour to tank over mismanagement of the economy as an election looms.
And yes, Labour will tank. But this severe economic downturn, which have some economists now whispering that it resembles a depression, will take some hard choices from an incoming government over the always politically toxic subject of spending.
But a small 'd' depression is less worse than a great depression and a recovery can usually be robust. The question will still be - especially in the UK - recover to what?
Complain about this comment
Is the following anywhere near right?
1. During the "boom", the banks borrowed hundreds of billions of "wholesale" funding from foreign sources (the Chinese, Arabs etc.?)
2. Then last year these foreign sources finally decided things were getting risky and gradually withdrew their funding.
3. Meanwhile the Government had to provide replacement funding for the banks
4. To pay for this, the Government has itself borrowed hundreds of billions from the same foreign sources.
So the end result is that the UK still has a massive external debt.
If on the other hand we had just let the banks go into administration, then the foreign sources would have had to write off the the debt. So from a national interest perspective, wouldn't that have been the best thing to do?
Complain about this comment
Have we finally hit capitulation for banking shares?
If so its a good thing. It means Brown can no longer stave off the market correction that he has been trying to buck since 2005
Complain about this comment
I can hear the forthcoming * Tory Chancellor's words even now:
'taxes will have to be increased to cover losses made under Labour'
Then it really starts. More taxes in a shrunken economy..
GC
* well, it's inevitable innit, that's how British politics works boom-bust Labour-Tory, same old game different hat.
Complain about this comment
When we go to the bank for a loan as a limited company they want all the directors to put up a personal guarantee; putting their assets at risk and making the limited liability idea of a LLC rather pointless.
a) I think that it would therefore be reasonable for all bank directors to be forced to do the same and put all their assets on the line in the same way, or resign without any golden goodbye.
b) If the investigation of this mess shows that many of them took their bonuses knowing what lay round the corner then they should at least be disqualified for life from serving as a director.
Complain about this comment
Too many chiefs not enough indians
I also find it crazy that Northern Rock still sponser a football team, so our taxes in effect pay footballers wages, lord help us
Complain about this comment
Robert
Time for another update I think
Complain about this comment
Has it occurred to anybody else that the present situation in which we find ourselves is nothing less than a long term plan, over 10 years now, for the labour party to nationalise our financial system and our major economic institutions. After all, this is what is happening, and its not even being debated In parliament. It's all being done by executive orders. Where are the Conservatives and why are they not opposing this nationalisation by stealth, which is what they are supposed to do?
We have all been brilliantly sleep walked into a socialist penury by these dangerously clever people.
Complain about this comment
angloscotty,Spot on it's hedge spivs once again! Why the Financial Suppine Authority let the dogs of war loose is a mystery, or is it the so called advisors the Government are the same lot who wanted 'lite' regulation. nuff said.
Complain about this comment
Instead of the Govt (us) taking up shares in the banks that are distressed, why don't they go for a public share offering?
If you imagine all the shareholders on the LSE being given a chance to invest in these banks at a knock-down price, you would surely have a rush of several billions.
There is plenty of money out there. People and institutions could sell a small portion of their other shares in their portfolios, and apply for these cheap shares. It would be like an investor bail-out rather than a taxpayer bailout. Why isnt the private investor sector being given an opportunity to support the capital base? The lessons of imprudent lending will have been learnt, and there will I HOPE! be better regulation in the future.
The present shareholders' holdings will be diluted severely, yes, but that is the price of getting things onto a sounder footing. They will obviously also have the opportuninty to invest in the new shares of their own banks as well.
This would be a financial reconstruction run by an administrator. After all, it looks as though there is a smell of insolvency here. The bad eggs should get rooted out in the process too.
This would help to support our sagging currency as well, as the Govt would be out of this, busy running the country on other issues instead of helplessly threshing and flailing around in the financial po(u)nd.
Obviously there would need to be a proper audited prospectus that came clean about the financial state of the bank. The number of shares on offer and knock-down price would have to be set so as to get sufficient capital at a price representing real value. Maybe an auction with a minimum price?
Complain about this comment
Robert
Apologies, you did the update whilst I was comtempkating a new series of Spitting Image.
Complain about this comment
Short Sellers - Stop hating the Scots
e.g. Gordon Brown / Royal Bank Scotland / Halifax Bank of Scotland
http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23201/twelve_month.stm
Complain about this comment
Memo to The Chancellor.
Since 'The Banks' are ex goodhibiting virtually no intention of cooperating with HM Gov for the good of the country,please consider the following:
The paper value of barclays on todays share price is a mere 7.5Bn. The Government already owns Northern Rock, and a ajority share in RBS.
Suggestion:
Acquire barclays and the remainder of RBS, then merge with Northern Rock, and rebrand the resulting super bank National Girobank2
Thus HM Gov can lead by example, and further HM Taxpayer wil have an actual asset to show for its money.
Complain about this comment
The banks are, of course, going to be nationalised and the Government will announce this formally just ahead of the budget.
All existing shareholders will be compensated rather than just see their shares lost altogether, but the value of that compensation will be set at the share price prevailing at the time of the announcement. It is in the interest of the Government and the PSBR to have the cost of nationalisation as low as possible - hence the timing. All bank results will be in; those results will be hideous; there will still be no confidence in the banking system and the nationalisation will cost almost nothing as a result.
I would have thought that this strategy was obvious.
Complain about this comment
Of course it could be that the market thinks that as the government is majority shareholders and as the prospect is for our holding to get larger, there is little point in holding the shares. The reason being that the banks will be run in a way that will benefit UK PLC before the shareholders interests are considered.
It could be that people are holding onto the shares as a very long term bet. However as your article has made no mention of the volume of trading so the price drop could be based on a small number of people panicing and those with cash finding better things to invest in at the moment
What annoys me is that these events are being assessed as if they are a computer game in which the time scale is amazingly compressed. In the real world things take time. Do not forget the aim of the package is to get the banks lending not in the interests of the banks, but in the interests of UK PLC.
Complain about this comment
Question?
Shabby Nationional and Alliance and Leicester are owned by the Spanish Santander group. Why is it only the UK taxpayer subsidising them? Where is the Spanish taxpayer#s money?
Complain about this comment
I am with 109 Edulike.
I read that every person in the country was going to owe 33,000 or maybe 36,000 for the bail out.
What about giving us all the money instead and see how quickly WE can get the economy going.
Complain about this comment
Basic economics lesson: Money, per se, does not exist; It’s the concept of exchange of Value.
The present shenanigans in the cause of Money are distanced from that exchange.
Hooray, Value still exists. The current global monetary system may collapse because Money has become an exchange of Money.
No worries, Value will still be exchangeable as long as there are at least two entities sharing its recognition.
So Money is ineradicably a by-product of Value’s existence. Money can resurface with new names. Value depends on us [or the plankton or whales or birds …get the drift?].
However, Relative Power is Value. Oh oh. This is only effective within individual societies, hence the Nation of Whales’ inability to pay off the Japanese and Norwegian ships from killing their members. Plankton? We humans tend to regard them as free. Not much recognition of Value or Relative Power there, yet.
The Global Banking System may disappear up its own but Relative Power and Value’s existence will, somehow, fix that until New Money and maybe New Banks evolve.
In the meantime, why not invest in Gold? Inedible and not nutritious.
Lead? Good for bullets..
What is the next level up from Trillions? Is it Quadrillions? Explain that to people living on a dollar per day, or, if they’re lucky, two.
I’d prefer a solution to the problem that is quickly “do-able”.[ Dr. Condolezza Rice’s usage]
Regards.
Complain about this comment
#119 - the government has not 'lost' anything today on the stock market (well not since it got the 70% anyway).
It owned 70% of RBS at the start and end of the day - only if it sells the shares has it lost anything - as it is much more likely to 'buy' (???) the remaining 30% then the government and the public (apart from those who do own RBS shares either directly or in their Pension Funds) have actually gained from the drop in value.
That is what all the 'conspiracy' posts are about - the announcements at the same time as the lift in short selling has 'made' shares it looks like the govt is going to have to buy drop in value - 'perfick'.
Of course the govt will still be taking on all the RBS toxic debt but they were anyway whatever the share price.
The govt - quite 'cleverly'/'slyly' (choose your own adjective) - is going to be able to pick off the banks one by one as the shortsellers feast, moving from target to target to achieve nationalisation for free - at maximum cost to existing shareholders and minimum cost to government. IMO this can be the only logical explanation for the short selling ban removal and the delay in the government grasping the nettle and nationalising all the banks right away.
Complain about this comment
So far today (As of 4:20pm GMT) RBS shares have plunged -65.71%.
Blimey.
Not waving but drowning.
RBS' tag-line is "Make it Happen": looks like something has.
Complain about this comment
Re 11
Please Robert could you answer post 11.
Complain about this comment
Did anyone see the BBC Market Data page where one of the banks had gone up 1456.20% today?
Complain about this comment
I have it on good authority that the new name for our soon to be nationalised banking system will be - Bank of Unusual Securities and Trust - a.k.a. BUST.
On second thoughts didn't someone say no more boom or BUST!
Complain about this comment
Post 138. Your summary is pretty accurate.
Re letting the banks go bust and the shareholders and bond holders take the pain. This might well have been a good idea a few months ago.
The problem with RBS is simple. We are in so deep now do you keep digging or stop and walk away?
My gut feeling is that Crash won't let a Scottish bank, let alone two, go to the wall and we are all paying for RBS & HBOS's recklessness.
Complain about this comment
Instead of nagging the banks to lend against their better judgement, why doesn't the government give a helping hand by massively reducing tax rates? This would put more earned money at our disposal. The shortfall to the Exchequer could be made up by taxing the very rich, whose expenditure pattern does little to support the overall economy.
Complain about this comment
130
Short selling
Short sellers borrow stock from institutions that hold the shares, mainly pension funds and other long term investors.
The pension fund takes a fee. The thinking is that the institution is gaining an income from something that would otherwise be an idle asset.
The shorter can then settle the deal. (As you correctly state much, much faster than the old days)
The theory goes that when the price drops the shorter buys again in the market and returns the stock to the lender.
As you would expect there are brokers in the middle also extracting fees.
If the market goes into free fall market makers are still obliged to quote two way prices so they are stuck with the shares eventually. (there is an FSA get out clause but it is not being used.
Guess who owns the market makers?
Got it in one: the banks.
Thus the banks will be taking losses hard until either the shares recover or they are nationalised and game over.
And guess who pays now?
Taxpayers both as holders of pension funds who tracked the index and as unwilling buyers of banks.
Now there is a novelty
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
I was wondering if the PM would like my bank details so he can give all my money away too
Complain about this comment
RP: "The fear of investors is that with taxpayers providing so much support to the banks, any spoils will go to the state in the form of fees, with shareholders receiving the slimmest possible returns for years to come."
I think there will be the slimmest of pickings for quite some time.
Can anyone tell me why the Preference Shares were converted to Ordinary and is there a gain or loss?
Complain about this comment
ELEPHANTS AND STRING
“BANKERS, NO ETHICAL GOVERNANCE OR MASTER PLAN”
The major tactical failure of the worldwide central banking structure, is that NOT ONE of these “so-called expert central bank regulators”, ever demanded of their ” financial engineers” developing new financial instruments (products), that such fiscal products be capable of passing the first rule of “Engineering 101? — the ability to successfully dismantle their construct if it ever became necessary.
Nor did a single ONE of these Regulators’, ensure that all/any new product constructs, meet the necessary risk management standards to protect public interests. A complete worldwide regulatory breakdown and dereliction in their \duty of care\ to world money markets.
What they built to gain excessive profits, spreading greed in their trail in the Bond Insurance markets, sanctioned by inept rating institutions, followed blindly by the Financial Accounting Standards Board (FASB), has been useless and deemed uncontrollable financial cobbling.
No “sane person” would ever set sail for the open seas in any one of the devices they created. Nor should the worlds’ citizens ever again, have to endure the pain these charlatans have inflicted upon citizens investing in worldwide open money markets.
The US “Wall Street” Bernanke-Paulson-Geithner troika is similarly using devices with the general effect to date, of pulling on a string attached to an elephant. The huge infusions of cash equivalents without strict governmental regulatory control may assist to avoid uncomfortable deflation and provide comfortable living for those at the institutions they have so generously assisted. Unfortunately, as inflation comes back on the scene, none has the knowledge or holds a key to any world banking structural plan, to undo the uncontrolled effects they have created.
Governments and their taxpayers must retake control of the issuance of currency, and fully utilise the expertise of professional ethicists i.e. Such as “The Certified Financial Analysts Institute” (CFA) in oversighting all new regulations for any proposed new future worldwide monetary system in protection of their citizens.
Complain about this comment
Maybe it's time for a third plan? The law of averages surely suggests that one of Super Gordon's plans WILL work some day. So maybe he should call an election which if he wins will give him time for plans 3 to (think of a number). Any takers?
Complain about this comment
Mr. Peston,
Doom and gloom have become your middle names and the crisis definitely has helped your career. It is time you and your collegues showed some responsibility!
I'm convinced that the media is not helping, on the contrary, your negative, oh my God are we going to survive this crisis attitude stinks. Not once have I seen or heard positive reporting. During the press conference this morning it was clear that lending is taking place, banks are committing themselves but not a single reporter requested further details about banks that are lending just how many might not.
We need people to get confident and you can help.
Any reports you have on positive issues is therefore very welcome.
Complain about this comment
Does anybody else think AlexanderCurzon needs to tone it down a bit. Everyone knows its a confidence game and his doom-mongering can't help (thats if anyone listens to hims). Come on Mr. Curzon, the tories have about as much chance of fixing the economy as you have of fixing your Caps Lock key.
Complain about this comment
Ask your bookie ...
Interesting to check out bookies' odds on various possible financial eventualities. Try it. It's fascinating.
Over the years, they have been very successful in forecasting election results and other events that often astonish us. Far exceeding the results of professional white collar rune-casters.
Pity our city slickers didn't do it before they made their loan/investment decisions.
Yours, etc
Complain about this comment
I get a bit confused over all of this.
Gordy tells me to spend and I will save £270 on VAT, but because the bank rates are so low and dividends have dissapeared I have lost £5k, and my pension is looking decidedly dodgy so how am I better off?
Gordy says, the banks must come clean over how much debt they are carrying, but shouldnt Gordy come clean as to how much debt he has dumped on us taxpayers?
Gordy says the banks are to blame for the mess we are in, but didn't Gordy do some peculiar maths over buisness investing in plant and equipment in his budgets that limits there taxable allowance to £50k, which hardly covers the cost of the delivery.
Gordy just gave £20m to Gaza, where is Gordy getting that from?
I need some simple explanations
Complain about this comment
Has the self acclaimed Saviour of the Scots, Alex Salmond MP not got a plan today to save RBS and HBOS, like he had three months ago.
Complain about this comment
106
You're being very unfair, sterling is doing awfully well against the Indonesian Rupiah today! :-)
http://tinyurl.com/xsnp
Complain about this comment
Capitalism is struggling to survive.
It will probably struggle for years, because the public have lost trust and confidence in all financial products.
Also Capitalism is in trouble because the bankers have lost all the capital!
Now we are entering a period of "state-sponsored capitalism", and the worlds' experts on that are the Chinese.
Capitalism also struggled in the 1930s, but then something came along to fix the problem....World War 2.
Complain about this comment
Conspiracy Digest
All the signals are jammed because nobody knows where the real power is.
The American markets look healthier but it is a public holiday (MLK day) and tomorrow will be the start of a Bush Free economy. Maybe it will be 'safe' to go back to america again to buy stock / invest money.
Complain about this comment
WOW this is a hot topic Bobby...
And did I hear on the news that the EU are saying the UK will suffer worst in the recession....
GB must be furious, as he thinks because of his fiscal prudence we are best placed to weather the storm.... who's going to tell him?
Bagsy not me!
PS - I think the gov are short selling, they are the ones with all the RBS shares!
PPS - RBS up to 14p that's a 40% increase in an hour or so..... it's Boom time again.... Yippee!!!!!!
Complain about this comment
Why exactly is it necessary that I have to have confidence in a bank?
Surely, they can survive even if I don't have confidence in them?
Actually ... no.
Under the current system, our banks rely on fractional reserves. This means that they only actually have a tiny percentage of the money they say they have.
So, you see, if even a tiny percentage of their depositors begin removing their money, a bank can easily fail.
Complain about this comment
watched "ice age the meltdown" last night with the kids and thought of Alistair Darling as the squirrel desperately holding onto the acorn, whilst trying to plug holes that keep appearing - to no avail I might add!
Also - when is Fred Goodwin going to be held to account on this?- he basked in the glory of profits for many years - seems he had been missing something off his balance sheet all along! Send him to a cell with Boy George in celebrity prison and televise it - probably more interesting than the Big Brother one!!
Complain about this comment
#130: Without going into too much detail, short-sellers can deliver stock by borrowing the shares from somebody else who owns it. Of course the "somebody else" doesn't do that for free - which is one small part of the tangled web of the "off market trading" that unravels when somebody can't or won't honour their obligations.
The futures and options markets are another way of making money from falling prices, and postponing the time when shares actually change hands - and that time often never actually occurs.
But you are right, it was a very different game when played in the old 2-week account periods.
Of course if the government owns 70% of a stock and just sits on its hands and does nothing with it, the main effect is to make the market in the other 30% MORE volatile, not less.
Complain about this comment
Can anyone tell me how much bad debt has actually come from us in the UK ?
How does this compare with the billions given to the banks now to cover all their bad debts?
I suspect the management of the banks involved have chased overseas business to gain big bonuses, whilst at the same time screwing all the hard working people here with bank accounts for every penny they could grab with obscene bank charges.
I feel the top excecutives should be named and shamed , with their bonuses repaid and their assests seized. Nobody should profit from such gross misconduct.
Complain about this comment
coments 155 to 158 - not allowed or simply missed in the flurry of posts?
Complain about this comment
Tut tut - here we all are acting treacherously and 'talking down the economy'.
As a government minister would say: '"So what?"
So what if RBS is only worth 3% of what it was a year ago?
So what if the pound has dropped in value?
So what if thousands are becoming unemployed each day?
I'm sure there are plenty of 'Green Shoots'
---
Actually the first green shoot I'd like to see is that of a fast-growing bamboo planted directly beneath the bound and squatting figure of Gordon Brown.
In a day or two all our troubles would be over.
Complain about this comment
Watching this financial mess unfold is distressing. Gordon Brown should resign - now!!
Could he be classed as "guilty of criminal negligence" along with many others within the financial industry ?
Our pension savings may dissappear altogether, and bank deposits frozen in nationalised banks. It doesn't bear thinking about, but is now becoming a distinct possibility.
How can we get this government out ?
I'm getting seriously pissed off !!
Complain about this comment
Ooooops down to 11.6, now I'm changing my mind about my #176 post........ 25% down ....... were are in a recession again......
Complain about this comment
aaaah Gordon Brown, remember him.
The king of bad timing, the prince of not-my-fault.
The day after he releases the * short-sellers, he converts his RBS money into shares, and watches it vapourise in a matter of minutes;
Remember when he sold the gold -by auction- at its low point, stuck in a trough, against all advice?
Remember when he dropped interest rates, at exactly when he should be raising them?
Remember when asked Diamond Al to take the blame and fall on his sword, sparing the glorious leader?
Oh, that's not happened yet, that's next month.
*glanafon (I think it was) -I know it isn't the short-sellers today, it is everybody dumping bank shares. (Not cos they are right, price is now a bargain, RBS is going to get snapped up from abroad before it is nationalised).
Complain about this comment
this all goes to show the FTSE serves no useful purpose to any of us.
automated selling of shares in a company that has just been propped up does not make any sense
Complain about this comment
My God...I post to the lyrics to Eric Idle's "Always look on the bright side of life" in an attempt to give everyone a wan smile on a crummy sort of day and my message gets referred to the moderators.
What sort of blog is this?
Complain about this comment
@Benji044
What we need is the truth. I bet you have not cried around when
the media was talking every single day about rising house prices,
how-to-make-your-home-sell or how great British the economy is.
Complain about this comment
Silver lining?
Look on the bright side. The consequences of 10 years of Labour rule are going to be so nasty over the next few years that it'll be a very long time before they the will be able offer a credible election platform.
And by the time the next generation has to learn the financial facts of life anew (as always), the Scots will have been successfully cast adrift to enjoy their independence.
This will happily answer the Midlothian question and remove most of a Labour vote.
Lest it be thought I am not fond of our Scottish brothers, may I say I like them very much - properly cooked. However, I don't think I could manage a whole one.
Yours etc
Complain about this comment
They said of Churchill that he had 100 ideas per day, one of which was a good one.
Now even if Flash is in the same league as Churchill; we are still only on plan B, which means we are not even at the end of the begining.
Complain about this comment
Without going all David Icke, I did read somewhere that the depression in the 30's was caused by the Rothschilds et al to crack back the whipper snappers , then since the 40's we have heard about the new world order, could this all be engineered to achieve this ? ie if Europe and the US suddenly all adopt the amero, who loses out ?
Im off to see If they will let me into the Bildenberg group , it will be busy in there today
Complain about this comment
#169 Nonsensationalist
Don't worry no one listens to Curzon..... there is a lot of lip moving but he says nothing without hindsight....
Watch for the reports on the fall of the Matawanbian Chick Bean and the post from Curzon a day later telling us he got out of it the week before.......
Complain about this comment
If a private bank like RBS managed to lose £ 2 billion lent to a Russian businessman, then I want a much higher return on my savings than 3% in the bank. The banks risk and gamble our money so the return needs to be more like 10%. Barclays lost a lot of money in the Far East about 20 years ago through reckless lending. I want my savings to be lent to safe UK business and AAA people for mortgages, not foreign interests.
Complain about this comment
#172 geoffthereff:
"Has the self acclaimed Saviour of the Scots, Alex Salmond MP not got a plan today to save RBS and HBOS, like he had three months ago."
There has been a deafening silence from him but he has not been the only one to keep silent.
You hardly hear from GB and AD either. It has probably saved quite a few TV screens from being smashed.
Complain about this comment
The banks have been reluctant/unable to advance more credit. They have significant losses from bad deals and investments. The government is using billions of taxpayers money to promote more lending. The banks are keeping this money to offset losses.
Proposal: Let the banks go to the wall. Use the Post Office Bank or similar identity to provide banking services. As current banks go bankrupt the new bank(s) use the staff and infrastructure to continue business.
Whilst I recognise this may seem ridiculous I am sure there must be a development of this idea that has some validity. Any ideas Gordon/Alistair?
Complain about this comment
Good old Lloyds TSB:
Avoided the sins of securitisation and the excesses of the US sub prime market. Resisted rampant expansion on cheap credit.
Came to the calling of a desperate UK government when a white knight was needed to buy HBoS.
And for what? It's common equity holders look likely to be written down to zero and spat out of any nationalised entity.
Complain about this comment
Peston might do his readership (and country in general) more of a service if he spent less time talking about 'confidence' and other intractable psychological notions, and stuck instead to talking about fundamentals. Most of the editors and commentators seem to just speculate these days. All it does is create panic....but...
There are banks and there are international banks. Is the UK Government seriously proposing to nationalise the international banks? I suppose it's technically possible for it to buy enough shares to be the majority share-holder now that it/the FSA has effectively lifted the ban on short-selling. Is that what they are hoping for, as low a share price as possible? What will it do then? Can the UK police the world markets?
Complain about this comment
There are numerous posts on here calling for bank directos to refund their salaries, be sacked, be locked up etc. Essentially their mistake lay at a micro economic level for making poor loan/investment decisions - and arguably they are culpable also for failing to look at the state of the economy as a whole. There is however only one person who is culpable for the parlous state of UK plc finances (at a macro economic level) - and that is Gordon Brown.
But he will receive his massive index linked, tax exempt, pension pot - and then will receive consultancy contracts (just like Tony) for "saving the world" that will place him in the league of the super rich.
He is not averse to writing the law so as to confiscate assets from others (shareholders, pensioners etc.) - so maybe we need to ensure that he does not profit personally from the catastrophe that he has caused within the UK economy for anybody who has to pay their own way (i.e. not on Government payroll).
Complain about this comment
Wait, hold on, what is with the FTSE100? According to my calculations, which may not always be perfect but do at least occasionally contain some degree of intellectuality, the market should have fallen around 10% today, if not significantly more. I use the terminology 'eh?' to summarise my opinions regarding this event most bizarre.
Complain about this comment
Watch it, folks, you know the next one will be a "Three o'clock in the morning and all's well" message, brought to you by the Serious Cybernetics Corporation,
"Get to love your ID Card,
stick it in the slot,
swipe it out and give a cheer,
sticking with the plot!"
Oddly enough, today was the 3rd day of the House of Lords Committee Stage of the Banking Bill 2007-8. According to the House of Lords Committee Paper:
The Bill establishes for the first time a permanent statutory regime for dealing with failing banks, amends related current legislation and makes new provisions for the governance of the Bank of England.
Key areas
establishes a permanent special resolution regime, providing the authorities with tools to deal with banks that get into financial difficulties. The regime has three options - transfer to a private sector purchaser, transfer to a bridge bank and transfer to temporary public sector ownership
creates a new bank insolvency procedure
provides for a new bank administration procedure for use where there has been a partial transfer of business from a failing bank
amends the Financial Services and Markets Act 2000 to enable changes to the Financial Services Compensation Scheme to be made, which fall outside the scope of the existing legislation
formalises the Bank of England’s role in the oversight of inter-bank payment systems
repeals legislation governing the issue of banknotes in Scotland and Northern Ireland, limits their issuance to existing issuers and provides for new reserve requirements
makes provisions relating to the governance of the Bank of England, including a new statutory financial stability objective and the establishment of a Financial Stability Committee.
Nice to know they're on top of the situation, isn't it? This was the Act for Part A!
Complain about this comment
This could be the time for a new High Street Bank to be set up. A new Hight Street Bank wouldn't be encumbered with the history of the present Banks nor would it have their 'bad assets'.
If it adhered to good banking principles I believe it would give confidence to investors and could raise enough capital to be a useful bank, able to lend to businesses with the right collateral.
Best of all, it would not be a nationalised bank.
Complain about this comment
106 moraymint
173 wrote
The Pound.
Do not worry about Sterling. There is some misplaced confidence in the Dollar due to expectations the new Head Honcho will perform miracles in the USA.
When he discovers he is hogtied by the current trillion bucks deficit there will be an ' adjustment'
Watch this space for the Euro becoming unravelled.
Complain about this comment
I just can't believe the gushing nonsense Plodder comes out with every day.
He just can't stop himself can he?
From this website:
" jobs may have been "needlessly" lost at healthy firms struggling to gain access to necessary funding. Good businesses must have access to credit," said the prime minister"
Sure but many surviving businesses also want to be able to trade effectively WITHOUT borrowing more, and in a shrinking market how do we accomplish this little miracle, Brown? I emphasise 'surviving' because every day brings more collapses, more anxiety and misery.
How about some little homilies on THAT issue?
GC
Complain about this comment
Let us mull over the glories of new Labour?
Remember the good old days of endogenous theory?
Remember when things could only get better?
Remember the longest period of economic growth for 200 years?
Remember `skoolsandhospitals'?
Remember 48 hours to save the health service?
The list goes on and the sad fact is that it was nothing more than an endless progression of utter mendacity. They got away with it because they could.
They got away with it because they seduced the public with visions of a wealth that did not exist.
Now all that has turned to dust. It was a complete fairy story and the Leprechaun King has reclaimed his gold.
Time for an election. Time for Labour to go. Time for change.
Time for a new Britain where honesty and integrity can once again play a part in our lives and our economy. Can we recover?
Yes, we can!
(Sorry Barak, I pinched your line but good luck for tomorrow and the next few years.)
Complain about this comment
Anyway, what I was looking for is tomorrow's business in the House. It's just too much to place here, go look it up under www.parliament.uk and have fun imagining what happens if the get to the ajournment debate...
The only thing missing's PMQ, that's Wednesday 1130.
Complain about this comment
The majority of you on this board are so inept it is unbelievable.
Can you not see that this is a global problem, which started in America. Are you saying all the governments across the globe are at fault?
I can bet if the torries were in power, they would not have a solution for this problem, bu this appears to be a Tory board.
If anyone is to blame, it should be the worlds worst banker, Sir Fred, who forced through the Acquisition of the Dutch Bank ABN, which has contibuted to RBS having to write off a further 20bn today.
Also whoever lifted the short selling ban should have their head looked at!! numpties!
Complain about this comment
Hi Ho, Hi Ho,
Its off to the IMF we go,
Here lies the Labour party, buried in 2009 by Gordon ‘Prudence, he saved the world’ Brown.
Complain about this comment
Three points:
1. I thought that the term MacMafia was said in jest.
2. Scots have forever lost their reputation for financial rectitude and
3. can we have 100% windfall taxes on banker’s bonuses and a return of their knighthoods?
Complain about this comment
The words "short selling" springs to mind.
Why is this economy wrecking activity allowed?
To the foolish who believe that everyone in banking is greedy, incompetent etc can I suggest that they need to look a little closer to home for the real people to blame.
I do not recall anyone saying in the last ten years that the value of their homes should be reducing not rising. Neither did those greedy incompettent individuals complain about rising stock markets etc.
Still it easier to blame someone else!!
Complain about this comment
189...... well they could not be worse than the Tories, the Frank Spencer party of Britain.
And as for the Scots, I think without Scotland ,England would be a rather bland and dull Germanic enclave. So why not join up with Germany ie Euroland and be done with it.....as Britain is fast imploding into nothingness as Little Tory Englanders turn nasty on their fellow British Scots, endlessly carping on and making the Scots feel unwelcome in their own country.
So much for the Tories being Unionists, the disgusteds of Bognor Regis are smashing up the country more than SNP could ever hope for.
Complain about this comment
What happens when the inflation comes which results in higher interest rates.
We have 8 MILLION mortgages in this country & 25MILLION houses.
What happens when 25% of the housing stock appears on the market?
And to exacerbate this, unemployment is rising RAPIDLY!
They have spent the best part of 1trn pounds on bailing the banks out, when they could have spent far less underpinning the housing market (Direct intervention into buying repossessions and renting them back to the punters).
They have made a complete pigs ear of it, and I honestly see riots and possible hangings out of this!
Complain about this comment
185 allmyfault
re short sellers
Nope wasnt me that queried it, quite happy with people selling shares. If you think they are too low you can always buy them.
Question is what is the objective of this. Is it to effectively take control of the banks. Or is it to pump credit into the system. Pumping credit in has all sorts of queries against it. But controlling the banks by the backdoor looks interesting. If it works. If that is the real objective and it works then rofl. As I posted on the last thread - last summer a major fund said that they could only see the outcome of nationalisation of US and european banks because only governments had the clout to deal with the debts. 2009 looks bleak.
Complain about this comment
Someone tell Robert that nationalisation usually destroys shareholder equity, so advance notification is a powerful incentive to sell. Finance for Beginners, surely?
Complain about this comment
206,
oh dear...............
Complain about this comment
Comment nos. 182, 183
Absolutely and your tone of comments echo throughout this unusually heavy blog response. I think Labour are still living in the belief that spin-doctoring can get them out of anything.
Where is that little boy to finally point out that the Gordon the Emperor and his cabinet have no clothes?
Newsnight and other talk shows are going to have to start really pelting the ministers of this destructive government with spiky hardballs.
It's been said that this situation really is just like a Dr. Who episode where the real cabinet ministers are being held hostage in the basement of number 10, while their alien counterparts continue with their nefarious plan to destroy the country.
Complain about this comment
According to the BBC website the total value of UK mortgages is currently £1.2trillion. The way this government appears to be splashing the cash can I suggest it would be far better/simpler for HMG to pay off everyone's mortgage, giving everyone an instant cash boost and security for the years ahead. this may even may encourage an increase in household spending. It is our money after all - I don't see why Bankers should have the final say over where my money goes. Oh - I guess that would never work as the financial institutions that got us into this mess would then lose all power over us.
Complain about this comment
I have to say that I am very sceptical about Barclays' statement that they will make a profit north of £5 billion. I think the Government should send in the auditors/FSA to have a very close look at what they have been doing and how they are managing to avoid losses on their loans. Of course, it might be all above board, but it seems a bit weird that they have avoided all this mess. What's happened to their share price suggests that maybe the market doesn't believe it either.
This latest Government 'plan' won't work for two reasons - 1) they have yet to get full disclosure from the banks, and therefore don't really know what they need to do to cleanse the system and b) getting the banks to lend more money to people and companies at this point is the wrong thing to do. we need to get debt DOWN, not UP. Until we do that, we are in the mire.
In any case, if we insure the banks' bad lending, why wouldn't they relax their lending criteria again and dig us even further in the mire? I thought banking was a risk business. it doesn't seem to be any more.
Complain about this comment
Surely when governments make big announcements like this they are meant to bring confidence to the markets.
Reminds me of the speech Darling gave when he waffled on before they had to make the announcement next day that the banks were being recapitalised.
Footsie on screen at the time was dropping like a stone the longer he droned on but said nothing.
Someone needs to gag this lot 'cos the more they open their mouths the worse things become.
If you have nothing constructive to say better to say nothing at all.
Complain about this comment
English bloggers may not know that in Scotland, the emasculation of RBS and HBOS is perceived by many as having been a strategic way of booting Scotland's claim to financial viability out of the park, and while I know that this was not deliberate, that is the effect it has had.
Pre-crash Edinburgh was the richest place outside London.
Now Auld Reekie has the dry boak.
So 189, you may well be stuck with the Scots for some time yet.
Complain about this comment
All this talk of full nationalisation of the banks.
But no comment on what would be done with them after nationalisation.
Although the Government appears stupid enough to do it (witness lifting the short selling ban at this crucial point - was Mandy influential in this decision - after all he appears to have some very rich hedge fund friends), what would the Government then do to restore international confidence in the UK?
Would the Government then prudently write off all those toxic assets, including perhaps lots of UK mortgages hit by declining house values and jobless houseowners- but it can't write off the trillions of liabilities it acquires.
The government would then have trillions of liabilities as national debt with much reduced assets on the other side of the balance sheet.
Or would it argue the toxic assets are worth something - but won't they have the same problem as the banks in valuing them?
Would they print more money as nobody would lend to the UK following the further drop in confidence on nationalisation?
Then who would they blame when the IMF have to be called in as with the Labour government of the 70's?
Presumably they would eliminate at least 50% of all nationalised bank branches (perhaps 100000+ employees would be redundant, more if the nationalisation includes Barclays)-after all why should the taxpayer support lots of bank employees all employed by the Government in NatWest, Lloyds, NR and possibly Barclays branches? If they don't do it, the IMF will insist they do along with a lot of other unpleasant things.
Before the IMF arrives, how would the Government increase lending and at what interest rates, particularly as UK government creditworthiness would be very low.
Would they further relax lending criteria so that businesses whose customers have largely disappeared would get loans to delay bankruptcy? After all these businesses employ voters and an election is pending.
With of course the taxpayer eventually footing an even larger bill?
Glib references are made to Sweden in the early 1990's but nobody mentions that the Swedish banking sector was much smaller than the UK's, its economy was very different, and its economy had a very unpleasant time.
The banking sector earned many millions from overseas activities including loans and fees to credit-worthy overseas companies - what would happen to their overseas activities once they are owned by the UK government?
If the government fully nationalises the banks watch our economy go into even steeper decline from which it will take many years to recover.
Robert I would be very interested to hear your views on how the Government would/should manage say nationalised RBS and Lloyds, and what the possible impact would be on international confidence in the UK.
The Government needs to restore confidence in the banking sector and avoid further nationalisation at all costs - an easy start would be to reinstate the ban on short selling and sack the incompetents who decided to lift it.
Complain about this comment
#206
Agree that whoever lifted the ban on short selling should be examined - but wasn't it our wonderful government who saw fit to do so through the FSA.
Not much use putting all this down to a 'global problem'. Whilst it is a factor, the manner in which our economy has been managed over the past 10 years has left us with so little leeway to take effective action.
Complain about this comment
Business might have been viable at the 2007 levels of lending to costumers to buy good etc but that was unsustainble therefore there were never really viable then. Are we going to be foreced to spend next ?
average wages are around £25K so if mortages were lent at about 3.5 times a single salary that £88K for the price of the average family house that families can live and love in and have a sensible life.
That around about half were we are at currently that an hugh amount of debt sitting somewhere.
The future 25 years was mortaged to for the Brown spending bubble of 2000-2007, thats around 20+ years to get out of this mess.
It took 79-97 to get out of the last labour mess, created during 64-79 with a small Tory governemt sandwich in the middle that did not have the majority to sort it out.
Complain about this comment
206 banksy
lol
Sir Fred did it all by himself. Did he use mass hypnosis. Quite an acheivement. Still does not match G Brown managing to upset depositors and borrowers simultaneously. A feat I never thought I would see. G Brown is either the most incompetent man in the world or the most unlucky. I do give him credit for being a trier.
: )
PS Did a certain A Blair pop round to the BoE and see a nasty graph and then decide time to jump ship. I found it baffling that a man who started wars was seen as a potential peace envoy.
Complain about this comment
178 fendal asks when Fred Goodwin will be led to account. As he won his knighthood for services to banking in 2004 should he not now be giving it back - or moreso having it taken back?
Complain about this comment
Two hours to pull a comment.
That is time for RBS to plunge 50 per cent.
I guess it was a complaint, I apologise if I offended someone.
It just goes to show one mans humour is anothers offence.
Complain about this comment
# 202 toldyouitwould
Yes, I agree that we shall shortly be watching the unravelling of the Euro (and possibly a fair bit of continental European social unrest?). The situation is neatly heralded here (amongst other commentators doing the same thing):
http://tinyurl.com/ayblgd
At what point does this crisis become a drama (remember that insurance ad?)? And if it does become a drama, how do our glorious political leaders give the people (that's you and me) the opportunity to express our opinions at the ballot box?
Can't Her Majesty the Queen do something?
Democracy seems to have flown out the window as the credit crisis walked in the door.
Complain about this comment
I think that after what has happened at Equitable Life investors should be worried - very worried about any sort of government guarantee scheme.
Equitable members are being offered comprensation (if the reports are correct) only if they can prove that they were mislead by the FSA statements AND if the can prove need. If compensation for bank problems are also going to be subject to a 'Means Test' then what percentage of the claimants are actually going to get anything back?
Just when we thought it couldn't get any worse...
Complain about this comment
I think the thing everyone is forgetting - the really scary thing - is that money only exists now as balances at banks. If Gordon had allowed some of the banks to go bust then all of the money transmission system and all of our bank balances would have gone as well.
This is the problem with banks - they have never been purely private sector organisations - they are too important to fail!
Complain about this comment
# 206 banksy1978
That's it then: it's all Sir Fred Goodwin's fault. That's a relief to know. Now we can get down to sorting the problem.
PS Presumably that's why Gordon Brown shouted at RBS today?
Complain about this comment
You cannot fool all the people all the time Brown. It is now crystal clear what your intentions are, FULL NATIONALISATION OF THE ECONOMY. It appears to be crystal clear to the markets as well, hence the rout in bank shares, but why investors think that the rest of the economy will be immune from the effects of a nationalised banking system is beyond me. We may as well accept that we will soon be living under a communist regime in all but name, and I do not make this statement flippantly.
The latest scheme is no different from the last in that it restricts the amount of lending that banks can undertake, instead of paying exorbitant coupons on preference shares the banks will have to pay penal rates on insurance, and if they try not to take out this insurance they will 'A' receive little in the way of institutional investment and 'B' probably have their capital ratios raised to compensate for the risk. So the banks are in no better position to lend more than they were prior to this latest so called bailout. In fact they are clearly in a much worse position as the market has completely lost all confidence in the UK banking system. Facts that are not well publicised are that the main banks are in fact increasing the amount of lending provision, the problem is that overseas investment that made up a huge part of the credit supply in this country(compounded by economic structural problems leading to a huge current account deficit) has completely evaporated. It would be hard enough in normal conditions for the banks to make up this shortfall, never mind in the current worse recession since the depression climate we are in. The spin doctors have convinced everyone that this has been an evil plot perpetrated by the banks probably orchestrated by the devil himself, and yet again we’ve swallowed the bull. Who does the public think ‘the banks’ are? All this talk about retribution is effectively directed at shareholders and people whose pensions are invested in the banks, are they to blame really?(that includes pretty much all of us). The so called perpetrators are a handful of investment bankers mostly American, but they are not in any way really the root cause. The real blame needs to be apportioned to the FSA the treasury and the Bank of England and in particular the architect of the system for handling macroeconomic policy and financial regulation, Brown. This now clearly a systemic failure of the financial system and a failure of macroeconomic policy.
Please don’t be fooled any longer, this government has failed dismally in not only the handling of the crisis but the preceding economic policies of the past 10 years.
Complain about this comment
Our banking system is a bit like a massive stretchy string vest with large holes in it which starts to unravel when you pull at the loose bit of strings or threads. This is not good when the credit and stock markets freeze over as we should have bought some thermal underwear instead.
Complain about this comment
And why shouldnt all the banks end up nationalised, and all future profits go to the public purse instead of the bankers and shareholders pockets.
The bankers have blown it, and taken their shareholders with them.
Many would say it serves them right, and the public dont trust them any more.
The public are saving their bacon, so all future profits go to the public.
We have to save our banks...we do not have to save our hopeless bankers.
Complain about this comment
@206
If not RBS it would have been Barclays. I bet they believe they got a lucky break there
Complain about this comment
Your picture of Crash Brown sums it all up.
Poor old dear, it looks like he's ready for permanent retirement where he can dwell on his past mistakes!
There is no added value to the economy or our jobs in him hanging about another day, so please go now Crash and lets celebrate.
Like a useless CEO going and the shares moving up 10% you can bet the country will rally on his permanent departure.
Complain about this comment
#192
I thought it was the Metabili Gumbo bean...
I think we are now at parity with that currency. How embarrassing for us.
Don't you think that with the first whiff Gordo had of this crisis his immediate action would have been to accelerate Prescott's affordable housing programme. He had loads of sites earmarked, he had a ready market of first-time buyers and key-sector workers, and had a construction industry desperate to be occupied gainfully.
We had a whole series of very neat modular, fast-track designs which could have been mass-produced in factories around the country, using as much locally-sourced UK material as anyone could from our service-based economy.
He could have got three times the bang for his buck; but no, Gordo wants to chuck all his money at the banks.......
Complain about this comment
Metalray:
I'm not saying don't report the truth, I'm asking report and question it all.
If 50 Billion is offered to corporations is there a chance that layoffs can be avoided in automotive and other sectors? Didn't they ask for money in order to prevent this from happening? If you work for Jaguar don't you want to know?
NONE OF QUESTIONS THESE WERE ASKED.
UK press is over the top, if you ever spend time outside of this country you would know that.
Complain about this comment
The days of lax banks failing to do due diligence on loans are over. Banks have precise information on the state of their own loan books, and after some needed sackings, better economists than the government. If they don't want to lend then there are very good reasons for not doing so. Brown and Darling on the other hand are trying to win an election, not survive for the next 100 years.
So here is a titbit that the press have missed but the banks know too well. For the weekending 10 January the US initial unemployment claims were 950,000 unadjusted. That week and the preceeding 4 weeks saw US unemployment jump 30%.
Complain about this comment
Is it easy to acquire life insurance if you have had two heart attacks and enjoy extreme sports? probably not.
Investors will be quietly breathing a sigh of relief that the tax payer will be taking all the risk and keeping their investment safe.
Has anyone heard any bankers stand up and take some responsibility yet?
Complain about this comment
At a well known high street retailer that sells everything for a pound, you can get six toilet rolls for that princely sum. That makes a toilet roll worth 16.6p.
Given that RBS shares closed at 12p, the "exchange rate" for "shares to rolls", means that it takes 1.38 shares to buy a toilet roll.
Now any paper has worth, whether written on or not, but a certificate for one share, would barely fold to four "sheets". So even if the privy door has new "reading matter" attached to the nail, a soft loo roll seems to hold better value.
Complain about this comment
old labour laughing their socks off?
Turned us back into a nationalised economy has old crash?
Complain about this comment
Dear Mr Brown,
I believe that you should step aside and let there be a fair election in a country that has tried hard to support you through thick and thin, it is unfortunate that the thin is just getting to thin and the thick.......! well lets just say the thick part only made the bankers money and now we are all paying for it, very dearly.
The UK has had enough now, so unless you are looking to lose the next election below the greens i suggest you stop bailing out the only part of the UK that no one cares about and start sorting out the mess your policies have created.
And to think i used to vote Labour!
Complain about this comment
Bail out UK banks so they can lend to British firms OK.
Bail out so they can lend to Business in USA and other countries, NO THANKS.
Think small, i think the banks should only lend to UK firms for now.
Complain about this comment
Now the bankers responsible for appalling risk management over the last few years, driven by personal greed, get to make new loans with the knowledge that if it turns bad the taxpayer gets the bill. Next step would seem to be joining Iceland with junk bond status for the UK government since overseas investors may well see the government drowning in unquantified risk. The Treasury have after all no experience of insurance risk assessment, yet still senior figures in financial services claim the need for high rewards for their "scarce talent". Now they have power without even the semblance of responsibility. Even Mafia leaders lose if they run the firm onto the rocks, but not senior bankers.
Complain about this comment
#217 elly3553:
" I think the Government should send in the auditors/FSA...."
+
They would not see anything.
They did not see any of this lot coming.
They still cannot get a value on the derivatives, SIV CDO etc.
You must group the following with the above:
Accountants Internal and External
HMT Inspectors
Risk Mgt Teams
HMRC
Credit Rating Agencies ( they have been quiet, eh?).
NONE of these saw that this was a House of Cards.
#183 gonzomuppet:
"Watching this financial mess unfold is distressing. Gordon Brown should resign - now!!
Could he be classed as "guilty of criminal negligence" along with many others within the financial industry ?"
---Yes, plus a lot of the list above.
Complain about this comment
I'm new to this blogging lark so bear with me. Just had a quick google of RBS' previous profits and they're something like £7Bn in 2005, £6Bn in 2004 and 2003 - i'm a simple soul so can someone explain where all the dosh went?
Complain about this comment
Think of yourself as a serf and the whole thing makes a lot more sense.
n.
A member of the lowest feudal class, attached to the land owned by a lord and required to perform labor in return for certain legal or customary rights.
An agricultural laborer under various similar systems, especially in 18th- and 19th-century Russia and eastern Europe.
A person in bondage or servitude.
Complain about this comment
When no new knowledge comes to the market large falls can surely only be explained by shorting or insider knowledge.
Anyway it can't be that bad because many of the bankers I know are still getting whopping bonusses...just that they are being deferred for a few years. (Borrowing off the staff now as well). Hmmmmm.
Complain about this comment
I agree with 183 gonzomuppet, Gordon Brown likes to pretend that all this is nothing to do with his policies whilst he was Chancellor.
Teflon Tony got out whilst the going was good and has disappeared off the planet and even as a so called special Middle East envoy was noticeably absent during the Israeli bombardment of Gaza.
As PM, Tony Blair succumbed to the pressure from the Banks to permit “light touch regulation” and Gordon Brown as Chancellor eased all the controls to allow our banks to join in the toxic loan bonanza. He should be locked up and forced to listen to an endless recording of his “Gone are the days of boom and bust” speech.
The bankers paid themselves obscene sums in bonuses but now claim that they didn’t understand what they were investing in. At the same time they loaned out money that they didn’t have to people who obviously couldn’t ever repay the loans.
Surely this amounts to criminal negligence?
And what about all those smart accountants who invented (and also got handsomely rewarded for advising the banks to invest in) the “financial instruments” which were the equivalent of black holes which the banks poured more money that they didn’t have into?
These same smart accountants were also then well rewarded for signing off the accounts of the banks so surely they must also be guilty of some form of criminal negligence.
I might just be able to stomach all of this mess if all the Chairmen and Board members of the banks along with all the Chairmen and Board members of the Accountancy firms who advised them were arrested and had all their assets seized.
But no, to add insult to injury, we now find those same incompetent bankers and accountants at the heart of Government now advising Gordon Brown as to how to get us taxpayers to pay for their mistakes and of course their on-going obscene bonuses!
Complain about this comment
Fact: The banks are insolvent.
Why doesn't Brown just do what is necessary............nationalise the banks then fill them with printed money.
They nationalised NR so why not the rest of the system?
Hey presto the collapse of the economy is halted and then we can work out where we go from here once we are in a more stable situation.
It would also help if a new Gov't had a mandate to do make those hard decisions................so call an election!
Complain about this comment
I admire all of you for your enthusiasm, passion and knowledge.
However whilst you sit there typing its happening. No sorry it’s happened....
What do we do now? But RBS? Its quite cheap, we could make a killing !
Personally, I shall never again deal with a bank or trust a politician. Lets face it if politicians were any use at anything they would have set up companies that would be going bust as we type.
If you want to cheer yourself up try listening to Lydon, Cook, Jones and Viscious’s masterpiece. They seemed to understand that this would happen way back then.
Get pissed destroy......
Complain about this comment
With governments of all nations setting up slush funds and toxic-assets-for-treasury-bond swap arrangements for banks and soon for other businesses, what has happened to the EU state aid rules? Are these being conveniently swept under the carpet?
Competition playing second fiddle to stabilisation ala HBOS/Lloyds?
Complain about this comment
Nice and convenient to blame short sellers. Anyone got any proof? Alphaville doesn't seem to concur with the assumption. Perhaps we might just consider that RBS is a massive pot of "FAIL" (along with UK plc) - the govt's actions & words just prove the point. Nationalisation beckons.
Complain about this comment
Brown's hourly recue plans are for all the world like Black Wednesday's interest rate changes, the sad fact however, is that the Tories decide within hours the game was up, Brown has taken, and will take months, by which time we will be bankrupt as a nation. turfthemout.me.uk has a nice line in revolution, seems a very English way of doing things.
Complain about this comment
Gordon really should buy Barclays - a snip at their current price (if they really are going to make that much "profit").
We get a nice bit of Lehman too.
I really cannot understand the reluctance to nationalise them. I think we are being too kind to TSB as well. OK, 12% interest on the Prefs is a bit steep, 3% with hefty warrants would have been better at the time.
Complain about this comment
Will the last one out please turn off the light!
A perfect example of why democracy often does not work. Every government policy of th last 50 years has been designed with re-election in mind rather than improving the country.
A few basic lessons to get us back on track
Our GDP was based on unreal money borrow on the value of overpriced houses (this money is now being written off by the banks and will be for years and years to come).
It is impossible for us to maintain GDP at previous levels and therefore a recession is a necessary evil that we will have to go through.
Our Welfare state cannot cope with the burden is currently bear, it will have to be sorted out or the system will collapse.
Nobody benefits from overpriced property, dont spend billions trying to keep prices up, let them find a natural level (circa 30% lower than todays price).
The reduction in VAT was a crass, stupid waste of money, be big enough to reverse your decision and build social housing with the £12billion.
Businesses that were geared up by hedge funds and venture capitalists must be allowed to go to the wall and then be bought up by someone who knows the dangers of excessivedebt.
We should all vote for politicians who represent the views of their constituants and not a party machine.
And we all should be praying and buying gold and silver.
Complain about this comment
#230 NeedaFilip "You cannot fool all the people all the time Brown. It is now crystal clear what your intentions are, FULL NATIONALISATION OF THE ECONOMY."
And what alernative would you propose? Your capitalist dream has fallen in a heap - at least Brown is trying to pull a small part of your clueless a*se out of the fire.
Complain about this comment
THIS IS ONLY THE END OF THE BEGINNING WE ARE SEEING.
The consensus of opinion and analysis on these comments pages has been far more accurate in predicting what will happen than anything the media has offered.
Most of us here all knew they would do it ( in some form) before they did and knew it would fail, as it has.
So what is the next phase?
My advice...
Dont ask.
The only likely fillet for many on here will be that the next phase will include Gordon Browns utter humiliation. Not even he will be able to deny it.
History will see him as a tragic figure. he probably meant well. I actually feel a bit sorry for him at this point. There will be a chill wind blowing through N0.10 downing street tonight.
Jericoa
Complain about this comment
#226. moraymint wrote:
"we shall shortly be watching the unravelling of the Euro"
Sterling is a small currency that has been run for the benefit of the City of London and its 'financial services' companies for a couple of decades. Much in the same as the Icelandic krona was run by Iceland.
Our banks did the same things as those in Iceland only more so. From what we are seeing to very much the same result, only more so!
Now you want the only ray of possible stability to collapse!
We are desperately dependent on the Euro being stable if we are ever to rebuild our exports, indeed we should join to gain the stability and administrative efficiencies.
One day you will learn to hug a European!
Complain about this comment
When is the RBS going to dump the rubbish on its employees and sack thousands who have worked there for years?
Will employees of the ABN Amro but first or last in the job centres?
Will the higher ranks continue to take home large sums of money and a golden handshake when it all goes wrong?
Complain about this comment
Enconomy (Banks) rescue plan not working?
no problem we will have a new plan sorted for release on Wednesday...and if that does not halt the slide on the Blackjack tables....um I mean the Stock Exchange, then another plan for...say.... Friday should/might do the trick.
Thing is...all these bad loans still have a value, some either will be repaid or the property lent against will be eventually sold, might be an investment plan here for the shrewd banker type, they fell for it once, no reason we should not try to tuck them up again.
Complain about this comment
I think Mr No More Boom or Bust has done a fantastic job of laying the blame for our economic woes on the Banks. Just listen in to the interviews with the public to see how well this is working. The ultimate responsibility for the financial crisis lies with Gordon Brown and whilst Britain could not have avoided the worldwide recession it could have reduced the massive impact it is having on us.
In 2005 it was plain to me that the level of debts in Britain was unsustainable. I have worked in many of the leading Banks and Building Society's in the UK. In some of the organisations where a sound business model was in operation they were lured into 'high risk' business to impress shareholders (banks) or members (Building Society's). The keyword for lending became affordability to avoid the old 'income multiple' criteria. In order to support increased retail and commercial lending it was necessary to increase the treasury function.
I certainly wasn't alone in thinking that the debt level simply didn't make sense. Whilst the Banks must clearly take a share in the responsibility for the collapse of the banking system, this responsibility is shared by the FSA, the Bank of England and ultimately the government.
To my thinking the Banks Shares are still overpriced at the moment and I susepct we'll see the Footsie below 3500 by easter. It may well be worth entering the market at this level if you fancy a long term punt - but I'd stick clear of Banking shares, since effectively they'll all be nationalised and I can't imagine Northern Rock or Bradford and Bingley shareholders getting too much back.
Complain about this comment
Now why would anyone think it is sensible to underwrite the UK banks exposure to the global derivatives markets which can continue to generate massive levels of loss for many years to come? Inevitably it will fail but in consequence will leave UK taxpayers with a burden which will force future generations to seek their living abroad to escape a tax burden of insufferable proportions. With our best and brightest gone and a stagnant and failing economy as a legacy pensions will no longer be even a faintly remembered dream. Could it be that our government is foolishly trying to support what it see's as international financial obligations that it has no realistic hope of meeting in order to gain favour and keep tactical economic options open for an incoming president?
Instead of trying to lead it may be better to be part of an international consensus and action plan for the way forward. I have said before that this may take months and years to evolve. In the interim damage limitation is one thing,trying to turn the tide on your own in a Canute like fashion is entirely another. I suspect that the leadership needed to develop the real global economic end game will come from either China or India. The politicians of the West seems obsessed with a return to a game plan that is clearly bust. The new capitalism will need to be a much more demanding environment to do business in.Welcome to the Global Republic.
Complain about this comment
In relation to this fagged out government and its incompetent leader, the words of Cromwell come to mind when he addressed parliament in 1653.
"You have sat here too long for any good you have been doing. depart, I say and let us have done with you. In the name of God, go!"
Complain about this comment
I am the top Re-brander in the industry
RBS (Royal Bank of Scotland) should be rebranded RBUK (Royal Bank of UK)
HBOS should be re-braned HBUK etc
Complain about this comment
Short sellers are probably the only thing standing between some banks and "no bid" right now.
Complain about this comment
- 'Get Rid of Gordon Brown' or 'Blame Robert Peston' may reflect your personal viewpoints - but they don't exactly help fix the problem.
Getting rid of Gordon is the start, until he goes we are stuffed, as either a) he still believes the UK is well positioned - in which case he needs to be sectioned
or b) He is after hanging onto power and saving his own skin, in which case he needs to be impeached (can we do that?).
Complain about this comment
How can you be surprised at the fall in bank share prices? I couldn't possibly be short selling, could it?
On 18 September 2008, Hector Sants, chief executive of the FSA, said:
".......we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets."
As the FSA allowed the ban on on short selling to expire on 16 January 2009, normal market conditions have obviously returned. These 'normal market conditions' allow, as Robet Peston says, a giant international bank to be valued at little over one year's profits.
The Government might just as well have given away free money. The problem is that it's my money.
The result is that the post-war generation that is now approaching retirement and who were taught that hard work and thrift were virtues and that debt was a social stigma are being thrown to the wolves. The Government repeatedly told us that we needed to make provision for our old age, so as not to be a burden on the State. In return, we are being condemned to live out our remaining years in poverty.
But 'normal market conditions' have been restored, so everything's alright.
Complain about this comment
I've wondered about this before, but as wholesale bank nationalisation seems even more on the cards now...
Why not treat the basic functionality of banking as a national utility. Nationalise the mechanics of current accounts, cash machines, cheque clearing etc. It's really hardly any different than providing an internet email account, and I can get one of those for free, so it can't cost that much to run.
Leave the banks to provide higher interest savings accounts and loans. Perhaps only let them provide term deposit accounts, so they can't borrow too short in order to lend long. At least then those who made deposits in such banks would be aware that higher returns means higher risk, and might start to check the business models of the banks before making their deposits.
Complain about this comment
I was not dreaming late this afternoon when the BBC business web site did, for ten precious minutes ,announce that RBS shares were the biggest gainers of the day and were up by 1,400% plus at over 350p.
But sadly it was a dream, or someone at the BBC was having a laugh.
Complain about this comment
What remains to be a coincidence is that short-sellers again made a lot of money for their hedge-funds by the falling share price of the banks, when the much-coveted Mr Peston highlights further 'bad' news on his internet blog.
Could irresponsible journalism be partly to blame for the economy's current predicament?
Complain about this comment
I object to people saying the Nationalisation of the RBS is the right thing for the "public purse".
Having worked in high street banking for 15 years, and naively believed buying into sharesaves, profit sharing shares etc was the way to ensure my families future, am I to be left with nothing?
I bucked the trend saved hard, paid off my mortgage invested in shares for my future and it seems to be the government are only interested in those who borrowed too much and were irresponsible.
What about the ?sensible? and prudent people?
Complain about this comment
Robert
The whole thing has fallen apart...
Consider:
Shareholder invested £12Bn not 9 months ago at £2 per share...
Late December 2008 (less than 3 weeks ago) staff were offered SAYE Share Scheme at a price of 39p... This was a 'fill your boots' offer, being at a 20% discount to close price mid December 2008.
Today the Great Gordo offered to place £5Bn of the Govt negotiated Preference Shares (bearing a 12% Coupon) on offer to existing Shareholders at 31p...
Q. Why does the Govt want to divest itself of an investment paying a 12% return to the Taxpayer? Are they 'mad'?
A. Because, when the first payment falls due and is found to be 'in default', then The Great Gordo is obliged to Nationalise The Bank - and assume full responsibility for the debts of the Bank...
Q. But Godro and Darling undertook a 'due dilligence' did they not before they took us into this mess?
A. But they didn't think it through!!!
To-night's close - 11p (Selling @ 9.9p). The Great White Darling suffered the Taxpayer to buy @ 70p!!! Why is he allowed to in charge of my Pension? Surely he should be carried off in a straight-jacket!!!
In 'old money' this is less than two shillings!!! The shares traded at £21.50 before the 'split' two years ago...
Let's hear it from the Board, The Internal Auditors, The Risk Managers, The External Auditors, THE FSA, The Bank of England, The Treasury... Indeed, anybody who benefitd from :
1. Clinging on to the shirt tail of The Shredder,
2. Knew, and said nothing,
3. Should have known,
4. Failed to heed the warnings from their subordinates,
5. Bullied their subordinates into saying nothing (for indeed this could not be suppressed in any other way? Could it?)
Is there any single one of them can stand up and tell the simple truth...? You see, there's smoke, and there's mirrors... And, given the figures, the truth lies 'outside' US sub-prime... The 'white lie' should have been exposed before now... But it's now too big to cover up...?
There should be one 'last chance'... then names should be named...
The shares are worthless. Who cares?
Robert
Hmmm...
Don't you agree?
Complain about this comment
#257 Jericoa:
Gordon Brown's handling of the economy reminds me of someone playing Tetris. It looks good at first but then it becomes apparent that each "success" speeds up the clock.
As many a Tetris player will tell you with a wink, the only winning move is not to play. ;)
Complain about this comment
Moderator WHERE is my post where I mention Snakes and STERLINGX etc…
You have not sent me an email about the above post
But for a subsequent post which you did moderate?
Why
What was it that was so contencious or do you have a problem with you systems ?
Has anyone else experience lost post on this blog post moderation???
This BLOG system needs upgrading it’s is NOT up to the JOB!
MODERATOR please email me with an explanation.
Thank you
Complain about this comment
I generally find your analysis helpful, along with your other colleagues who try to give hope to we small items of 'flotsam' being tossed hither and thither on an 'angry ocean' of banking failures populated by the 'sharks' of anonymous big money players in the financial markets.
At a time of extremes, with noone really knowing what will come next, why do we not hear from Government ministers about the thinking behind these 'rescue' plans, in great depth and at great length, with a proper public debate.
We are constantly treated like little children who wouldn't understand, so why bother, yet the enormous numbers, the enormous risks, and the enormous threat to all our futures, is given the same importance as a change in the Council Tax!
We should depend on BBC people to give the balanced arguments, and not to be the interpreters of Government announcements. Seems to me you are unpaid Government lackeys!!
Why don't you press Mr Brown/Darling/Mandelson for a 1 hour special on the actions taken, being planned, and the reasons, and then a 1 hour debate with you experts quizzing the government on our behalf?
Might we find out some hidden gems of truth?
Complain about this comment
177. At 5:06pm on 19 Jan 2009, true-liberal wrote:
"So, you see, if even a tiny percentage of their depositors begin removing their money, a bank can easily fail."
But the depositors are a G Brown and A Darling, and they keep putting more and more in rather than taking it out!
Complain about this comment
To all those saying RBS shares are now cheap; I should point out that they are cheap because ther is a good chance the company will need another large slug of taxpayers cash which would dilute your new shareholding to NIL.
Complain about this comment
#258 It´s difficult to see the euro as long term viable. As the med economies go into meltdown either the Germans to shoulder the burden or they deliberately wreck their own economy for the greater glory of club Med.
Can´t see why the Germans would agree to either proposition.
Complain about this comment
Gordon Browns story is looking more like a mirror of Daniel Dravot everyday (man who would be king)
Complain about this comment
257 Hi Jericoa
I tabbed across to see what was going on and you post poped up.
Yup I feel sorry for Brown n Ali D. neither looked comical this morn.
V serious but nothin to do. Outta all hands methinks.
Banks in it big time. All comes back to confidence at all levels. Bit like love, Once it flies out of the window difficult to find. Unfortunately mose people have been sleepwalking so rude awakening.
Other than the usual compos mentis posts the rhubarb is simmering away. Howls of rage will be nothing to what may come. Wait till the Gulag UK unemployed reports come out. Another illusion to be shattered. The caring welfare state.
258 John from
Euro should be okay surely. Big trading block. Problems but not as bad as here. Chatter from people we know. 3rd world problems look bad in this framework. No info but social unrest could be a problem. I think we are seeing that the forces are beyond one man or his team. Or one man his dog and his team, I am reminded of Albert Einstein again. 'The difference between stupidity and genius is that genius has its limits.' If you spend years carefully building a disaster how can you expect to control it in a matter of days.
Complain about this comment
208. At 5:43pm on 19 Jan 2009, P_Dorff wrote:
Three points:
1. I thought that the term MacMafia was said in jest.
2. Scots have forever lost their reputation for financial rectitude ...
I tohugh the reason we have a United Kingdom is because the Scots went Bankrupt once before, and the English had to bail them out.
Complain about this comment
Security doesnt make a bad lending proposition good. A banking axiom from happier days. So, will this latest initiative make a bad proposition good? No chance.
I have blogged before and will do so again on this point: banks will always lend to viable businesses, the money is there to be lent. What banks will not do is throw good money after bad and prop up a falling property market nor refinance highly geared businesses or propositions structured in times of easy, cheap credit.
For goodness sake, that is how we got into this mess in the first place.
One note of caution to those that have been saying we should return to the days of the "old bank manager". Looked in a bank branch recently? Young, bright things wet behind the ears who are salespersons, not bankers. Most don't even have the (in my day) Chartered Institute of Bankers examination.
Heaven help us and this Country of ours if we don't soon get a Government that actually knows what it is doing.
Complain about this comment
Off topic but it would be nice if the equivalent of David Owen Shirley Williams and Roy Jenkins, but preferably cross party, could get together and form a new National Unity Party and challenge the existing hegemony
Perhaps
William Hague
Frank Field
Vince Cable as a starter mix
Complain about this comment
Gordons given a lot of our money away. He paid a visit to Jerusalem last year and felt the need to dig into our pockets to the tune of 300 million. Could I say everything he has got involved with he ultimately throws money at it?
Look at who creates wealth. The banks gamble it and the government spend it. They need more, and more, and more, and more and so on.
What did you expect?
For those calls to tone it down please don’t tell me your relying on us to be positive for Gords sake!
Attempt to let them off the hook?
Until Bruin goes it will only get worse. Fact! Not Darling. We know what role he plays and its a lame one.
David Icke is ok. If you go public with that information, you have to make out your a little off the rails or you wouldnt last too long out there. Rothschilds, JP Morgans, Rockerfellas (and a few other prominent families) yes yes yes, they creamed it in then, and they are creaming it in now. Did you know that most of us directly or indirectly work for the Rothchilds? They even quoted that banking is inimical to our interests a long time ago. Nothing changes, but the mentality of the people.
Bicker and argue amongst yourselves...Thatll help.
Bad to judge who or who isn’t read on here. It doesnt put you out in front. The point of all this is understanding and peoples point of view.
We are most definitely onto something. We now know that this is getting repeated through the corridors, and if I were to guess Gordy is throwing a fit in response to his army of haters. That is the only direction to be throwing the slanging matches thank you. We are here to spend energy for that purpose.
Labour be gone. Front and back!!
All of em!
Complain about this comment
What if the government only guarantee the retail deposits and let the weak banks fail? The bank creditors can fight over what's left.
Did not the wholesale credit lenders get higher interest rates for supposely riskier investments?
It is interesting to see that the two countries with the most troops in Afganistan and Iraq are also the countries in most banking trouble. UK banking borrowings started mushrooming in 2001, the year of 9/11.
Let UK bank borrowings return to 2000 level
(£6-7billion ?)
Complain about this comment
It appears not a little odd that since the ending of the suspension of short selling that banks are in trouble again. Will the FSA never learn?
Complain about this comment
# 258 johnfromhendon
I'm happy to hug a European anytime (with one or two minor conditions ...).
My problem is not with Europe or the Europeans. Indeed, my company imports 50% of its goods from Europe: we're being absolutely mullered (to use a Pestonism) right now.
My problem is with the the political fantasists who put the EU and the Euro together in its current form with nothing in their eyes except visions of a guaranteed, sunlit future. The world isn't like that as we're now discovering.
It doesn't take an archbishop to work out that if you dream up a structure comprising lots of different and diverse economies, societies and political systems and then ram a single currency down its throat then as soon as the going gets tough (like now maybe?) then the currency system will bend, shudder, convulse and eventually fracture under the strain.
I have no particular desire to see the Euro do one thing or the other (survive or collapse): I just think its another idiotic scheme dreamt up by a political elite (ha!) which could well now be setting off on its journey home to roost.
I'd be more than happy to be proved wrong.
Complain about this comment
126. foredeckdave wrote:
"can anybody tell me what is going on in Ireland? I heared rumours today that if Eire attempts to keep to its Euro commitments then it will be technically bankrupt and will have to leave the Euro to protect itself. Does anybody know?"
The position in Ireland is that the third largest bank, Anglo Irish, will be nationalised, probably on Wednesday. Legislation is to be rushed through the Oireachtas (Parliament) tomorrow. It's being nationalised due to a "mini-run" on its deposits of some EUR 4 billion over the last couple of weeks. Allied is probably the weakest of Ireland's banks, with a business model that makes Northern Rock look prudent. However, its real current problem is that a Director hid over EUR 120 million in loans from the bank to himself (loans to Directors have to be disclosed in the financial statements but he managed to avoid this: the details don't really matter). Two other Directors resigned as they felt obliged to share responsibility for the malpractice for different reasons. The CEO of the Regulator here also resigned, and the Regulatory body has been heavily criticised for the affair by an Oireachtas committee. Other financial institutions do not want their own (already tarnished) reputations made worse by association, hence the withdrawal of institutional deposits of some EUR 4 billion.
Two other banks, Allied Irish ("AIB") and Bank of Ireland ("BoI") are attempting to raise EUR 1 billion each in rights issues. They are also due to receive government investment, a bit like RBoS and Lloyds in the UK. The rights issues look likely to fail miserably, leaving both majority owned by the State. BoI's CEO has announced today that he will be resigning in June (he would have been sacked anyway once the government owned over 50% of the bank).
As for Ireland's Euro commitments, I think breaching these (from an EU perspective) can be ignored. Nobody in the EU/ECB wants the Euro system to fail, so the risk of Ireland being kicked out is absolutely zero. However, strains are showing in the system. Firstly, Spain's sovereign risk was downgraded today from AAA to AA+. There are expectations the same will happen to Ireland. There are big spreads opening up on the cost of sovereign borrowing amongst Euro members. Before this crisis, all Euro members were paying roughly (within 0.1%) the same interest rates on long term borrowing. Now Spain is having to pay 2.6% more than Germany, and Ireland 1.6% more. The implication of this is that investors now see a real risk that the Euro will fall apart, with individual countries deciding to withdraw. There was an article in the Sunday Times Irish edition this weekend suggesting it would be in Ireland's interests to do just that. Incidentally, I don't see that as being a good idea. Without Euro membership, Ireland would already have gone the way of Iceland.
Complain about this comment
I am not surprised at RBS’ losses. They have not even managed risks on the simplest of projects and spent great deal of money only to lose value of their security, where they could have spent a third of the money and would have tripled their security.
Complain about this comment
My wife and I have just returned from a winter break in Switzerland, when the waiter in our hotel restaurant found out we were British, he tipped us ! The signs are ominous.....
Complain about this comment
59. whatevernext1 wrote:
The share prices of the banks continue to collapse, despite the Barclays and HSBC annoucements.
The senior managers FSA who advised/decided upon lifting the short selling ban should be sacked, as they are costing the taxpayers about as much as the former managers of RBS.
Whatevernext1.
A mild correction, please, forgive me...
They are all still there.
They are the ones charged with 'downsizing' the business.
Noticed that the CEO is on £750k p.a. (excluding perks)? Quite a nice little 'shoo in'... What particular skill does he bear to the table that warrants such lavish reward? We should be told... (Not many people can decimate a share-price)
The Board remains. Not a single resignation nor apology, excepting the honourable but perhaps wanting outgoing Chairman...
Tinkering with the Global Market Operations team is hardly radical...
Hardly many 'former managers' as far as I have noticed.
I have no wish to see honest men and women suffer in all this, but there is a cold wing blowin' in... and they will suffer.
However, rest assured that there has always been a very secure 'old auditors network' looking after the chaps.
Fred's boys are alive and kicking, even though some may now be 'enjoying' a new life in The States...
The real villains will not be called to account any time soon...
Complain about this comment
With financial WMD detonating around the world, especially in UK and USA. Is this Bushism a Freudian slip ?
"Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we." —President George W. Bush, Washington, D.C., Aug. 5, 2004
He should add "our closest ally" to the list.
Complain about this comment
Robert, why shouldn't the government stop the charade and just buyout those banks (RBS and HBOS in particular) that are falling prey to short selling? The price must be very tempting and the opportunity of stabilising them, compelling. Barclays claims not to need government money 'but it is beginning to look like a lot like Christmas' if you fancy picking up a bank.
Also, if any of the utilities should so happen to be struggling, they could be snapped up too. The telephonic merry-go-round is a joke and the gas and electricity generators just duplicate each other in some crazy bureaucratic fantasy of competition.
When the government has done this they should then look at giving loan guarantees to British companies that actually make something tangible (engineering, bio-technology, clothing ... whatever... - something that needs investment capital and is capable of turning a profit, creating jobs and paying tax.
All the talk is about the banks and lending, which makes sense. However, the difficulty might be that those in position to borrow cannot find a market to buy their products.
The other thing about a service economy is that it tends to feed off itself. It creates a sort of commercial house of cards - call centres, marketing, PR, recruitment, publishing, design, advertising... It will be interesting and horrifying to see what happens next.
Given your reputation as Lord Peston of Downturn, would it be possible for you to look at companies that have something to sell, are selling it and positive about their future contribution to the economy?
It's always to get a dose of hope with the truth.
Complain about this comment
246. StephenBlencowe
'Think of yourself as a serf and the whole thing makes a lot more sense. ... A person in bondage or servitude.'
That was the whole underlying mechanism of the manipulation of the housing market (and planning system) from Thatcher thru to Brown to now. Promise riches one day based on an nonliquid asset and shackle with high individual debt to make compliant. Very clever. The shackles go on willingly. Housing price rises - the opium of the masses, what you are seeing now are raving junkies on withdrawal.
Complain about this comment
#129 robrob2002...
You are right of course. The corollary is that those WITH ideas have left this place and are doing what they can in their own bit of the boat to keep it afloat.
Every day, there is an increasing proportion of bloggers on here who think that changing the colour of the deckchairs will do some good.
You are wasting your time arguing the point here. Get and do something yourself - it's probably the last time I post too.
I spent the last week in mainland Europe - no good viewing this situation with parochial eyes or by applying domestic solutions - it is everywhere you look.
All hands to the pumps! Interesting times...
Complain about this comment
130. DickyJ39
Dicky,
Firstly, settlement of UK trades is now T+3, eg shares bought today will have to be paid for on Thursday of this week.
Secondly, shorting/stock borrowing/lending, follows this cycle. If I short (sell) a stock today, I have to deliver shares on Thursday. So I go to my prime broker today and ask to borrow the stock so I can do so. The prime broker will deposit shares into my account on Thursday (ie normal settlement cycle), and I can then settle my trade that day.
The rest of your post is a bit theoretical and, I suspect, irrelevant today. You're right to imply that settling trades post-nationalisation might be harder than if they were normal trades. Therefore I suspect very little shorting took place in stocks like RBoS today. In fact, I'd bet that some of the buyers today were those parties that have been running short positions since the original ban in October closing their positions. These guys have already made huge profits on those positions and, frankly, another 10-15p/share is neither here nor there. They'd probably rather close the positions now and be able to crystalise their gain, than wait until nationalisation and whatever paperwork they may need in order to close their position. However, if there are short positions still out there, they will benefit if there is nationalisation and a deemed value of zero. They might have to wait a bit and fund the position (ie borrowed stock) for a while, but they'll still make money. Only shareholders lose, and maybe the odd executive who plays the part of sacraficial lamb.
Complain about this comment
279
Do you like Kipling?
I don't know, I've never Kipled.
Boom Boom
He lost his head too did he not?
Complain about this comment
271. charminglastchance
'Having worked in high street banking for 15 years, and naively believed buying into sharesaves, profit sharing shares etc was the way to ensure my families future, am I to be left with nothing?'
You should address this question to the business whose shares you hold. Possibly attend the next agm. At least your profit sharing scheme is not a negative profit sharing scheme such as appears to being given to taxpayers. You should also visit your MP particularly if he is a Labour MP.
Complain about this comment
278 arm and a leg - ion times
Your on form today. Reasons to be cheerful. If currencywise every collapses then everything stays the same. The Obama love-in probably is keeping the USD up until they realise he is only human. Eurozone has probs sure, youre over there arnt you, but debt less than here plus warmer so food local. Surely they are not daft enough to airlift fruit n veg halfway around the globe like they do here. France has nuke energy. Germany has rented sector mainly, Spain has the sun. We have Gordon Brown and the rain. Tourism from the Olympics thats the answer.
Complain about this comment
Like thousands of others, I am absolutely appalled by the apparent malpractices, unprofessional conduct and moral turpitide revealed over the last 3 months in the banking sector which has led to miserable consequences to mortgage holders and new applicants, businesses for seeking loans for working capital. the possible loss of up to 2 million jobs in our economy and the downgrading of pensioners' expectations. This is a gargantuan catalogue of national disasters which must be firmly laid on the doormats of city bankers who were, at one time, renowned for their respect for honour in their dealings. I appreciate that this situation may have had some global triggers but do we have to follow the sheep ? The practitioners in the legal, medical, accountancy and other professional institutions are regulated by their bodies and will strike people off who behave in an unprofessional manner ; what action is or will the Institute of Directors, FSA and others take to ensure the culpable members are never again allowed to perform executive or non-executive activities in the banking world ? It's about time they were made fully accountable for the tanrnishment they have brought upon a once respected industry. Denys Lawrie, Manchester
Complain about this comment
Absolutely agree. Shareholders in banks have been hammered over the last 9 to 12 and most of these are ordinary people who own shares either directly or indirectly through their Pension Funds. When the media talk about 'bailing the banks out' just who or what do they mean by 'banks'? All bank employees will have lost out as shareholders, shareholders are, in the case of HBOS and RBS, over 90% down on a year ago, so who exactly is being bailed out? Or do they mean depositors who have not lost out because the banks have not been allowed to go bust. Think it through guys...
Complain about this comment
#273 wellington silent
He can see the last block coming down now and knows it is beyond his skill to get it in place before the game is over..things start to work in slow motion. He will still try but the hope of success is gone....
I think today will be the day he personaly marks as when he realised the game was up. He will no doubt still come out fighting by force of habit, but there is nowhere left for him to go now credibility wise.
Nationalisation is next.
Printing Money.
Direct govenment intervention to keep a float key companies.
A run on Sterling.
A general election or some kind of crisis coalition.
I am not sure of the order is all.
I am surprised by my own reaction, he is human after all and of course would never have wished for this outcome. He probably did genuinly want to 'provide social mobility and justice for hard working families'.
He just did not have the tools to do it, ambition as a'social warrior' of some kind yes, intelligence yes, vision...No.
''where there is no vision the people perish''
(old testament) it was known back then what a nation needs, some things do not change.
Today I feel sorry for Gordon Brown.
Jericoa
Complain about this comment
I left the UK (and Europe) while I still could - it will only be the rich & connected that will be able to when the riots start... The tragedy is that when the riots do start, the people will be rioting against a phantom, and the special interests who have profited most from the 'BUY NOW, PAY LATER' ideology which has been mis-sold to us for so long will have left the country and will be partying on... Robert Peston's 'New Capitalism' is clearly propaganda - I don't blame Robert (or should I say - 'the powers that be') for peddling this idea... Hope is a powerful anaesthetic!
For those of us who are designed by nature to sense these things before the rest of the tribe (see http://www.hsperson.com - we are the canaries in the coal mine!) watching all of this unfold is especially frustrating... If we remain civilised (and surely we must!) something that resembles a New Communism is much more likely to rise out of the ashes than a New Capitalism... But Rome must burn first...
Complain about this comment
195. alexmeaden wrote:
"Use the Post Office Bank or similar identity to provide banking services"
The Post Office bank is actually run by Bank of Ireland ("BoI"), BoI is currently trying to raise EUR 1 billion in a rights issue, and failing miserably. It will be majority owned by the Irish State within weeks. Actually, it may simply be nationalised within days, given the collapse of Irish bank shares today (worse than UK ones).
Complain about this comment
It must be soul destroying for the staff at RBS / Lloyds to see their savings obliterated in the share crash. I know (as a former employee who saved with HBOS and lost over £6k - not much to a city fellow but a lifetime to me) how painful this can be. These Senior managers, who continually promoted sharesave scheme's to employee's without revealing the true risk involved by their creative lending (and servicing their own greed) should be JAILED!! Treated their staff like dirt!
Secondly why does a Governament which has came out and stated that bankers greed is to blame for all this and why this greed was deplorable and will not be allowed to happen again THEN allow the FSA to re-instate short selling so that the Hedge Funds thirst / greed for money at the expense of the above shareholders (staff and customers at Barclays). IT BEGGARS BELIEF!!!
Gordon Brown is only interested in self preservation. He has no political or moral purpose.
Complain about this comment
283 sosraboc
Conservatives expected in at next GE just search GE odds, you might find them interesting, so why would Hague bother. Labour trying to salvage credibility for history books so wouldnt help, explains x party efforts failed to date. Rest well LIBDems big price. Youre really asking for the prospect of a hung government pushing cooperation forward. Sorry doubt it. Stuck with process in place as far as I can see. No Conservatives marshalling and waiting for Labour to fall apart. Needs something exceptional for Lab to survive. If there was pick up economically then maybe but cant see it.
Complain about this comment
Britain is forecast by Brussels to experience two quarters of negative inflation in the last half of this year, but this will not amount to an annual judgment of deflation in 2009, said Joaquin Almunia, the EU’s economic and monetary affairs commissioner.
“In annual terms in 2009, inflation [in Britain] according to our forecast is 0.1 per cent and next year 1.1 per cent,” said Mr Almunia this morning.
“The situation is more worrying in public finance because the UK had not consolidated public finances during the good times,” he added.
Complain about this comment
271. At 8:09pm on 19 Jan 2009, charminglastchance wrote:
I object to people saying the Nationalisation of the RBS is the right thing for the "public purse".
Having worked in high street banking for 15 years, and naively believed buying into sharesaves, profit sharing shares etc was the way to ensure my families future, am I to be left with nothing?
I bucked the trend saved hard, paid off my mortgage invested in shares for my future and it seems to be the government are only interested in those who borrowed too much and were irresponsible.
What about the ?sensible? and prudent people?
charminglastchance
I spoke to member of RBSG staff today, who was offered retirement at 60 last year, but chose to work on as she enjoyed her role (back office in a business centre). A very competent lady.
She is not well paid, but had saved up her profit sharing and performance bonuses from Day 1, she had accumulated over 25,000 shares. Having used her savings to take up her Rights Issue @ £2, within the past year she tonight finds herself with no ready cash, and her 'pension' pot wiped out... You may care to ponder just what motivation she receives from her Line Managers... Any amusement at her suggestion that she should have 'gone down the pub and got pissed everynight for the past 25 years' was strangely lacking...
Whilst enjoying myself in Scotland pre-Xmas, I met my old Accountant - he who sent me South, to 'Look after your Granny's Money, and Learn about the World'. Although on crutches now, he is sound of mind - he was 'crippled' when the share price was plummeting then, but much more aware of the impact of a lack of any dividend would have for, as he recognised, the next 5 years. Be assured that my one time mentor used language quite inappropriate for one of his station and advancing years. He left me in no doubt that the Bank was in good order when he was made redundant before his 'time'. What he will be uttering to-night will make his contemporaries turn in their graves...
charminglastchance
There are many such as you who are beginning to ask questions...
Did the son of the manse undertake 'identity checks' before he received latest tablet of Devine Guidance? We should be told...
Robert
It would be helpful if you, or one of your colleagues, could cast your attention in this direction. For, from this unholy mess there must come a change in the status quo... The next election could be too late...
Complain about this comment
# 270. jimmyrevolta wrote:
Could irresponsible journalism be partly to blame for the economy's current predicament?
Absolutely. Where were these journalists in 2002 and 2003 when Gordon Brown created a million extra public sector jobs and started borrowing 35bn a year just to make the payroll? Where were they when house prices trebled in a decade?
Indeed where are they today? We need a lot of journalists and TV commentators to overcome the blizzard of 'global downturn that started in America' and 'all the afult of the irresponsible banks' that greets us whenever Brown et al come anywhere near the BBC.
You simply cannot underestimate the power of the BBC when it comes to informing the voters opinions. The whole 'Brown Bounce' was down to the way the BBC chose to report the first (unsuccessful) bank bailout. 'A failure of Thatcherism' was how the BBC reported it. Dutifully lifted and transmitted around the rest of the media.
Imagine if the BBC had presented it as 'Complete Failure of Gordon Browns Regulation' or 'Prudence is Dead' or something similarly close to the truth. Forget 'Brown Bounce' we'd have had a 'Brown Burial' by now and not a minute too soon.
Complain about this comment
Robert
When are you going to interview Maggie, who got us out of the last mess, and see what she prescribes as the fix for this one?
Complain about this comment
285 puzzling
'It is interesting to see that the two countries with the most troops in Afganistan and Iraq are also the countries in most banking trouble. UK banking borrowings started mushrooming in 2001, the year of 9/11.'
Yes there are 3 obvious possibilities which could all be wrong
1 It is a coincidence
2 The obsession with external threat or the wish to deflect scrutiny as to the security failures that let it happen led to focus overseas and the eye was taken off the ball domestically.
3 The wars, pural - because both were seperate but clearly linked in Bush's mind, and Blair was too quick to support effectively unconditionally, cost - substantial money. It is a easy source of funds when a economy bubbles. Huge tax incomes resulted and avoided the need to raise taxation or to raise public borrowing. Both of which would have had to be very public. War UK costs never seem to be discussed passed year 2. If the 911 attack and subsquent wars did prompt this event then Osama won.
Complain about this comment
We want the three big banks, their directors and managers, and their shareholders to suffer punishing losses. As penalties for their greed and foolishness that created this mess we've now got to clean up.
We want them to suffer personal losses and humiliation. Otherwise they'll be a moral hazard wherby some others will repeat their reckless behaviors.
So I'm very glad that the government's packages are well aimed to both revive bank loans to responsible borrowers, and has ensured that banks' share prices have collapsed and dragged down the directors and senior managers with them.
We also want the profit opportunities as the Banks' share prices recover, to accrue to British Taxpayers. That'll enable us to save taxes in the future. Which is only right and just.
Whoppee! Thank you Gordon and Alistair for punishing those Banks for their greed and hubris!
Complain about this comment
'I am the top Re-brander in the industry
RBS (Royal Bank of Scotland) should be rebranded RBUK (Royal Bank of UK)
HBOS should be re-braned HBUK etc '
Good to see kikdread attack the big issues head on lol
Complain about this comment
297 sosraboc
...Do you like Kipling...
..He lost his head too did he not..
Mr Kipling - Is that the one you mean - No, hes still making fairy cakes and stuff and having exceedingly good picnicing with his tarts.
Complain about this comment
Robert, Alistair,George and Vince
Re my contribution to earlier blog, the RBS closing price today was 11.6 pence placing my estimate of the taxpayers' loss at 12.25 billion GBP on paper over the six or so weeks since the original placement. This might well go down in the books later as 'cost of nationalisation' or something like that I suppose.
Cold towel around the head :-
What's challenging me is the terms of the Preference Share conversion to Ordinary Shares. If I understand this correctly, the original placement of Preference Shares did not contain a right to convert to Ordinary Shares. But, today's announcement pegs the deal reached between RBS and Treasury to 31.75p ( Ordinary). What I dont understand is the way they propose to do it. RBS say that they will make a placement of c. 5 billion ( preference debt ) GBP's worth of new Ordinary shares at 31.75p each ( underwritten by the Treasury). These 13.3 billion odd shares would generate the 5 billion GBP to pay off the Treasury's Preference Shares. In effect the Treasury ( with other brave shareholders ! ) generate the cash flow to pay off the Treasury preference debt...the Treasury are then left with 13.3 billion extra Ordinary Shares ( overpaid by 20p per share against today's value) and no secured preference debt which RBS dont need to worry about ( good for them).
Does not the diference between the pegged value ( 31.75p ) and market value ( 11.6p ) represent a further potential write-off to the taxpayer and the other brave shareholders,if any, at the issue date, assuming the shares maintain their current value? This would be c.13.3 billion x 20p = 2.6 billion GBP...additional to the above 12.25 billion GBP. I suppose Treasury end up owning the lion's share of the business - is this it?
I am the first to admit I could hopefully be very wrong or my maths is out and I would be very relieved to find out that I am, please.
Complain about this comment
Now that the banks are nearly cheap enough for me and my pals down the pub to buy one between us, I can't help wondering why the government doesn't just buy them all up and auction them off - preferably to a foreign bidder! Or just give them all to HSBC with whatever necessary inducements- maybe a seat on the front bench and Buck Palace? Well possibly an Autumn election if Ken C's unheralded return is anything to go by? All those who said nationalisation of at least one big meaty bank was inevitable in order to get the others in line will soon get their wish. Or has it happened already? Who knows?
I seem almost alone in believing G & A are (belatedly) doing what is necessary - it's the old herding cats problem - all off in every direction screeching for a profit when only a loss is to be had. The balloon is leaky - it will go down - so manage it!
Complain about this comment
281,
You bailed Scotland out? Look back to the seventies when SCOTTISH OIL BAILED YOU OUT,,
Also for the record,
The amount of English folk who have moved up here lately is staggering, I wonder why the want out ?
Complain about this comment
re 297 sosraboc
'Do you like Kipling?
I don't know, I've never Kipled.'
Boom Boom
naa but i do like Mr kipling cakes :P
'He lost his head too did he not?'
Before that Daniel Dravot took a plunge into a deep chasm after being discovered he was a fraud.
Complain about this comment
# 288 JayPee28bpr
"The implication of this is that investors now see a real risk that the Euro will fall apart, with individual countries deciding to withdraw"
Good post. Relates directly to mine at # 287.
Individual countries deciding to withdraw from the Euro could end up being a function of the degree of social unrest in any given member state. The problem we all face now is growing nationalism as things get bad economically and all this wonderful "global village" nonsense starts to look distinctly suspect. Why would the Germans want to bail out Hungary, for example? "Greeks believe they live on a planet called Greece ..." has just this very minute been quoted by a Greek politician on The World Tonight playing on the radio next to me. Nationalism is on the rise. It's natural when economies start going pear-shaped.
We're now entering into the positive feedback phase of this nightmare where each new problem reinforces the next one and together they reinforce the one after that, and so on - Warren Buffet made this observation today: he also referred to an "economic Pearl Harbour" taking place.
It's now only a matter of time before the term (looming) "depression" supersedes "recession", but commentators will resist this initially (we kept talking about "downturn" when a recession was blindingly obvious) until, again, it's blindingly obvious we face a depression (a 10% fall in GDP).
For me, I await a latter-day Churchill to emerge to grip the situation, to grip the mood of the people and to start the process of leading our (once) great nation out of this mother of all Labour Party legacies.
The Labour Party will never recover from this.
Complain about this comment
Whatever happened to the Canons of Lending - CAMPARI Character, Ability,Margin, Purpose, Amount, Repayment and Insurance ?
As an old Personal Loans Officer, I would happilly provide my consultancy services to any Bank that wanted to start lending properly again but please, first stop paying idiots to sell loans!
Complain about this comment
#288 JayPee28bpr.
thanks for you input. What I was hearing was in-line with your reality.
The strains on the Euro are increasing daily. I would expect to see both the Euro and the US$ come under tremendous pressure in the next month.
perhaps the only ray of hope for the UK is that most of the downgrading of the £ appears to have already happened. Expect to see the value of the £ rise.
Complain about this comment
I notice several bloggers refer to the Scottish Mafia when making negative comments about Gordon Brown.
I'd like to point out that Gordon Brown is not Scottish. Under an ancient Scots law he renounced his citizenship the day he announced he would support England in the world cup.
Complain about this comment
This is a time of great dispear for the country, I have given up now with BBC reports they are pesimistic and bias. The nation needs a voice of security and hope neither of wich are ever factors in Mr Pestons reprts. Why is it nesessary to be so diroagtory and pesamist about a govnment who are actively trying repear the damage of banks nation wide. Please tell me and other who you would recommend to do a better job? And also explain who exactly the people are that provide you with such an insight as i am sure that 'the people I talk' to is not a professional term.
Complain about this comment
'This is not a bank rescue plan', it is a bank nationalisation plan at knock down price and robbery from shareholders. Why else was short trading allowed again just prior to its announcement?
Lloyds TSB has truly been shafted by the government in taking on the HBOS losses. That will teach them and the major shareholders for trusting Gordon Brown that he wouldn't take full ownership for loans.
If only 1 in 7 loans of RBS loans were in the UK, then it means that the UK taxpayer is paying for huge losses made overseas. It is Gordon Brown who changed the regulations allowing retail depositor banks to take investment bank risks.
It would have been far cheaper for us taxpayers not to rescue the banks, and for the government to directly loan the UK businesses and refund UK depositors that would have lost out.
Complain about this comment
i noticed today that GB is trying to spin the collapse of the UK economy on the banks.... we must be getting near to the end game....not my fault, global downturn, sub prime, america, banks.... you name it they are all to blame except the guy who has been in power for the past 11 years!
Complain about this comment
#287. moraymint wrote:
"My problem is with the the political fantasists who put the EU and the Euro together in its current form"
The answer is to get more involved and by force of logical free market or social market arguments to make Europe work more efficiently.
No system of government or economic management is perfect - surely you cannot be still arguing that the quality of British economic management is superior, given recent events?
The stability of the Euro gives its members a sound and indeed protected base to work within - Sterling fluctuates violently destroying the economic stability that favours manufacturing and only leading to the resurgence of financial services - again and look where that has got us!
Don't let the bankers cripple us again!
Complain about this comment
The really baffling disconnect is that reading this blog, and others, and the odd so called expert even...it's been absolutely blindingly obvious that the blogs (which I guess means the people) are miles ahead of the Government and the 'organised' analysts and experts.
Because they all have some skin in the game (whether votes, fees, or just the need for some sort of confidence to be maintained) perhaps?? But the analaysis often just seems miles out of synch...just one example is while "they" say it could be worse than 91... here 'we' say ..'this is the 70's all over again... when they say 'This could be like the early eighties!!...'we' are already pretty clear it's actually 1931 on 'Crack Cocaine'...NOW, 'they' say ..this could be as bad as anything since 1946...well you know it must be really 'bad' because you'd already past their analysis some months back.
It's either skewed analysis because they all have that 'responsible' Corporal Jones hidden agenda of 'Don't panic' and so deliberately understate (and more damagingly) constantly react behind the curve..
OR...to draw another (worse even) TV character simile..they're like Homer Simpson, hopelessly pulling levers at random hoping one may make the reactor shut down but without any firm idea on what will or won't work.
Unhappily ...with Homer he usually does blunder to a happy ending...but that's a cartoon character of genius.....
What we have are people seemingly lost once the 'governing' can't be done by focus group reports and off the record briefing and starts to rely on nerve, skill and whatever it was that Churchill had and Chamberlain didn't (answers on a large postcard)
So Gordon Brown as a luckless Homer or hapless Chamberlain...and for Gordon Brown read ...' includes the Chancellor, the rest of the Govt, most highly paid experts and the definitely the entire executive level of every major bank, who disn't bother resigning before it was totally blindingly obvious!'"
ANF FINALLY...why aren't we getting back those bonuses paid through the last few years as we punished the hapless shareholders right left and centre without really bothering over much about Law??
If the Govt can ignore property and company law because 'it can'..then why can't it just turn round and ignore the law of contract... 100 or so ex-ceos and chairmen aren't going to cause a revolution as they'll struggle to raise a phone box full of sympathisers let alone an army.,... and after the damage they've done we could find a better reason to set up a Guantanamo Bay on an island in the North Sea and stick them on there while we sequester their ill gotten gains ---than was put forward for some of these chucked into the real prison off Cuba...
At least I got that off my chest.... it's really easy to let a sober intention to analyse turn into a rant these days isn't it??
When is someone going to suggest The BBC organise a (cut price) booze up for this blog somewhere appropriate anyway???
On second thoughts maybe that's a really bad idea.............
Complain about this comment
could someone answer this question? when i got into financial difficulty and declared myself bankrupt a few years ago, the banks that i owed money to sold the debt on to other banks.
i found this a bit strange because why would anyone buy a debt that they had no possibility of getting repaid.
fortunately i have seen the error of my ways and will never borrow another penny from anyone and urge everyone to do likewise.
the daft thing is, the government are actively promoting lend, lend, lend, borrow,borrow, borrow when it is totally wrong. people should save and buy not borrow, buy and pay later.
Complain about this comment
I really think that there is a massive wave of hysteria here.
Now this bank has made 10 billion quid a year for 5 years, and in a dreadful year loses 8 billion, on top of that its acquisition abn/amro has been downgraded in value in the same share crash.That acquisition is what sunk RBS.
Basically it has lost less than a year's profits in the world's worst ever banking year.It has 40 years of huge profits behind it, and I really think, in front of it too.
8 billion pounds for something with a loanbook of 2000 billion pounds is not a lot,and is not evidence of a massive cessation of interest paying abilities by its customers.
I am not sure much else has gone wrong with this bank other than a collapsed share price and a failed rights issue and a partial nationalisation and liquidity problem due to withdrawal of funds.
Mr Darling's timing was not the best .
Gordon needs to put some sellotape round AD's mouth,as he confuses the roles of being the boss of RBSwith the angry chancellor who has to put the boot in .
We have now had 2 share price collapses secondary to Darling's size 13 foot in his mouth and I think Gordon needs to do the needful and to put Ed Balls in his place.
Darling has been an unfortunate chancellor, and I like Labour and I have been accused of being a troll, which I am not, but it has taken this to make me say this.....
DARLING HAS TO GO AND PRONTO.
And basically, if GB keeps his head and allows RBS to get on with its daily business, it will stop being a basketcase.If he allows it to continue as it did, but without taking on more acquisitions, it will prosperand HMG WILL GET MANY TIMES ITS MONEY BACK.
It is important not to divest the assets to quickly.....eg Bank Of China..... that was a longterm buy and hold if ever there was one and to sell it off at such a low price was not a great choice.....who ordered that?
What every UK bank needs is liquidity and the only way it is going to get this is with 100% guarantee of all deposits with no maximum, in order to get the high cash accounts back into UK banks, and to get hard cash back in the UK from people like Alexander Curzon if he really exists.
There is absolutely no debating this and it has to be done right now!
This bank is full of fantastically able people, and has a great track record. If I had cash I would be putting my money in it tomorrow am.
AND ROBERT, YOU SHOULD BE SAYING THIS TOO!
Complain about this comment
Let's see how Gordon reacts when countries start freezing British companies assets under terror laws. Our currency is going under, our banks are going under, it's Iceland the sequel!
Complain about this comment
I know it's terribly fashionable to blame banks and bankers for irresponsible risk taking, but Gordon the Golem praised them to the heavens when the good times were rolling. And Gordon the Golem was telling them - and everyone else - that under his stewardship the good times would never end.
"No more return to boom and bust" was his cry. That's what got us into this mess, in large measure. He encouraged the risk taking by telling everyone that there was no risk in Gordonian Britain.
Complain about this comment
310
KEEP MAGGIE IN HER NURSING HOME, PLEASE, WE DO NOT WANT HER VANDALISING UK AGAIN!
Complain about this comment
It appears that Newsnight might be starting to get stuck in to Golam........
Complain about this comment
I am probably considering this in a far too simplistic manner but if the terms of the "insurance" on defaulting loans is attractive enough for the banks they may be happy to pay the premium and then not bother to chase up repayments. So what protection is the government building in to these terms to ensure that banks pursue all debt repayments with vigour, no matter how easy or difficult that may be?
Complain about this comment
According to www.treas.gov, as at Nov 2008, UK (including Channel Islands and Isle of Man) holds US$360.0 billion of US Treasury Securities. 3rd highest foreign holder. Germany ranked 13th at US$43.3bn.
Perhaps we are better resourced than we thought.
Complain about this comment
Whist I dont agree with giving the banks even more money and didnt agree with giving them any at all to start with.
I am very concerned now to find out that HSBC has an American sub-prime bank called Household, which is on verge of going brankrupt and I do hope that we the British tax payer are not only holding the British banks up but also their American or for that matter and other countries holding.
I see that HSBC could call for a bail out of some £13.5 for this American holding.
I would also like to point out that everything that is happening to British banks was and is caused by their utter greed incompetance and total negligence.
I therefore do not feel sorry for these people they should stand or fall on their own merits and not my childs taxes.
Complain about this comment
Anybody want to buy a bag of rice ?
Complain about this comment
I'm scared
Complain about this comment
When we (tax payer) own the banks completly after the third then fourth bailout and quantative easing has had as much positive effect as a two and a half percent VAT cut, the pound will fall further and further to lows such that imports will become unaffordable.
Will Brown call an election then!
Complain about this comment
And what, exactly would happen to the UK and the global economies if we told the fantastic guys who earned the fantastic salaries they seemed to think they deserved to deal with it on their own?
I would like to hear the politicians, of all parties explain to me what the consequences of ignoring these banks and their problems would be, in their own words?
If these masters of the financial universe are as good as their salaries portray them to be, then there is no need for us ordinary tax payers to act, surely!
Perhaps a little walk down for a nice chat with the officers at the fraud squad, or lack of it, could be explained to the public too.
The bankers should be told to behave themselves, be greatful for the help they have already recieved, and to get on with it.
Can't some of the rich guys on the planet see what a wonderful, money making opportunity this insurance scheme is? If it was such a good idea, the market would provide the insurance at the price the market demands.
No? Really?
This refusal to work with the economic mess they have created is a bit too much like the little baby throwing toys out of the pram. Every mother knows to ignore them and they will settle down pretty quickly. A good nanny will make the child pick the toys back up asap!
As the party comes to an end and we approach the stroke of midnight, all the cars at the ball for the bankers turn into pumpkins, or perhaps Reliant Robins with Del Boy and Rodney clones making the journey home..... with the rest of us wondering if we even have a home to go to now.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
There are continuing calls for the heads of the heads of the banks and other financial institutions. Don't bother it will be just a waste of time and effort.
This is the UK and they are part of the Establishment. If the culprits are not related to the top lawyers, judges, civil servants and accounting experts then they were at school with them or belong to the same clubs! A long and costly enquiry/trial would only result in "they did nothing illegal. They were just a little silly and lacked judgement." They would also claim that they were let down by their operational managers/directors.
At what price did we, the people, swap our prefernce shares for ordinary shares? Ergo, how much more did we lose?
Complain about this comment
Javaman1984. it NEVER was Scotland's oil. If you want to look at a map you'll find over half lies in what could be described as English waters.
Any way like your banks it's over!!
Complain about this comment
@#8 IndianaG
Totally agree - this has really become too much
Its beginning to feel like the song :
There's a hole in my bucket! - except that no matter how many times Gordon Brown and Ali D sing the song with the ways to mend it, the water keeps running out of the hole - or should that be 'the money'
Complain about this comment
#299 glanafon.
I don´t know there you implying that my currency observations are too gloomy, and then elsewhere I find you agreeing that there is a master plan to return us all to serfdom!!
Long term (if there is one) the best currency bets are stable resource rich countries - Canada and Australia spring to mind.
The rest are all deeply dodgy - either move to Canada or Australia or get into gold is my advice.
Economic forces will adversely impact sterling and the US$. This will be exacerbated by a bunch of second rate politicians deciding that they can forestall the terrible day by getting into competitive currency devaluations and then blaming global forces, short sellers, and highly populated Asian countries.
Club med has radically different ideas as to what constitutes work and honesty than our friends in the north. You´ve already got Berlusconi bailing out cheese producers. Who could forget that it was also the Italians who insisted that there should be a €500 note - apparently a lot of "businesses" in the south are dependent on high value paper notes.
Time will tell with regard to the euro - too early to be definitive, but not too early to be cautious.
Complain about this comment
An underhand scheme by Gordo to nationalise the Banks foreign liabilities? Cunning plan.
Now I have heard everything......
And does he think he is going to run the banks any better...?
Chutspa, (who knows how to spell that) -what a guy! Man of destiny.......
You couldn't write this, maybe 60 million people could be wrong. Maybe there is only one guy (and his pal presumably) who knows the masterplan.
Nahhhh.
What will tomorrow bring.
Complain about this comment
Does anyone know the rules for removal of a Prime Minister who is of unsound mind (and even less sound) finance?
Complain about this comment
#281
You might want to check out the TV series now being broadcast across the whole of the UK. The episode, 'Project Britian' will be very informative not to mention highly enjoyable.
A quote from the programme (James was now King after the death of the childless Elizabeth I):
'Put yourself in James’ position. This was the seat of power of his most ancient foe: the enemies of his blood. The people who had burned, raped and murdered his forebears, who had sought to dominate his nation for 300 years were offering everything they had, throne and crown included, to him. Imagine what that must have felt like.
After the grand entrance, the great words of welcome. James unveiled his masterplan and it went way beyond just being the king of two separate kingdoms. Now, according to James was the chosen moment for a new country to be born. James had a crystal clear vision of the future and his place in it. This was to be a Great Britain united under a common religion, common laws and common citizenship. He would be at the top, king and emperor of it all. And most crucially, it was to be a union of two equal nations.'
Name calling isn't really suitable for royalty, royal subjects, or BBC comments! It causes all sorts of upset among the chattering classes!
Complain about this comment
311. glanafon
Thanks. In my opinion #3 is more likely.
I was too trusting then. Never again.
Perhaps we were setup big time and enslaved by easy credit by those who will use any means to get us involved. WMD do exist but it is financial and economic. "Borrower is the servant to the lender". Where next will those people demand we send our young men ?
Complain about this comment
This is very scary. With the collapse in confidence I would be very concerned about banks being controlled by the government whatever their stated intentions.
The banks are in this position partly because of bad judgemnt on lending and the thought of the government even indirectly influencing "social lending" can only increase the risk.
Domestically it seems that any one who can is using the current interest rate reductions to pay off mortgages. These must in general be the best loans serviced by people with adequate income leaving the banks and goverment increasingly dependent on poorer quality loans.
This cannot be good and when interest rates rebound as they must coupled with reduced public sector pay? (cf Ireland) or at least reduced inflation driven spending power even more loans will default.
We are in for a bad few years
Complain about this comment
Spare a thought for the honest finance companies out there.
From small to large, the nation's building societies have been running along just fine, aside from being massively penalised by having to pay the compensation bill for bank failures like B&B.
The worst of the banks should be allowed to fail. The good employees and good parts of the business will be picked up soon enough, especially with government support.
Throw good money after good, not bad.
Complain about this comment
I see Vince Fable is touting full nationalisation of the banks again, presumably based upon his very relevant experience as an economist at Shell.
I wonder why he left?
My experience of economists in several large businesses is that you could never get a sensible response from them even when you asked a simple question - unfortunately usually in a big business they would not be sacked but tolerated and a source of amusement.
My experience of undergraduates doing PPE many decades ago was that they always had much more time on their hands than students doing real subjects- but perhaps it was the philosophising bit.
My view of economists has now been reinforced by the gross incompetence of the BoE.
Mr Fable is therefore eminently qualified to be a Liberal politician, i.e. a bit of a joke and not to be taken seriously.
However I would be most amused to hear how:
he would manage the banks once nationalised;
how he would see this solving such problems as the valuation of toxic assets;
how it would save taxpayers money when it would take trillions of pounds of liabilities on as national debt;
how it would restore confidence particularly the waning international confidence in the UK (as evidenced today by falling bond prices);
why it would not cause a run on the pound; and
why the Government would be better at running the banks than the new management, particularly given its track record and its natural desire to take impending elections into account when making decisions on lending policies, etc, etc.
Complain about this comment
I lived and worked in Germany in the early seventies when the Government faced a mini economic crisis, and this was their solution. They asked every worker to save 32 marks a month which would be deducted from their salary and paid into a special savings account. For every 32 marks saved the Government would match it with 16 marks of their own money under the one condition and that was that you could only reclaim your savings after 5 years. The end result was that the Bank's were bulging with money, people were saving and the Government had a massive influx of cash. Would it not be better trying out this system (make it £32 + £16) whereby tax payers could see their money being put to good use with a return after 5 years rather than billions being thrown at the Banks with no guarantee of any return.
John Morrison
Gatehouse of Fleet
Complain about this comment
These are Global issues because we have a global economy and a Global Banking Sector. Whilst Governments appear to be taking action that attempts to address their own Nations Banking problems, that have a similar pattern but differs from Country to Country it is not the Global action that Brown quite rightly called for. The Banking sector on a global scale caused the Credit Crunch. Therefore Globally they should be made to pay not the Taxpayers of the World.
The recession, part of the normal economic cycle triggered I feel by excessive fuel costs and other inflationary pressures hidden by the Credit Crunch is something that would have happened without the Credit Crunch and obviously the pain felt in the UK would have been worse because of past excessive borrowing by Brown when he was Chancellor. He will pay the price for that and would have done so if the Credit Crunch had not happened. It is though entirely seperate from the Credit Crunch and issues of Toxic debts. Brown cannot be blamed for the actions of the Global Banking sector.
A Global Toxic debt dump under the auspices of the IMF should be created where all the existing toxic debts should be ring fenced and seperated from a Bank's normal activities. This would allow them to operate as they would in a normal recession incurring some losses as one would expect but overall making a profit based on sound Banking principles.
Banks that take the option to place its debts in my suggested Global Toxic debt dump should be expected to contribute from future profits to pay off the toxic debts over the next 20 years or however long it takes. This should be on an interest free basis as extraordinary measures are required to resolve this global problem.
Obviously this will affect overall future shareholder returns and future share prices with the worst offenders being the worst hit, but for the shareholder if Banks had not taken the huge gambles that they had then the return would not have been so high, and now that there will be increased controls placed on the Banks the returns won't be so high anyway. However those Banks that have followed the rules won't be affected and will continue to make the same returns that they would expect in a normal recessionary environment. Such Banks wil end up stronger for it. It would get Banks such as RBS out of a huge hole, but they would be able to operate normally with the proviso that an annual percentage of future profits go to pay off the Toxic debt. They will have learned from this and will not make the same mistakes and risks for a very, very, very long while.
Complain about this comment
#323 LauraThompson308:
We do what they have spent their careers talking about. We are the market. And so are you.
Complain about this comment
#335 puzzling wrote:
"UK (including Channel Islands and Isle of Man) holds US$360.0 billion of US Treasury Securities... Perhaps we are better resourced than we thought."
How do you realise a paper profit? Think about it.
Complain about this comment
maybe we should sell the banks to the chinese, since they are the only ones with any money at the moment
Complain about this comment
Robert
You should really take a long holiday.
You have not really helped the situation have you?
People are really suffering and your elaborating, sensational attitude to all this is worse than irresposible - lose cannon comes to mind.
Anyhow
Sleep well wont you.
Hopefully the BBC state run TV will shut up once all the taxpayers money has been used to buy back the banks - hopefuly Robert, you will be a victim of your own "Success".
Complain about this comment
Did the moderators punch out at 10.50 pm tonight?
Very council office of them..
Complain about this comment
The collapse of the banking system is very much due to fractional reserve banking. We used to have a gold reserve, but that's long gone now. Instead money can be borrowed at many times the actual reserve in the bank. Have a look at this link with CIA and you will find UK and USA at the rock bottom! I am happy to find all the Scandinavian countries at the top. What have they done differently??? Are we going bust???
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html
Complain about this comment
In August 2007, when the first news of sub prime losses broke, I remember my 93 year old father watching Bloomberg and saying 'This is going to be worse than the Depression'. And of course he lived through the Depression.
At the time, I dismissed this as the exaggeration of an old man. How I wish I had heeded him then.
Watching Yvette Cooper sparring pointlessly with the Tory spokesman on Newsnight tonight, I felt a real chill of fear. She was still talking as if it were all some terrible blip and that normal service would soon be resumed. But what if it won't? What if this is capitalism's Armageddon? What if the world is not going to go back to what we have known, or not within the lifetimes of many of us? Don't we need politicians who will finally acknowledge that possibility and come up with policies to address it? Because the longer we put off facing up to the truth, surely the worse we are letting things get.
What can possibly be the point of pouring yet more public money into institutions run by people who are either stupid or crooked or both, but who in any case serve their own and their shareholders' interests before those of their customers or the taxpayers who support them? How can confidence be restored as long as banks are in the hands of bankers whom nobody trusts?
I no longer see anything to be gained by holding off nationalising the banks - and I say that with the hugest of regret as a lifelong capitalist and a conservative with a small c.
If you think differently please tell me why.
And then I come to politics. It frightens me
how few people of any weight, intelligence, experience and vision there are in political life. And by God we need such people right now. Obama will give it his best intelligent, thoughtful, moral and visionary shot. It might not be enough but the Americans know they have the best pilot at the controls as they try to land their failed economy on the frozen Hudson river. But where is the British Obama? Where is anyone who comes close in ability and even more importantly in integrity?
A week ago I was saying I might give Flash one more vote. I take that back. That lot are never going to save us on their own. Their policies are designed only to keep alive their own hopes of another term. They are initiatives for the sake of it, rushed into in too much of a hurry on too many fronts without proper thought. Action for the sake of it.
Has the time maybe come for a temporary government of national unity? Again I am almost appalled to see myself write this, lifelong political liberal and democrat that I am. But again on Newsnight only Vince Cable had any grasp of the situation or made any real sense. In a crisis like this, a man of his ability should not be simply giving the commentary. He ought to be on the pitch with the ball at his feet - to mix a million more agitated metaphors. Even Ken Clarke, hardly my favourite person, has gravitas and experience. Draft him in. He's got to be better than those 12 year old car salesmen and civics teachers that pass for gvt ministers and leaders of the opposition parties.
Complain about this comment
ZanuLabour and Gordert MuBrownbe.
Complain about this comment
Having started the process of supporting the Banks for the sake of the economy, what will be the Governments position should the insurance companies run into problems when they start paying out on claims arising from the mortgage protection policies that were sold to those people who, having lost their jobs in the recession, make claims on those policies?
Complain about this comment
The government can pump as much money into banks as they want but the fact is that it is not going to make a blind bit of difference the main reason being CONFIDENCE. For confidence to return, taxpayers require the following:
1. A worse case scenario figure in terms of the maximum potential bill to the taxpayer - only then can we get a sense of the scale and apply a stiff upper lip.
2. Complete candour from our government as to their future plans should the latest measures fail.
3. The government need to be seen to be in consultation with all political parties PRIOR to making plans so that all rescue plans are deemed to be considered.
Complain about this comment
At about 12PM tonight sterling hit a new low of 1.40 against the dollar
The Sovereign debt of Countries is now being re rated and called into question when they issue new bonds or gilts to the market.
In the past 24 hours Ireland are talking about pulling out of the Euro with Spain Italy and Greece all now being included for consideration of sovereign re rating.
If sterling Gilts lose their AAA rating on international markets in coming days and weeks, then the Bank of England will not be able to get their Gilt Auctions away as happened recently in Germany. The UK is then into a major ruin on the pound, devaluation and much higher interest rates to attract overseas buyers of our bonds and gilts.
We are now at the mercy of Sorus and the Big Hedge boys as they smell blood after the viceration of RBS today now worth only 12p a share or in all other words, "nationalized"
The credibility of our Banks and their CEO's and Directors is shot as is the political capital of the Labour Government who are now chasing events again, the market now is back in charge and will be ruthless.
The ONLY honourable thing to do is for G Brown to call an election to get a real mandate for what we now have to do for the coming several months and years.
Labour have no mandate to mortgage future generations of British People to a life of debt and penury.
We really now are at the tipping point where lack of trust and dispair in Britain across a wide range of Public opinion feels that this Government must hand over to people with real business experience and competance internationally and domestically
If Spain and Italy start to fail now with Ireland pulling out of the Euro possibly, then sterling could be left high and dry against the dollar, Yen and swiss franc.
God help pensioners now living in Spain as no one else will, if they are being paid in pounds sterling. I have just been offered a figure of £250K for my house which is priced at £450K and am considering this as a serious possibility after a year on the market.
It is going to be long lonely road for Brown and Darling in the months to come, they got it wrong, refused to admit ten years of lax controls and now the chickens are truly coming hom,e to roost. What a pair of sad incompetants, we must be able to do better?
I also feel that Mr A Curson could cease shouting as he will never hear the rest of us who often have interesting things to say,apart from just him. Why is he so angry, he has made his millions already? Maybe he considers that other bloggers who are not multi millionairs have no real view or suggestions worthy of offer ?
I predict that the Euro will now come under very serious strain and the US Dollar will hold whilst the Yen continues to rise against sterling. Sterling will fall another ten percent over the coming weeks
Complain about this comment
Surely this is NOW the TIME for a VOTE
OF NO CONFIDENCE IN G BROWN ??
AND THE LABOUR GOVERNMENT.
As an aside i didnt SHORT ANY BANK
SHARES ALTHOUGH I WAS TEMPTED
TO SET UP A SERIES OF SHORTING
TRANSACTIONS FOR TODAY,LAST
WEEK.
Complain about this comment
#354 Tuliptownman
The global DEPRESSION that we are entering is related to what we call the Credit Crunch. It is an essential element of it.
The Crunch itself will pass but in so doing it will decimate many of the economies of the world. I cannot say if it will be harder for us in the UK. However, life will never be as it was before. We will have to develop new systems, attitudes and industries to assist us for maybe the next 10 years. That may be no bad thing in the long run but the lesson will be very painfully learnt.
Complain about this comment
poor moderators-overtime again? Doesn't look like you've even got time fora 'nsture's necessity' break! Thanks btw for publishing my post # 203 on 'Lend, lend, lend'. shame it was after all this hullabaloo and new topics. Funny, though, it relates directly to this topic. A little sneaky I feel, or was it just coincidence?
Re tumbling shares today-I did point it out just after 9 am and invited the government to suspend trading in bank shares-maybe they should have listened. Given the massive amounts being sold, noone can realistically blame short selling.
How we got to this point is now largely irrelevant. Myself and many others were predicting this way back in October. (check out our historic posts to see useful info if you wish-Alexander Curzon is both funny and informed-should be recommended reading!)
The banks, the government and our great nation are in a in a perilous position. But to those of you who say let them go to the wall, what would you say to those who lose their wage on payday, and can't pay their mortgage or feed their children? What of the pensioner and being unable to draw their pension, or the company unable to pay their wages? How would you feel? I urge you to be careful what you wish for.
No, I am not a labour supporter-in fact, I am colourless as a colleague said last week.
I care about my country and all the people suffering or about to suffer from the effects of this appallingly mismanaged crisis.
Gordon and friends must go-of that there is no question.
I would give anything to sit in his seat right now. Not because of a desire for a political career, but purely so I could hold my head up and do something constructive. My motive is simple-I want to help the nation I am proud to be a part of stabilise at least.
It is a global crisis, but we need to look after our own first. In-fighting is of no benefit. Our foe is not a foreign power sending bombs, it is runaway greed at the highest level-so blind is cares not a whit for normal hardworking people.
We need a Cromwell-someone who has no care for political points-just a desire to restore our country.
Regarding the banks-perhaps RBS should break into it's component parts? At least some must be profitable. Barclays? Who knows with them? They have been tight lipped since this nightmare began. Lloyds? Given their behaviour re USA sanction busting-punish them severely. HSBC-probably the least evil of the lot, but with the American problem, who knows which government should bail them out-if indeed they need it?
Gordy and co have made some very grave mistakes. We are now going to pay for them. And don't expect the IMF to help-they more than likely haven't got enough money and Gordy's fiscal policies have been frowned upon by them. We are likely to be spanked by them too.
Hold tight and stand firm-our British true grit is going to be needed to keep us going.
I'm itching to get in there and sort this blasted mess out-won't be pretty (carnage of some sort is necessary and should be happening), but at least working folk would benefit without needing a loan to pay their bills!
Btw, did anyone notice the B of E remit to lend money to businesses as they see fit? Wonder if we are going to see car makers being bailed out?
Complain about this comment
Mr Curson
Why not read Blog 365 just one before you and STOP SHOUTING at the rest of us.
Sincerely
Johnny Zero
Complain about this comment
RE GOVERNMENT GILTS?
THEY ARE FINISHED.
NOT EVEN WORTH BEING RECYCLED
INTO FISCAL PRUDENCE LAVATORY
PAPER.
WELL DONE NUlabour!!
SUCH CONCEIT SUCH PIOUS
ARROGANCE.
Complain about this comment
Sorry,Robert.As i said on Dec3 RBS is insolvent even before bad debt provisions.
When your net assets are ?65billion ,including intangibles,and you have ?1.7trillion of liabilities you do not have any capital reserves.Bad debts can only worsen the situation.
Taxpayers money is being thrown into a black hole.
The fact that the govnt. cotinues to throw money at the problem without knowing the state of the state of the banks' balance s
sheets is .a .disgrace.
Complain about this comment
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.
#372, apparently i have to rewrite the post to conform with BBC's new guidelines on is allowed to be said....
#12, it is the bank's fault, it is the global credit crisis that began in the US, it's the tripling of the price of oil did i mention Thatcher did i mention interest rates were 15% under the Tories. The government is following a well-thought brilliant plan that will lead the world out of recession and into nirvana where everyone will thank Brown's undeniable genius.
It may not be obvious to us lesser mortals so lucky we have journalists whose indepth knowledge of economics and finance can be brought to bear to enlighten us when we might be tempted to blame Brown who is clearly not at fault in the slightest.
Complain about this comment
#373, again rewrite needed...
#354, of course it is the global banking system. Did you not hear the genius Brown not declare that 10 years ago he wanted to change the system so that the credit crunch which began in the US could never happen. If only we simply obeyed Brown's orders the world would be perfect. He has brilliantly and wisely spent on the public sector and in a flash has solved the world's problems starting with the UK.
Any deviant thoughts i might have of blaming Brown have luckily been washed away by the BBC and the ongoing depth and breadth of insight it's business team display everyday. Apart from Brown who predicted everything, no one else could have seen the problems the UK - which to reiterate ARE not the fault of the government, but every and anyone elses... - not the IMF, not Vince Cable not OECD no one.
Complain about this comment
The fact that the banks are falling and Barclays is trading at close to 2008 profits is a pretty clear signal that the market expects future profits (on which the share price is based) to nose dive or disappear. This is especially true for foreign investors where they will be getting massively devalued sterling back as a dividend.
This latest scheme looks likely to only hasten and deepen Sterlings demise making the banks even more unattractive to foreign investors.
Complain about this comment
At the press conference Brown said today's measures were not a blank cheque: "At every point, conditions are laid and the greatest condition of all is that in return for our support for the banking system they have an obligation to lend to small businesses and to families in this country. I will not sit idly by and let people and businesses go to the wall."
Isn't nationalising a PLC bank exactly that, giving them a blank cheque? If you add all the "dodgy banks" PLC's assets together and nationalise them Gordon Brown (or should I say we) are bust.
Strangely that is exactly what happened in japan in the late 70's. Call in the IMF.
Complain about this comment
Oh I forgot to mention, no doubt the assets are in dollars so the sterling value will increase with devaluation. I wish we had a do nothing government, they wouldn't get us into the mess that this irresponsible government has managed to do.
Complain about this comment
The behaviour of the large banks continues to be arrogant as far as both investors and customers are concerned. One might be forgiven for thinking there has been collusion between banks and the London Stock Exchange over the information being made available to investors about the nature and extent of losses and what are much more fundamental solvency problems than anyone could imagine.
For example, what is the London Stock Exchange doing about false trading in shares? There are clear rules in the ‘Yellow Book’ that require listed companies to disclose information at the earliest opportunity that could affect market prices. Many smaller listed companies with bad news of such enormity would have been required by their advisers and Stock Exchange regulations to request suspension of their listing pending clarification of their financial position. Extreme, perhaps, but it stops a false market in the shares.
The market – investors and customers - seem to have had to exist on leaked information or evidence from third parties, e.g. the small matter of $3.5bn of loans to Lyondell Chemical – “RBS forced to reveal after warnings from analysts”.
So we have had a false market in the shares of every major bank, investors have been assured that further funding is not required only to find out this was not the case – and not by small amounts, either. The rights issues last year could conceivably be regarded as being based on misleading and even false information.
It will not be long before the government-owned banks will be subject to class actions from shareholders against both banks and previous management. This will run for years. If only we could buy shares in lawyers…
Complain about this comment
WHY LABOUR IS THE CAN DO NOTHING PARTY?
Because Labour has been asset striping. The credit crunch exposed the driving force behind Gordon Brown’s booming economy, ie the property market.
BASIS OF THE BRITISH ECONOMY
Britain has always been a homeowner-based economy - not like the economies of France and Germany, where the majority of people live in rented accommodation. Homeownership made Britain one of the wealthiest and stable economies in the world.
In 1992: When Britain joined the European Exchange Rate Mechanism (ERM), it fixed the level of the pound within a band which put the economy under great strain. The UK's prime minister and chancellor Norman Lamont tried desperately to prop up a failing pound. The Chancellor raised interest rates from 10% to 12%, then to 15%, and authorised the spending of billions of pounds to buy up the sterling being frantically sold on the currency markets. But the measures failed to prevent the pound falling lower than its minimum level in the ERM. But because Britain has always been a homeowner-based economy, the only thing that could give under the strain was property. That is why, at that time, homeowners suffered negative equity and repossessions. After Prime Minister, Margaret Thatcher, pro-Europe politicians have persistently tried to change Britain’s economy, to bring it into line with the economies of France and Germany, but all attempts failed to change the basis of its home-ownership economy. Britain had to come out of the ERM but it cost the country 48 Billion pounds.
So what’s good about a homeowner based economy?
Scarcity of building land, difficulty in getting planning permission and the time it takes to build substantial property using bricks and mortar and with every increasing costs, it all adds up to a very valuable asset that increases in value. Because of this, the majority of people want to get on the property ladder. Owning your own home gives a sense of security and confidence. You have the confidence to borrow to improve your property and to keep it regularly maintained. It gives the homeowner a sense of, worth, self-a-steam and pride in his achievement. These attributes and property that is well maintained is the ingredients that give the confidence to the Banks to lend.
These assets are the foundation of the British economy and credit ratings upon which stability and confidence depends. Banks had confidence in property assets and were therefore willing to lend to their mortgagor-customers and to each other, the result of all this – a booming economy.
But there are different types of domestic customer that banks can lend to –
Those with secure assets – homeowner-mortgagor;
Those with income – credit card holders;
Those with no assets;
Those with no income;
Lending to homeowners was not reckless lending and was not the cause of the credit crunch. The majority of homeowners have too much to lose to be reckless. The cause of the credit crunch was unscrupulous bankers greed using the assets of homeowners to raise collateral in the form of Collateral Loan Obligations (CLOs) and other similar products, a form of gambling, selling them on in volatile financial stock markets, and handing out credit cards to people who had no assets, many of whom were in temporary employment.
CHANGE OF THE SYSTEM, Deregulation.
Up until 1997 the Bank of England controlled the financial system. It was common knowledge that mortgages were protected from such abuse, under existing safeguards of regulations and the law, and that mortgages, in particular, were sacrosanct.
Mortgages were only to be used for the purchase of property; loans for all other purchases had to be through a bank loan or hire purchase, which were short term and had a higher rate of interest. Lending banks and building societies were strictly regulated in order to protect homeowners’ and the security of their asset and the valuation upon which mortgage deeds depend. Lending for consumer spending on domestic and luxury goods were kept separate.
However, in 1997, Gordon Brown when Chancellor, decided that he didn’t like that anymore. So he introduced a system were we had, the Financial Services Authority, the Treasury, and the Bank of England, (the Tripartite Authorities) carving up the job amongst them. Just one big problem – when there was a crisis, ‘apparently’ nobody knew who was in charge. The effect of all this – the system unregulated.
The bankers most certainly knew the enormous value of your mortgage, backed by the secure asset of your home, and that mortgage-securities would be the driving force behind a powerful booming economy. They knew they would make a fortune if they could trade them on the US financial markets in the same way as US Government-Sponsored-Enterprises (GSEs). However, bankers knew mortgages couldn’t be traded unless they were taken out of their protective regulation. So how did they get their hands on them?
Well, first, you must know what you are doing, and know how to have them deregulated. By changing the banking system in 1997, banks were able to raise collateral by repackaging mortgages and sell them on in the form of Collateral Loan Obligations (CLOs) and other similar stealth products. These were traded through institutions, but an institution is not called a bank, and therefore operated outside strict bank regulations. This was the key to the unscrupulous bankers making a fortune.
The questions one should keep in mind is, was it Gordon Brown's idea, or the Bankers' idea, or both? Who persuaded who?
The property assets backing CLOs were so valuable, that other loan sharks wanted to get in on the act - adverts started to appeared on national television encouraging homeowners’ to free up equity from their home and to - Spend! Spend! Spend! The banks’ were promoting credit cards – shopping on the high street was a wash with cash.
However, whilst you homeowners’ were sleeping in your beds, unscrupulous bankers were undermining the financial foundations of your property asset, by taking your mortgage out from under strict banking regulation, re packet aging them in the form of Collateral Loan Obligations (CLOs) and similar products, selling them on and gambling with them in volatile markets on US Wall Street, and lost them, resulting in the credit crunch and falling house prices.
WHY DO THE BANKS REFUSE TO LEND?
When Gordon Brown goes to the banks to ask them to lend, the banks want to know: What assets does he have to offer as security for the loan? How does he propose to raise sufficient money to pay back the loan plus interest? Who is to go guarantor and the duration of the loan? What debts dose he already have?
The Banks look at Gordon Brown’s economy bank account and say to him: But Mr Brown you have no assets and you have maxed out all your credit, your credit rating is zero. We told you that if you did not replenish your account by putting liquidity back into you’re your economy account we would, within twelve months, have no alternative but to commence repossessions of homeowners property.
We are sorry that you will be left with a horrendous problem of having to re house these people, that you are in a can do nothing position and that you have to resolve these problems before you can call an election, and after which you will have the additional problem of the enemy within – We bankers are sorry that you are in this predicament and as you know we can’t therefore lend to each other whilst you are MP. – We are so sorry - But Mr Brown, that’s how business works. For example lets look at your record:
Who has presided over record levels of Government borrowing? Gordon Brown.
Who has racked up the biggest budget deficit in the western world? Gordon Brown.
Who bears responsibility for the destruction of Britain's pension schemes and funds through the £5 billion a year tax that he introduced in his first budget? Gordon Brown.
Who is the financial genius who sold off 60 per cent of Britain's gold reserves between 1999 and 2002, at prices which are half today's levels? Gordon Brown.
Who convinced many people of a better future with low inflation and that Britain’s infrastructure would, not only be the best in Europe, but, wait for it, ‘The best in the World’ – and that Britain would be better placed to withstand global financial turbulence than any other country, if they deprive themselves from a rise in wages? Gordon Brown.
Who in desperation to raise revenue scraped a 10p Tax from the bottom of the barrel? Gordon Brown.
Who over the last ten years had been using stealth Taxes to raise revenue? Gordon Brown.
Who, by whatever stealth it takes, is intending to use green taxes, not for the purpose of global warming - but in desperation to finance Britain’s out of control borrowing deficit? Gordon Brown.
Who in 1997 changed Britain’s financial system, the effect of which, the system unregulated and ‘apparently’ with on one in control, the result of which, the Chancellor of the day, in effect, handed over his possession, power and control of Britain’s economy to unscrupulous foreign bankers over which he had no jurisdiction or authority? Gordon Brown.
Who is responsible for a decade of regulatory failure in respect of banks and the financial services industry generally? Gordon Brown.
Who after handing over his possession, power and control of Britain’s economy to unscrupulous foreign bankers, brought back his spin doctor Peter Mandelson to make, speeches which are vague, nebulous, guff, delivered with so-called authority in an attempt to blame his failures on the global down-turn outside his control? Gordon Brown.
Who run in desperation with cap in hand to ask King Abdullah to give Britain more oil, and in return the Saudies’ could invest in nuclear power in Britain? Gordon Brown.
Who sold off our nuclear installations to the French? Gordon Brown.
Who sold off our hospitals buildings only to rent them back? Gordon Brown.
Who sold off hospital car parks? Gordon Brown.
Who has been asset striping? Gordon Brown.
Who went with cap in hand to ask the banks to start lending again? Gordon Brown.
Who has been sabre rattling, threatening to national the banks if they don’t start lending? Gordon Brown.
Who, after the banks, in open defiance, refuse to pass on interest rates and to start lending again, has taken no steps to force the banks to do so? Gordon Brown.
Who has been given an ultimatum that if he fails to bail out the banks within twelve months, the banks will no longer defer the repossession of homes? Gordon Brown.
Who has given the banks an undertaking to have the banks recapitalised, and with sufficient liquidity, within twelve months, at the expense of homeowners and the taxpayer? Gordon Brown.
Who has given an undertaking to the banks, for the Bank of England to buy toxic assets in exchange for bonds at the expense of the Taxpayer? Gordon Brown.
Who has taken no steps to claw back the ill-gotten gains of the unscrupulous bankers? Gordon Brown.
Who refuses to have a judicial review into the credit crunch in Britain, as it might reveal that the Chancellor at the helm was the cause? Gordon Brown.
Who is running around the world in a desperate attempt to prevent protectionism? Gordon Brown.
Who after all these failures thinks he is well placed to be the Chancellor of, not just Britain, or even Europe, but of the whole world? Gordon Brown.
Gordon Brown says: This is no time for a Novice. Well, there is one sure thing – The unscrupulous bankers were certainly no Novices.
Complain about this comment
Robert,
Cordon here, thought I'd drop you a line to let you know the economy's going to be fine - Mandy's on it.
Fantastic
Cordon
p.s love your show (the news)
Complain about this comment
It would have made more sense for the government to have paid everybody of working age £25000. It is our money afterall!
It would have meant people could afford their bills ao prevent repocessions and kick started the econony as people could afford to spend.
Better that than throwing good money after bad... giving taxpayers money to the very people who have caused this problem.
Complain about this comment
BBC Breaking News!!!
It's Party Time in Washington!!
Other Top Party stories this Tuesday morning!!
BBC covering Party in Washington!
We're not having a Party say Barclays/RBS!
We're the Party of recovery says Brown!
We're the Party of the future says Cameron!
We're the Party talking sense says Cable!
It's no party being repossessed say families!
GC
Complain about this comment
Some time ago some people believed it was possible to make gold out of lead.
The modern equivalent are people who believe that it is possible to replace productive work with confidence in banks and selling houses to each other.
The British Dream seems to be the one of a life without competitive, productive work, where everybody is either a banker, an estate agent, a massage therapist or a retailer. A life where the underpaid checkout girl in the supermarket can purchase anything by just putting it onto a little plastic credit card, promising the bankers that all of her meagre income will end up in their pockets. No problem, she can always borrow more. Britons dream of a world where no-one has to compete and everybody has a wonderful money-printing machine at home. What do you need savings for?
Gordon Brown wants to prove this British Dream is alive. He needs people to believe it, because there is a thing between him and power that is called elections. As if to prove the point, he is set to destroy peoples savings and blows with all his might, to see if he can re-inflate the mother of all debt bubbles. I don't blame him that he doesn't (in contrast to myself) want to see the bubble burst. After all it is his creation. His monster!
Complain about this comment
At what point in the "nationalisation" of RBS do their assets appear as Government debt?
Complain about this comment
It might be time to restructure the bank. If banks spin off investment banking out then there is still value in banks.
If cut in rates are passed down then there will not be a credit crunch or property prices will not fall, also deflation is welcome at the moment as governments can print money and create jobs, without the need to borrow.
Complain about this comment
Everyone keeps going on about this credit crunch as if it's a little prang. It's more like a credit crush or even write off. However for those who are complaining about why should they save as the interests so low. Why not borrow from a UK bank, if you can, at the low rate. Put the money in a French bank for instance where the top rates are still around 6% and Bob's your uncle. Well he may not be but there are simple solutions to those with money. It's those without that have the problems but a disproptionate of news space is given to the have's.
As far as UK plc is concerned. Since the government is now a multinational corporate why can't we buy shares in it rather than individual subsiduaries like RBS. That way we would have greater protection and it wouldn't change things that much. Those with the most valuable shares have always had a big say in government.
Complain about this comment
Flash has a great wheeze for building confidence in a fractured banking system:-
Cancal the ban on shorting and there will be much more calm in the market-you know we can trust the boys in the city.
Next week he will probably announce theres free beer for alcoholics.
Nice one Flash.
Complain about this comment
Good morning Glenafon
I agree with your conclusion and have been sure of this since GB took over the leadership.
My forlorn hope is that something could come out of the ashes to break the current party system and put smart people in charge, who care more for the country than their three line whip, and act accordingly. The three names were chosen on perception of intelligence and innovative thinking.
Complain about this comment
posters 365 369
Thankyou the reason why i use this
blog is because i am interested in other
peoples views.
THE SO CALLED SHOUTING IS AT THE
ESTABLISHMENT!! Got it???
Complain about this comment
I think the crux of the this problem is that the Banks do not know or want to divulge the extent of their lending and Trading [with Depoisters Money] in these worthless Bonds.They have been Trading between each other with these useless pieces of Paper taking Commissions on every Deal which fueled a fictitious market and Profits that were being taken from Depositers Funds not real Wealth created money.Brown, etc ,did nothing because they in their Commercial ignorance thouht that the Profits from London were good and they all wanted positions there after so they were not going to rock the Boat.The only way out is for the Banks to Ringfence all Industrial and Commercial Loans and put somewhere else so that the Pollutant Bonds can be given the heave ho.If they pursue this stupid action of throwing money at Banks they will keep this Paper Bubble afloat which in essece will mean UK Taxpayers will bailout overseas Investors.Banking on this scale is finished here now ,its the same scenario as British Leyland .The answer is to hold on to our Capital and Invest in new Industry here in the UK that will provide Jobs,Profit and create real Wealth again. If we carry on throwing money around like confettey we will end up like 1945 Germany.
Complain about this comment
#25 Those in the know are not saying, and those doing the saying dont know.
The dimensions of this crisis take it above party politics. Please will those in the know, for the sake of our children, tell us who should now take the helm?
From this blog so far we have proposals for Cable and Haigh. Is that the choice or are there others?
Complain about this comment
I already thought that Gordon Brown was arrogant and out of touch but to hear him say that HE won't stand idly by and see businesses go to the wall due to the irresponsible actions of a few bankers took my breath away.
It could easily be argued that HIS irresponsibility over the last 10 years with UK plc has left us poorly equipped to deal with the current economic crisis. If we were in such good shape, how come sterling is on it's knees vs. all the other major currencies?
Notice how he can't utter the words "credit crisis" without preceding it with the word "global" either.
How he can keep peddling the mantra "not my fault but I'm the man to fix it" is beyond me.
Can't wait for the day he is out on his ear and will rightly be judged by hostorians to have the worst record ever of any UK Prime Minister.
Complain about this comment
onward-ho wrote:
"If I had cash I would be putting my money in it [the bank] tomorrow am."
Hmmmm... Have you considered that your lack of financial and economic acumen is the reason you don't have any cash?
Complain about this comment
Today’s conspiracy theory
The fall in sterling is accelerating again. What non economic reason might there be?
The so called toxic assets can be stop-lossed because of the government guarantee.
The downside potential is small the upside huge.
Fill your boots you city traders, there are bonuses to be made.
Complain about this comment
RBS/NATwest Shares youve got to
laugh??
Its time these FINANCIAL KNIGHTS
were DEFROCKED TARRED AND
FEATHERED & PLACED IN THE STOCKS
ABN AMRO ?? ONLY A LUNATIC WOULD
HAVE VOTED TO BUY IT.
Complain about this comment
FORENSIC-DEBATE 380
A wonderful post you hit the nail on the head in many ways. Most of all you make the point that I have tried to get over for so long, that it was Browns deregulation in 1997 which began the rot in the banks. Also that all the policies since have been to save Brown's skin, not the banks, and its his own economic record which has caused most of the problems.
I only hope people take the time to read it, well done.
Complain about this comment
A quote from today's Telegraph.
"The European Commission warned yesterday that the growing scope of Government intervention to rescue Britain's banks may have serious ramifications for the public finances.
It predicted that the latest banking bailout scheme would "very, very rapidly" dig Britain deeper into a public spending black hole and blamed Mr Brown for failing to "consolidate" during the boom years.
Joaquin Almunia, the European Economic and Monetary Affairs Commissioner, warned that the British budget balance, in terms of spending deficits and debt, would "deteriorate very rapidly". The Commission also warned unemployment would rise above 2.5 million. "
Complain about this comment
#365 The UK is then into a major "ruin" on the pound
Freudian or fact? Unfortuantely, I think, fact.
Complain about this comment
#206
That's the point of a blog. If you have a competition for qualified correspondants, then you end up with just one poster, so you've got to be tolerant and teach a bit. That way the inept improve and you learn too.
The global question would be a viable approach if there were a global force tackling the question. As the World Bank and IMF aren't interested, and my friends in the OECD are doing their ususal form-filling, the the answer's "no", and we must fend for ourselves.
However, at the next level down, London is one of the three global banking centres who keep the ball rolling 24/24 365.25/365.25, and our past profits in that respect have to be paid for by current losses as our bail-out supports other nations' banks as well. It would have been nice to have seen some of the past profits, however, rather than watching them disappear into the dealers' very deep pockets. this is probably the biggest reason of all for nationalisation, now.
#215
Oddly enough, AC and I are verging to start discussing exactly that. I've got data to add to his Dunblane observations which makes it look as though they may not actually be interested in the welfare of the State at all. OK, not aliens, but the underlying behavioural rationale's almost as weird.
#189, 219
Rather, the inability to distinguish between the conspiracy theory and the truth will disable them. We commented on that at the time, and it was clear that was a side-effect, not planned. If anyone was to blame, it was certain Scottish members of the Boards of both banks in the 1990s. I recall having to teach HBOS how to code IBANs, as Halifax' Intelligent Finance misunderstood the structure, thinking the ECBS/EPC format meant the check digits in the code are always 34 - duh! If a Scottish bank can be that thick, then no wonder they're in the mess they ended up in and they only have themselves to thank for it.
In passing, has anything been done about rolling out the SEPA-format account numbers in the UK yet? I haven't heard anything here.
#245
Money's an intangible linked to the speed of circulation. You can't eat your bank statement and get the same amount of nourishment from it that money could buy food for, for example. Part of it went in bonuses to dealers who stoked house price inflation with it, part in stoking the cost of living in London (one of the most expensive places to visit in the world, until very recently), and part to pay dividends which went the same way. It's something of a shell game and when the fancy lifts the shell to show it's gone, then you realise you've been conned, it didn't exist, at least not there, and may have been slid offshore elsewhere.
OK, where now?
1. It's too late to nationalise - the reorganisation will leave our entrails exposed while it happens. Write the banks off, sorry folks, but you did it.
2. It's not too late to consolidate that mockery of an open credit market, VISA. Use that as the core. Anyone without a VISA account can have one but witha zero credit facility.
3. Individual credit limits must be consolidated, so you've got an overall individual limit and can take it where you want, stopping the nonsense of twenty cards each maxed-out at 5k on income of 20k, whereas Rahere can't get credit on my income of 200k because I've been overseas so long I've disappeared off the map (which is tough on the credit houses because I can tell them where to put it). Put liens on income at source to reduce borrowings as quickly as possible, condemning the massively indebted to survival on starvation rations until they repay. That's the price of the attitude "another five hundred quid on the existing mountain for a fifth pair of Jimmy Choos won't make any difference".
4. The Bank of England must extend its retail arm to cover Business Credits.
Complain about this comment
Flawed analysis - dangerous speculation - the absence of responsibility – gullibility – deal making without diligence – shorting for greed – transfer of ownership of assets out of the UK – the list is endless.
The objective is to protect the security of the UK, its citizens and our way of life, not save the City of London, nor this Government; these are strategic instruments that have failed so far and are not the objective. To repeat what I wrote 3 months ago – freeze the markets, audit the real financial position of all UK based Banks and leading companies, admit the truth and handle it. Denial and fear is not helping and shows an absence of leadership.
Complain about this comment
# 380 FORENSIC-DEBATE,
Interesting argument (until the final paragraph which just became a rant).
However, the basis of your argument is somewhat flawed. It can also be argued that Britain's economy has not been stabilised by the growth of homeownwership. It is equally valid to argue that the dash to ownership has led this country to the development of a sea of debt. and a climate wherein both long and short term debt is 'good'.
I do not argue that greed in the financial sector and lax regulation has brought us to the present situation. This could not have happened so easily if we, as the public, had not been seduced into a lifetime living with debt.
There is intrinsically nothing wrong with rent. We could have used the 'real' wealth existing within the economy for other more productive purposes. Thatchers rush for homeownership started the money bubble that has led us to where we are today. Instead of using our finances to develop our industries and infra-structure, we became fixated upon consumerism and the idea of no effort wealth generation. BTW, what did happen to all the money that was raised by the sale of the council housing stock?
Complain about this comment
Gordon is right : blame the yanks
especially the ones in Canary Wharf
Complain about this comment
In this poker game between the banks and HMG, the govt are playing like ameteurs. They have declared their hand, and the banks can now bluff them as much as they like. With Ali D declaring that they will do "whatever it takes" to keep the banks running, he has lost all negotiating power. Therefore it is inevitable that the governemnt (and hence us taxpayers) will come out of this badly and the banks will, long term, do rather nicely. The Chancellor can lend £20b, £50b, £100b, whatever, but he is not in a position to demand that the banks give him something in return (such as lending to business). If, as is currently the case, the banks simply refuse to pass on the money, what can the Chancellor do? Nothing - he has committed himself (us) to saving them, so can't let them go to the wall. The banks can just demand more money and the govt has no choice but to pay.
A similar thing happens frequently in my industry, ship building. Every time a new warship is built the government think they have this contracting business worked out. Pay the contractor a firm (fixed) amount and pass the risk of building the ship to budget on to the contractor. But, ultimately, the government can not absolve itself of risk. Half way through the ship building period, the ship builder turns to the government and demands more money. The govt says "no, you gave a firm price" to which the shipbuilder says "fine, then we will stop building". The govt has no choice but to pay up, because the half built ship can't be taken elsewhere for completion, it can't justify buying half a (useless) ship and at any rate, it puts the defence of the realm at risk not having a complete naval force. So the govt cannot win, and it will get similarly beaten by the banks.
Complain about this comment
# 380
Excellent forensic debating piece except it overlooks that from 1997 the man with the overall responsibility and who should therefore be regarded as the main culprit was Tony Blair not Gordon Brown.
Blair's concession of unfettered power to Brown and craven refusal to subject him to any kind of challenge or control were symptoms of his general character-deficiency. Blair was driven almost exclusively by vain personal ambition; he was always fundamentally unserious about the business of government. As a result its not just the the financial system but more or less everything that has fallen apart on his watch (if Blair can be said ever to watch anything apart from his own reflection in the mirror).
Blair's licence to Brown to use the economy as a kind of personal plaything was in keeping with his own use of the armed forces and as usual when vain and undisciplined children are at play, the toys have ended up horribly broken.
In its judgement on the fate of British society, I suspect that history will record that when a fantasy-figure like Blair could get to the top, the time had already come for people to get out
Complain about this comment
#361 - wharfgirl! I read you all the way.
This is a war, we need a non-Labour coalition. There is no-one in the Labour Party worth keeping on.
If the Tories had any bottle at all, they'd listen to what the whole country is saying - an end to Brown now - but no, the same old Tory self-interest and arrogance ('we know better than you ..') hinders them at every turn.
Meanwhile the price is paid (and it's a heavy one) by the long suffering British people. And don't they all just know, way down there, that the British people will never revolt. Because they'll all be sent to PRISON!
No - they must suffer in silence and serfdom. And wait for due process to take its course. Plodder may be useless but he's in No 10 and you're not! So you'll just have to wait until he's played out the role to the bitter end. And, why is the Monarch is so silent on the matter of her subjects being repossessed, foreclosed, ruined? Doesn't get involved in politics! Doesn't get involved in domestic policy. Doesn't get involved when her people are suffering. Ahhh....
Oh for a revolution of some kind - even a coalition would be a revolution compared with this ghastly stalemate/standoff!
America gets Obama. We get Kenneth Clarke. When you vote at the next election just remember how Cameron made you wait till the bitter end and did nothing when he was most needed.
GC
Complain about this comment
343, fordeckdave.
This blog is being turned into an arena for people ‘TheEnglishman’ (with a moniker like that, we all know what he is about) to voice their racial vitriol. Indeed this is a symptom of tensions arising between North and South due to our present custodian ‘making an @rse of it’.
Believe me when I say, I’d be more than happy to go our own way given the way Westminster has managed all of our lives over the last 20 years or so (or even longer).
And another thing, I lived in England for a considerable period and consider the people to be genuine and good company. I’m simply suggesting that many on here seem to be blaming Scotland for Britains woes, try looking closer to home after all YOU voted these clowns in!
Complain about this comment
Just logged onto my BOS account to find today's message: "The new Lloyds Banking Group Bank of Scotland is part of HBOS plc. "
Eh? The banks don't even know who owns them. In fact we do, they don't want to admit it.
Complain about this comment
Management of banks have a duty of care
Am I right in thinking that the legislation says that failure in this regard makes the director personally liable?
If so why is this course of action not being takeninstead of paying heavty bonuses and inflated salaries?
Complain about this comment
Crisis? What crisis?
Or to lengthen to full quote
RP thinking
Crisis? What, out of the many many crises I've got to choose from in the financial world, should my blog be about today?
Is it just me or does anyone else think there has been a rapid acceleration over the last two days towards the cliff edge.
Another failed initiative, bank share prices collapsing, pound collapsing - all linked but all gathering momentum - Niagara Falls beckons and we seem to be in a sealed barrel!
You've got to think that last night GB, AD, Mandy and the rest must have been sitting down discussing what they would do if RBS shares fell further - nationalise? etc etc - surely they must have a plan????????????????
Complain about this comment
The damage done to this country since the late 80s by the financial institutions and their chums in Govt is now becoming more apparent.
A recent European Commission report said that Britain’s manufacturing base was now too small to take advantage of the weak pound.
It makes you so proud doesn't it.
Complain about this comment
361,
Good post wharfgirl.
Complain about this comment
@ 400
my post above made reference to the dunblane article, id be interested in more supporting evidence
Complain about this comment
My main problem with Browns policies is this. His main aim is to get the banks to lend. However if there is no demand for the loans eg people are not buying goods, not taking out mortgages, what on earth use is that. Surely the secret of this is to encourage investment and saving to help the banks, and make people feel better by tax cuts not rises. At the end of this year everyone knows that their taxes are going to rise in 2010, because Brown got us into such Government debt. The better off will take the biggest hit therefore making the circulation of money, investment and spending power less. I cannot see how he expects his policies to work. What business is expanding at the moment and needs a loan. Next if you prop up a business which cannot sell its goods now it may not be able to sell them even by the end of the year, more debt this time on the tax payer.
Gordon Brown says this is Global, if it is why is Europe expected to grow by 1.8% and we are expected to be a minus 2%. Why is sterling taking such a hit, and why are we going down in the list of solvent countries. Soon Brown will not be able to raise credit in the money markets, what then.?
I am starting to think that because this Government did not set up a toxic bank and find out exactly what debt the banks have, this tax payers money is secretly only being used to pay off toxic debt not for loans at all.
Complain about this comment
#404, maybe thats why UK ship building is the powerhouse it is....
Complain about this comment