Taxpayers to insure £500bn of bank assets
Taxpayers may become liable for £500bn of poor loans and investments made by Royal Bank of Scotland and Lloyds TSB.
Negotiations are at an advanced stage on what the Treasury has called its Asset Protection Scheme, which would involve taxpayers insuring banks against future losses on their less prudent lending and investment.
It is understood that each of Lloyds and Royal Bank hopes to insure £250bn of their loans and investments.
They are working towards a deadline of Thursday for Royal Bank and Friday for Lloyds to agree the outline of the deal with the Treasury.
If £500bn of their assets are insured, this would be a bold attempt by the Treasury to achieve two outcomes: first, to strengthen their balance sheets to avoid having to nationalise the banks fully if their losses increase; second, to release resources within the banks to generate perhaps £30bn or £40bn of new lending to companies and home buyers.
It would also, however, lift the total of British taxpayer support for our banks since the start of the credit crunch - in the form of loans, guarantees, insurance and investment - to a remarkable £1.3 trillion, more or less equivalent to the entire annual output of the British economy or GDP.
Sources close to the negotiations said that there are still important disagreements between the Treasury and the banks on the terms of the deal.
One contentious area is the size of the loss - known as the first loss - that the banks must incur before taxpayers pick up the tab.
The Treasury wanted the banks' owners, their shareholders, to be liable for the first 10% of the loss.
But on £500bn of assets, that 10% loss would potentially destroy their balance sheets - and thus end up weakening the banks, rather than strengthening them.
Second, is the size of the fee payable by the banks.
This would be in the form of participating preference shares to be issued to the Treasury and would probably be classed under banking regulations as core tier one capital - which means they would reinforce the financial robustness of the banks.
These shares would carry no votes. So the government's voting control of Royal Bank would remain at 70% and 43% for Lloyds TSB.
But if the fee were set high, the government's economic interest in these banks - it claims over the banks' assets - could approach 100%.
In the sense of rights over the banks' profits and assets, there would be little or nothing left for Royal Bank's and Lloyds' private sector shareholders. This would represent "economic" nationalisation of the banks, if not formal nationalisation.
The banks and Treasury officials, together with teams of City advisers, are struggling to construct a formula that avoids this economic nationalisation.
Update 2009-03-03: In the first paragraph of this note, I referred to "Lloyds TSB". Following the acquisition of HBOS, the bank is of course now called "Lloyds Banking Group". For Lloyds, most (but not all) of the assets to be insured by the new Asset Protection Scheme are expected to be loans and investments that were originally made by HBOS.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~03~RS~)
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I wonder if Del and Rodney would like a go at running the economy?
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MORE LUNACY FROM THE LUNATICS!
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PSST!GORDY WANA BUY MY BAD DEBTS OFF
ME FOR 33,000,000 STERLING? I WILL TAKE
40,000,000 TO LET YOU HAVE THEM.
A SPECIAL PRICE FOR THE MAN WHO THINKS
HE IS SAVING THE WORLD!!
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Let's keep our fingers crossed this does get liquidity flowing. The DOW has been in free-fall ever since Tim Geithner surprised the market with his lack of a detailed plan. Right now the market's need leadership from Government to put some kind of confidence back into the market. The is first sign that there is a detailed plan emerging that is more than the empty rhetoric the markets keep hearing. Let hope for all our sakes it works!!!
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Robert said
"Taxpayers may become liable for £500bn of poor loans and investments made by Royal Bank of Scotland and Lloyds TSB, the BBC has learned."
Once it was decided that these institutions were too big to fail the tax payer had become liable for these losses in all but name anyway. Also the losses of any other UK too big to fail institution that has solvency problems.
By making the banks absorb the first 10% loss all you would be doing is taking out the capital that was put in by the Government last year. So pointless.
If this underwriting is sufficient to allow these banks to operate properly and commercially then it has to be done. The alternative is them to be zombie banks which are no good to anyone. But the government should prescribe rules about investment in British businesses (not houses) as it is the British tax payer that is underwriting them. I mean real rules not just 'we would like you to...'. The British tax payer has no desire to support employment overseas, but wants UK banks to underpin the UK economy.
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A while ago I came to the view that Gordon Brown is pursuing a scorched earth strategy.
This news doesn't do much to change my mind.
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It makes no difference.
A total crash is coming somewhere near to you (and all of us) soon!
Sorry to be a doom monger. In fact, no, I'm not sorry..... I'm just a realist.
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Bonus Hunger
There is a basic question under Bonus-malus system based on insurance customer’s point of view, that is, “Should an insurance customer carry an incurred loss himself, or should he make a claim to the insurance company?”. Hence, an insurance customer prefers to choose self-financing an occurred loss by carrying a small loss himself in order to avoid an increased future premium, instead of financing the loss by compensation from the insurance company. This strategy is called bonus hunger of the insurance customer. In this strategy, the insurance customer prefers the most profitable financial alternative, after a loss occurrence. A well-designed Bonus-malus system must take bonus hunger into consideration.
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I don't know about you but I don't think I can afford this anymore. Crash has destroyed my savings, wrecked the value of my pension fund and is now asking me to pay for the mistakes made by Fred Goodwin and Co all of whom have left with their huge pension funds intact.......
I'm beginning to really hate Brown.
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i wonder how long before Barclays joins the asset protection scheme?
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The traditional method is to split RBS (and the Lloyds Banking Group) into two companies and allocate all existing shareholders shares in each company. The court would have to approve such a reorganisation, but it is not without precedent.
Then the market will set a price for RBS(good) plc and RBS(bad) plc etc. (similarly for Lloyds, CitiGroup, Barclays etc.)
However the first thing to be able to do is the value the assets and liabilities of the companies concerned - and this is (I surmise) where the problem still remains!
(I have talked before of the way in which these organisations have structured themselves and the nature of the synthetic financial instruments and the lack of a valid mark-to-market valuation of these assets and liabilities - as the market no longer exists!)
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I note that "Sources close to the negotiations said there are still important disagreements between the Treasury and the banks on the terms of the deal."
One important disagreement might be the position of HMG plc's CEO. It is EXTRAORDINARY that the mug who led us into this mess (remember he claimed full credit for Britain's "success story" before it was recategorised as a disaster) is not only still around but is also now Prime Minister.
Before we throw another trillion around, how about checking with the taxpayers what they want and who they want to be doing it for them. Bailing out banks was not (I think) included in any party's manifesto at the last election. We would be truly stupid to think that we had no choice but that the man who got us into this mess is the right man to get us out of it.
But (of course there's a but - I am stupid after all!) the disagreement is "between the Treasury and the banks". Maybe it's forgiveable for HMG plc to assume we're stupid given that we've scarcely bleated so far. Time for change?
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Robert, Please forgive my ignorance but can you please tell us what legislation the government is using to legitimately take on these liabilities?
I find it worrying to see that the government is still trying to shore up capital adequacy, which is afterall merely a regulatory requirement. The real underlying problem is that the combined external gross debt of the UK is 10.745 trillion GDP according to the world bank et al (http://devdata.worldbank.org/sdmx/jedh/jedh_instrument.html)
Much of this is short term debt. Is quantitative easing intended to shore this up too?
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I don't remember voting to insure private businesses. If I had I wouldn't have voted for it to be the banks.
This is disgrace it's nationalisation without any of the benefits thereof.
I'm seriously thinking about not paying my tax in protest. Why should the bankers get it?
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#9 Wee-Scamp
You`re spot on the mark - couldn't have put it any better!
People are at boiling point now and with the news not likely to get better any time soon is it any wonder that the Police are preparing for the public to take to the streets by summer.
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The greed of a few, crushed the aspirations of many....
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On another (but related) tack...
I can see the Metropolitan Police's fears of civil unrest from armies of passbook waving ladies of a certain age and their similarly retired partners.
If they get wind of money for bankers on this scale and also notice that their savings set aside for their retirement now yield nothing they will put two and two together and march down Whitehall (with or without permission!) crying "Gordon Brown stole my savings", or similarly after the election "David Cameron savings thief". I cannot see the Metropolitan Police being prepared to baton-charge the mass ranks of the elderly. My guess is that they will refuse to do so even if the prime minister of the time ordered them to do so.
It is absolutely imperative that savers are kept quiet as there are 7 times more of them than borrowers. The only way to do this is to put interest rates up to at least 4 per-cent and it must be done on or by 22 April!
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OK, we've had the sweeteners...........when are we going to get the bad news?
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why dont they just guarantee the depositors (savers) and let the rest go to hell... why should i reward the corrupt bankers with my hard earned money? I fail to see the difference between RBS and Woolworths, both brought down by bad management...for those who say "too big to fail" i say rubbish, the market will pick up the good bits and the rest is a busted flush....the directors and auditors should be stripped of all their ill gotten gains and put on trial for fraud for it is obvious they have lied and lied to the shareholders....
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The Royal Mail pension deficit of £5 billion covering 450,000 people looks quite small in comparison to RBS's figures, guess which will be sorted first!
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Instead of this, why doesn't the government intercede directly in the housing market. Through local councils they could allocate (say) 1 billion punds to buy up houses that people are desperately trying to sell. If they targeted this to buy houses in the medium price range, it would achieve at least three things. It would stimulate the market, give people a way out of their crippling mortgage, give finance to the mortgage lenders instead of having to re-possess, and provide social housing for the expected number of families who will be turning for help to find somewhere to live. More importantly, they would have assets for their money which definitely could be sold later on. Simples No?
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#1
If you haven't noticed, we already have a couple of spivs running the economy.
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rob think of our probs as
human collateral damage
not mark ups for crooks
30000 GBP for each crook
because they are professionals
not amateurs
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What another stupid idea, but then we are in the realm of utter stupidity.
The Government - and their advisers - are in complete denial and seem to think that they can just sweep the ever growing toxic debt under the carpet and carry on as before.
They can't.
And remember that £500bn is an estimate and fails to take into account what happens if and when the housing market collapses by 50%+, more businesses fall apart, unemployment rockets etc. Then the debt is likely to rocket above £1 trillion plus.
How on earth do they think that one can a) pay off this debt? and b) create growth?
They can't.
Particularly, as the so-called 'golden decade' had been entirely based on debt. Without it there would have been - and thus soon will be - millions more unemployed. Full employment in an age of globalisation, technological advances and demographics is a pipe dream.
Unfortunately, they will find out the hard way that Capitalism, which had a pretty good run, is on life support and is in a vegetative state.
We are entering a post-economic age and the end of consumerism - and the sooner we all accept, rather than fight, it the better it will be for us all.
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MEANWHILE BANKERS GET THEIR BONUS
PAYOUTS.
MR & MRS JOE GET STUFFED BY HMG.
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I studied our Pension Statement for our UK
Employees today the fund has lost 40%
since 31/12/2007.
THANKS GORDY!
I dare NOT give it to the staff to read.
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RE PENSION FUND PAYMENTS?
BETTER TRY THE 3.45 AT KEMPTON PARK
OR THE EUROMILLIONS.
FISCAL PRUDENCE?
A NEW PRODUCTION RUN OF FISCAL
PRUDENCE LAVATORY PAPER.
NONE FOR GORDY ALLY MANDY & THE GANG.
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What a waste! The sad thing about this whole process is that all this money has been FOUND when for decades, public services have been starved of real cash at the point of delivery (or just wasted in layers of incompetant bureaucracy).
Pity our children and grandchildren. What a legacy!
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GORDY IF YOU WANT A REVOLUTION??
JUST KEEP UP THE MESSAIANIC WORK!!
THEN YOU CAN CLAIM YOU NEED MARSHALL
LAW AND DICTATE WITH ABANDON!!!
THE MIDDLE CLASSES ARE GETTING HOT
AND BOTHERED IT WONT BE GENTILE!
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Im with Mr Curzon, the idea that the taxpayer is funding BONUSES while getting put on the hook for these obscene liabilities is nothing short of outrageous.
The Brown administration is fumbling around in the dark, from one bungled policy to the next. Its our money! The sooner we unite and demand better treatment the better. I never thought i'd be saying the French have got it right but....
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Whoops there goes another trillion!
I wonder though is this just the tip of the financial iceburg?
We are apparently as tax payers are now going to insure the banks against their losses.
What about insurance companies?
I like many other money paranoids keep a close track of my investments and commitments and with all this banking mayhem got quite worried.
So I pulled some of my savings out of my bank and re-invested them myself, they have risen in value when all around was sinking, not bad I thought if I can do it the big boys should be OK too.
I was happy until this weekend when I received an update of my endowment policy, which after many years of doom and gloom last year was finally projected to make a tidy profit, this has now been wiped out with a larger than ever projected short fall. This works out to well over 10K!
Where has all this money gone?, I can't be the only one can I? and if not is this going to be the sting in this Fianancial Fiasco's tail?
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GORDON BROWN?
WHEN WILL YOU RESIGN?
WHEN WILL YOU WAKE UP AND SMELL THE
COFFEE?
DO WE REALLY HAVE TO MARCH ON LONDON
AND KICK YOU OUT?
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RE LDV COLLAPSE.
SO UNITE HAD IT ABOUT RIGHT!
ANOTHER 5000plus to JOIN THE DOLE
QUEUE!
ANOTHER NEW LABOUR GEM/MIRACLE.
WHAT IS MANDYS ROLE IN THIS I WONDER?
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Re THE BANKS.
It seems we only have one High Street Bank
left worth dealing with THE COOPERATIVE
BANK PLC.
THE OTHER CLEARERS ARE TOO HOT!!
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Why give 500B support to banks to achieve 40B available to lend?
a) Make 40B available to lend via NR or Bsocs and do the following
b) force Lloyds and RBS to sell many of their assets
c) split them up into smaller banks which would each be capable of failing (RATHER THAN BIG BANKS THAT 'CAN'T BE ALLOWED TO FAIL')
d) guarantee depositors will not lose money from above
e) Put houses repossessed by banks onto local councils books at current valuation (funded by government) and allow them to rent them out either to the defaulter or as social housing.
This is all about FOREIGN debts at RBS and Lloyds (which US has probably told GB it MUST honour) the losses on the still relatively small number of repossessed houses is not that enormous even at 125% mortgage.
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Robert,
I appreciate the banks are too big to fail (not in my opinion), but, surely what is happening at the moment is that the tax payers are making oportunities for someone to make money at their expense.
As Mrs. T used to say 'You can not buck the market', and yet, that is exactly what the Government is doing by not allowing these institutions to crash and for the economy to quickly reset.
And of course where tax payers future liabilities are concerned, there must be some who have worked out how to leverage our future tax payments into physical (or even virtual) cash with which they can play with no risk.
If an investor puts 100 quid into a modern day investment, and it gets diluted into all these clever instruments that were created over the last 10 years or so, by the time the money actually settles to the bottom of the investment pool, so many fees have been charged it is likely to be worth in the region of only 95 quid (a figurative representation only).
So if you assume it lost 5% on the way down, a sure as eggs is eggs, it will lose 5% on the way back to the surface of cash.
Put 1.5 Billion of our money in there, and there is a great deal of revenue for people to earn a very nice and comfortable living off, even if it is just allowing these dodgy investments to surface (which apparently is the governments chosen aim, make the banks realise their (ahem ... sorry that should be our) loses).
Perpetuating the unstustainable will bankrupt the U.K.
As a final point, if annual GDP is the real risk/investment in our banking industry, then surely this was magic money created out of nothing. If that is the case, then surely money supply expansion must have been high over the last 10 years. It clearly isn't all foreign money, because the banks have lost it. The money supply must have grown to cover all these over-valued assets.
Surely the real fault of government is that they managed an economy without the levers of restraint. Perhaps if the inflation gauge and the MPC levers were all tied to 'real' inflation measuring all asset classes and commodities, then runaway asset inflation and invisible money supply expansion, would not have occurred and a sustainable economy could have resulted.
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WELL GORDY YOUVE FINISHED THE UK
BANKING SYSTEM.
YOUVE GOT OVER 6,000,000 ON OUT OF
WORK BENEFITS.
THE JOBLESS FIGURES ARE GROWING BY THE
HOUR.
YOUVE GOT BALANCE OF PAYMENT
PROBLEMS.
A STERLING CRISIS.
PEOPLE BEING THROWN OUT THEIR HOMES
SET TO PEAK AT 70,000 PLUS FOR 2009.
AN ILL EQUIPED ARMY FIGHTING TWO
UNJUST WARS.
A STATE SECURITY SYSTEM THAT LOOKS LIKE
THE FORMER USSR SYSTEM.
RECORD CORPORATE AND PERSONAL
INSOLVENCY RATES.
ARE YOU PROUD GORDY DO YOU THINK
YOU DESERVE AN OSCAR?
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#29
AC
I think you made a typo... it should be masonic instead of messianic
D
B
L
E
N
U
A
I
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RE HBOS AS IT WAS CLEARLY INSOLVENT
THIS BUSINESS SHOULD HAVE BEEN PLACED
IN ADMINISTRATION.
I CAN ONLY WISH I HAD PETITIONED
HALIFAX PLC IN 2007 AND DONE THE JOB.
HOWEVER WATCH THIS SPACE AS I MAY
SOON BE PRESENTING A PETITION
ELSEWHERE. GUESS!!!!!
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I am past being infuriated. This has really gone too far. Will the last one leaving UK PLC please turn out the lights?
So we can offer another 500 billion to failed banks and not tighten up banking regulation and the bonus culture?
Yet LDV are on the way out......does GB want to offer them a life line? Woolies? No.. No, of course not. Not great party donors perhaps.
This is a disgrace, an absolute disgrace.
Brown and his stooges should apologise to the Tax payer and stand down now that they have finally destroyed the UK financially for the next 30 years. Time for a general election.
It is interesting to see the tide finally changing on your blog Robert.
I have lost all hope of this government getting to grips with the problem. They behave like cowards, too timid to stand up to the national theft witnessed by the humble tax payer.
I agree, let the banks dissolve. Support depositors and lay waste to the rest. What have ordinary people got to lose now?
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31 - justhangonamo touches upon an interesting point.
How on earth do you value all these assets on the balance sheet?
If we value these too highly then we, the taxpayer, surely end up potentially having to overpay if the asset declines further in value.
However, if we under value them then that means the banks have to make further write downs. That could then mean more money pouring into the banks (or outright nationalisation perhaps).
Would not a necessary first step be for all these assets to be independently valued or at least all parties (the government on behalf of taxpayers and the banks) to agree a method of evaluating these assets?
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ANYBODY KNOW WHEN OUR ERRANT
REGULATORS MIGHT GET FIRED??
STARTING WITH THE BANK OF ENGLAND!
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You might think the Government may be interested in finding out where these "leaks" are coming from or may be not ?
they have given/ dropped it into the messenger once again to ease the news in.
Forgive me wasn't this heralded a few weeks back as the way to help liquidity.
Insuring losses ....doesn't mean they ARE actual losses. The key word is is the first line It is MAY ..... Not certain, just a possibility. It might mean nothing at all although I would accept that is as unlikely, as it is to be, 500 bn
This headline feature will make some believe they have lost the money already and encourage yet another ranting sesion and keep the author 's blogging profile high ... in time for the next round of pay rises.
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You refer to £500 billion of bank assets.
I remember being taught at (UK) school(s) that £1 billion was £1 million million i.e. £1,000,000,000,000 but that in the USA $1 billion was one thousand million i.e. $1,000,000,000. Am I to assume that the BBC has now abandoned traditional UK values in favour of those across the pond?
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Bankslicker post 38
An A too many whoops!
In Brussels with tired eyes tonight.
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dormor1
Re the BILLIONS?
It doesnt seem to matter any more the
money doesnt exist anyway.
GORDY IS INTENT ON PRINTING AS MUCH AS
HE THINKS HE NEEDS LIKE MUGABE.
WE THE NUMPTY BRIGADE WILL PAY THE
PRICE FOR 30 YEARS PLUS.
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Why can't RBS sell off Citizens Bank in the US
According to the Citizens Bank web-site it might be worth a tidy sum
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Just get on and nationalise the banks properly. Are they in any position to "negotiate" Their assets are all our money anyway.
It's highly amusing to note that the New Labour monster was born partly out of fear of the Leftist policy of nationalising the banks and taking control of the 'commanding heights' of the economy. It seems we are all Militants now. Pity is that we didn't have the foresight to do the necessary way back then. Capitalism, it seems, does need to be controlled.
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#35 blairwatchproject and others
Your suggestion highlights an inconsistency in this story. One I trust Robert Peston will write on soon.
There were reportedly 40,000 repossessions last year. Assuming each constituted a 100,000 GBP loss, which I believe is a sizeable overestimate, then the total losses would be 4 billion GBP. Of course not all these losses would have fallen on RBS and Lloyds-HBOS. Where is the rest of the money going?
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The reason, in my view, why all the governments' efforts will fail to solve the problem is clear.
Time is needed to allow asset values to retreat back (30% in UK) to historically normal levels that can be supported by the free market. And time is necessary for the excessive debt levels to be attenuated to a level where they can be serviced without the Treasury/BoE artificially forcing interest rates down.
Any and all attempts to prevent deleveraging and to prop up inflated asset prices and (insolvent banks) will cause years to be added to the healing process. The compulsion to intervene (the volte face in economic philosophy we are seeing daily) will just propel us deeper into the abyss through the most inefficient redistribution of resources. Let the speculators carry the can. They bought into the failed business model. They accepted the risk for higher returns. By all means guarantee all retail saving accounts. People did not take a risk when depositing and will need the cash to spend when they are good and ready. The shareholders and their mis-judgements deserve to be punished not the tax-payer in years to come.
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Does it really matter now? Gordon has totally destroyed our economy and to such an extent that we have no posibility of a decent future. Wish I was younger and could realistically leave the country and set up elsewhere.
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#49 and others:
Mortgages are not the only story. There is the rest of the economy to consider. A lot of companies will not make it. There will be some big losses there, coming in multi-million pound chunks.
My view is this. We need banks. We do not need THOSE banks. Liquidate and start over. Government seed capital with onerous coupon, then IPO. Who wouldn't love a chance to invest in the only game in town, and one without legacy debt?
The reason it will not happen? Too many established interests with lots of political influence and lots to lose from a change in the status quo.
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#34 alexander curzon
Funnily enough I changed from lloyds TSB ( illegal money landerers to Iran, guilty as charged in the USA, GB's servant taking over the HBOS -how nice of them)
and
I moved to The co-op bank who managed to pursuade Bob dylan to use 'blowing in the wind' for a bank advert. They passed his moral requirements it seems.
Wouldent it be funny if eveybody else voted with their feet as well and sent a message to the banks and Gordon?
Jericoa.
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just where is the opposition in all this? only 12 points ahead in the polls....it should be 50 points! this week the government is to bring in the bill to part privatise the Royal Mail....140 labour backbenchers will revolt, but the opposition is apparently going to vote with the government.......for god's sake cameron, this is your big chance to force an election ...just do your job and oppose!
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The middle classes will do as they've always done - tut into their copies of the Daily Mail.
What should be of REAL concern to the so-called great and good of this country is when the ACTUAL workers decide they've had enough of this whole situation.
The working class will not stand for their already tenuous quality of life being eroded still further for very much longer, and especially not by a Labour Party that's purported to be on their side yet have duped them for the last decade - as they usually do when they're in power.
This time, the scales are falling from their eyes - and things could get VERY nasty indeed.
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I'm off to bed... with AlexanderCurzon carpet bombing in upper case cluster bombs and thinking about what £1,300,000,000,000 actually is my brain is aching.
I cannot get past the feeling that the way this whole thing has been handled will be looked on in years to come as a complete disaster in that it has been almost the wrong call at every turn...
There are only 60,000,000 of us so that is give or take..£22,000 for every single man, woman, child , baby in the country (It should be £21,660 but I am doing this in my head, and it's doing my head in).... for the average (no such thing I know!) family of 2.4 kids that is £96,000 ..
10 rolling drunks on a stag or hen party rolling round the pubs on Saturday could be carrying £220,000 in debt, each group...... not counting their own debt on their cards and mortgages!!
I'll be looking at the buses tomorrow and doing quick maths and thinking that bus owes well over half a million quid...and so does that one ...and that one has 3/4 of a million riding on it....
Even Alloa Athletic's crowd could collectively be liable for over £5 Million Quid next Saturday!!
It doesn't bear thinking about---except on the brighter side every football crowd this weekend will be able to buy their on club... even Chelsea from Abramovich, and Man Utd off the Glazers---
And if just a the regulars on this blog get together WE'LL be able to buy out the Govt from RBS and take the bank over and become bankers------
All it needs is to find a way to securitise the debt by parcelling it up and selling it off (after all it's AAA rated UK sovereign debt this is ...it's not any old rusty banger of debt...)... we won't have to make any repayments because the other suckers... er ...tax payers will do that and by the time it all unravels we'll have had our first year bonuses and be buying rounds in Monte Carlo
What can possibly go wrong?
Goodnight
And what about the interest!!!!
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This a total disaster the UK tax payer can not keep pinking up the bill for inefficient management in the Banking industry.If this disaster continuos there will more people out work more business going bankrupt so less tax payers revenue to uphold the Banks.This is what should have happened the suspected Banks go into receivership and stated as bankrupt where they would have to pay their creditors this would have stopped us having our own money recycled back to us.
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There will still be the same number of fields, factories, buildings, people and workers the day after the economy dies as the day before.
Let this system die and let us rebuild a new one.
What has existed since the UK exited the gold standard has been a slow eradication of wealth by the use of fiat money. I.E government lies - lies from the left and lies from the right.
As Charlton Heston said " Damn you all to Hell"
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Robert
Is it too late to let them go bust?
Only retail depositors need to be protected.
So who is defaulting on these loans? Who has had the benefit from the billions that the british tax payer will be paying for decades to come?
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dormor1 (post No. 44).
Like me, you must have gone to school long ago.
However, I seem to remember that Denis Healey redifined billion to its current meaning during his tenure as Chancellor in the 1970s.
I hate it too, but we are stuck with it.
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When will people realise that all of these plans being put into place are to stop us all from mass rebellion!! From what I see for nearly 8 years the uk and us the great consumer economies of the world have adopted a fundamentilist captilist approach. Our banks and financial institutions whicn in the uk in paricular under pin are economies have borrowed excessively form china and other emerging markets or anywhere they could get there grubby little hands on. Theyve proceeded to borrow all this money to us the consumers whove spent it on our nice plasma screen tellys that were probably mad in china and upsising o our bigger overvalued houses!! This was a false economy we spent money we didnt have which created growth in countries quicker than should have happened it was a vicious circle that would eventually collapse!!! Yet now it is collapsing the goverment want us to borrow money to start the whole process again??!!! Thats rediculous but they will never tell us the truth THAT ARE ECONOMY IS OVERVALUED, THAT THE RICH HAVE GOT RICHER AND WE WILL PAY FOR IT, THAT FUNDAMENTILIST CAPTILISM WHICH THE UK WAS THE FRONT RUNNER IN IS DOOMED TO FAILURE UNLESS WE KEEP ROBBING POORER NATIONS WHO JUST DONT SEEM WILLING TO PLAY BALL ANYMORE!!! BRING ON THE REVOLOUTION, ITS TIME THE MIDDLE CLASS REALISE THEY ARE JUST WORKING CLASS IN DISGUISE AND WE TAKE BACK WHATS OURS AND END THIS GREED!!!!!!!!!!!!!
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The Banks are bankrupt. The only thing keeping them alive is tax-payers money (present and future taxes). The past profits (and bonuses) were private but the debts are and will be paid by the British tax payer. The opportunity cost losses to 95% of the British people in terms of the productive value of their work is scandalous. Think what can't be done in the future because the taxes for all those things that we really know and believe should be done in the country will be used to pay the interest on the national debt to....bankers!
The only real solution in the nation's interest (even Greenspan thinks so know!) is for the systematic nationalisation of all of the retail assets of the loser banks in that they go along the tried and tested route of Insolvency.
The profitable assets are nationalised and quickly restructured with new, competent management (we have enough talent in the virtuous banks for secondments and I'm sure the Bundesbank could help out for a while) and then re-privatised with clear limits on their business plans to avoid securitised debt, money market borrowing (the source of our woes) and the perverse bonus culture. The banks then operate on the basis of deposits (which 99% of us thought anyway).
The losers will be the speculating 5%. They will be cleaned out.
We just have to get this nightmare over with. And punish our homegrown and international 'punters' who pulled this whole number off in their own short term profit maximisation interests.
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Message to Gordon and Alistair.
In a recession you can tweak the money supply. In a Depression you can't. It failed Hoover and Roosevelt. Unemployment peaked in America in 1937/38, a full nine years after 1929. They tried it then and it didn't actually work. Roosevelt saved America for the type of capitalism which has led us to the present state of affairs. The Rich emerged richer and everyone else had to rebuild with uncounted personal tragedies on the way.
The planet can't sustain the sort of world you two are trying to maintain anyway.
Who will buy the treasury bonds you need to finance your policy?
The Chinese, perhaps?
Why should they!
They have all the hi-tec kit they need now.
They have a huge internal market to develop.
They have barter deals in place to assure oil and resources outside the fiat reserve dollar which has stitched them up.
Why should they see you as important enough to invest in.
Even Hillary has tried to sweet-talk them because she knows that debtor nations have to treat their creditors with respect.
Where did the Chinese go after Davos?
Berlin and Paris.
Not London.
Put Britain first and nationalise those banks to make UK worth investing in again.
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I propose an alternative solution
Let all the Banks fail, and keep the Tax payers money safe.
The Banks will fail eventually anyway, but we will still have some cash to lavish on everyone who has lost their investments.
Or alternatively let the investors rot, and spend it on rebuilding the economy.
Whatever we do with our £Bn's is frankly insignificant compared to the US's £Tn's.
Also, as has been proven again and again, you cannot fight the markets - so lets not try.
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This has to be a record, even for the Golem. Yesterday he was going to be putting people first (people like the everyday tax payer, I guess) and the banks were going to be the servants. Then, a day or so later, he's giving the tax payer a nice gift in the shape of a £500 billion liability.
I suppose you do have to pay the servants well in this New Labour wasteland.
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This Asset Protection scheme is similar to what the US govt gave as assistance to Citigroup and other failed banks in the States. Watch rep Alan Grayson interview Citigroup CEO Vikram Pandit him about the assistance given. dont know if beeb allow me to give a link: http://www.youtube.com/watch?v=A-DOwLnQ4nk , otherwise its on you tube just look under Alan Grayson.it's well worth watching
Let the banks fail if they are rotten and a new generation come up in their place. Let the CEO's and presidents of these noble institutions have their properties forfeited and their accounts seized and have the bonuses returned, as they don't seem to understand the error of their ways otherwise others will come behind them and it will be repeated.
Are we to rebuild the already broken banks?they are broken because they don't work. Mr prime minister...THEY DON"T WORK!
They don't work because it was decided that the market could regulate itself; now when it does the panic sets in...does the self regulation entail the destruction of the markets that they existed in?. of course it can, this is the self balancing act and from the ashes new banks will arise, healthy banks
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Personally I think there's a bit too much criticism of the banks going on. True a few of them messed up - a bit - but they were investing in things no-on understood, least of all them, and that takes a lot of courage. It would have been easy if we'd all known what we were doing but they didn't and it takes a man of rare ability to do the things they did, on the basis of blind faith; I salute them for it and believe they fully deserve any bonuses owing. Set a terrible example if we don't cough up - we may not be able to attract people of the same calibre into the City in future. Disaster if that happened. Sorry Peston but you got it wrong this time!
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Quite right. You can't buck the markets and the markets are screaming at the moment.
Nationalise, restructure and reset on time-honoured principles.
80% of Britons are not in negative equity even if assets stabilize at normal (ie -30%) values. Only the illusion of wealth has been blown away with the deflating bubble.
Move house and you gain or lose nothing when the market stabilises after the tank in two or three years time.
It will pay to build again instead of hogging building land and houses to 'flip' at a profit.
75% of Britons are savers. How can they be made to pay for the mistakes of the bankers? Its immoral as well as wrong-headed.
Most of us are tax-payers (direct and indirect taxes). Why should we pay for the losses of the banks and the hedge funds they fed to?
Let them go to hell (and their private wealth clients) and let the rest of us build a viable, skill based ecionomy that can face the future in a real global economy.
We really should not be paying for the losses of those unwise enough to have entrusted their wealth to the Ponzi scheme the banks created.
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No 67, you're right, there is too much criticism of the banks. It's criticism that is encouraged by policy makers like the Golem in order to hide their sins of omission and commission. When the history of this crisis is written, policy makers will be trashed. It's the likes of the Golem, King, Bernanke and Greenspan who are the primary cause.
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Sing to the tune of Beethoven's 'Ode to Joy':
Moral Hazard, Moral Hazard, Moral Hazard, ev'ry day...
Moral Hazard, Moral Hazard, Moral Hazard,
ev'ry way!
Banks screw up, and we all cough up,
we're really fed up, been robbed blind...
Moral Hazard, Moral Hazard,
Brother, can you spare a dime?
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Sadly I have now come to the conclusion that there is only one solution to this mess.
As a matter of national emergency
All farmland/open spaces must be turned over to food production.
All troops must be returned home.
Domestic arms production to be highest priority.
Full nationalisation of Ford/Vauxhall/RR/Corus etc. with production changed to military hardware.
National service implementation immediately with all able bodied persons given basic military training.
This must be done now.
It is the only fiscal stimulus that will get our economy back up and running but we must be the first to do it and it requires the utmost commitment.
War is coming.
It took 50 years and an empire to pay for the last one because we had to buy tanks/planes etc. at the top of the market (enriching many americans in the process)
If we are not well prepared and well armed, war will come here so there is no time to lose.
Do it Gordon, declare a state of National Emergency, stuff the election, give the economy the only fiscal stimulus it understands.
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Many years ago I bought shares in Eurotunnel. My investment is now worthless. "The Banks" took the lot.
So - tough luck if you are a bank shareholder. I know how you feel.
I just count myself lucky I didn't buy shares in Marconi.
All businesses, all shareholders, all investors take risks. Basically we are all gamblers. As an Irish jockey once remarked "If I thought the horse was going to lose - I wouldn't have put me own money on it!"
Well - we've lost. And lost big this time. No wonder we are all hanging on to our cash.
The sooner the bad banks are nationalised the better. A few less horses to put your money on.
If the the Government does no better we can get rid of them the next time we visit the ballot box - and without a bonus.
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#67 and 69
Probably so (and Clinton, Rubin, Thatcher, Reagan who among many others were the political lobby of the bankers who can also be named). The bankers called the shots for a quarter of a century since the mid eighties "big bang".
Look at the economic statistics and the history.
The Thatcher/Reagan revolution was a cultural revolution which (at the request of bankers) swept away the structures put in place after the Great Depression of the 30's to prevent a replay.
Their model. It has failed.
"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy and more selfish than bureaucracy"
Abraham Lincoln
"They who control the credit of a nation direct the policy of governments and hold in the hollow of their hands the destiny of the people"
Rt Hon Reginald McKenna (Chancellor of the Exchequer)
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I am at a loss, the Trader that lost millions goes to prision, the Guys that lose Billions get a Bonus.
We are spending more on Public Servants that make the Country nothing but we spend nothing on keeping manufacturing going.
Last time I looked New Labour had enough MP's to keep safe those that enjoyed draining the Public purse but now they cannot stop the sale of the Post Office, what a load of GUFF we are expected to swallow.
Now our Northern Rock is going to let people buy overpriced houses with money the Govt. has borrowed to get us out of the mess of their own making.
You don't have to be mad to try living here but it helps.
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#74 (Fideafindimp)
Because they are stupid enough to think they can buck the market. They think they can reverse gravity and that by saving the banks they are saving their reputation for economic savvy over the past 10 years.
They have neither the moral bravery nor the integrity to concede they were wrong,
Look at Tessa Jowell talking to Andrew Neil or to Paxman. It just beggars belief!
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Gordon,
Just go and never darken our door again. And take that lot with you.
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I am so glad i left the UK, the thought of spending the rest of my working life paying tax for incompetent bankers who will never face the criminal charges for the disgraceful way they have destroyed the wealth of a nation and burdened the work force and business owners with so much debt.
I guess it is the same old UK privatise the wealth and nationalise the debt, always money for wars and banks never any for schools, roads and hospitals.
More than 2 million people left the UK for good in the last 10 years for all sorts of reasons. That amounts to more than 10 747 aircraft packed with people leaving on a one way ticket every week, anybody think of asking why so many people want to permanently leave or is everybody to busy bailing out the banks.
It seems ironic that the people who work with money have no clue how to control it and yet if a retailer or manufacturer makes a complete mess of their finances they go out of business.
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I disagree with tonyyd1, this is not the first detailed plan.
What happened to the detailed plans for healthcare, pensioners, Education, Education, Education.
We have welcomed by force a bail out of the banks, only because it is our money sitting in there, that is if it is there, why do they need a bail out if they have yours and my money, or what have they done with it.
Is it invisible money that banks are dealing with and for that matter the government.
We are all going to get a big hit in about 5 years time.
We have had investment in healthcare, and education admitted, but only in partnership with private companies, private companies work on profit, NOT Education,Healthcare etc.
I applaud TimBJones for his comments,British business not houses, houses are owned mostly by the banks not by the people living in them, repossesions galore lately for the banks, are they building their stock up for the future to sell off at exstortionate prices and then earn more bonuses.
Houses were not available 15 or 20years ago for the people of britain that needed them because the government would not give Councils money to make them habitable.
Our neighbours from where we do not know arrive and all of a sudden all the empty houses are having money spent on them, to accomadate skilled people to fill our job crisis, no skilled people exist in britain!, as for bank bonuses, do they not earn enough, Iam not talking about the face you see,but more the face you don't see.
I have never seen my bank Manager in13 years, we need to bring that back.
By the way had a letter off my bank Ltsb today 23rd stating the service charge on my current account has increased by a pound, is there no end to the bankers greed.
Final comment, I am still proud to be british, I only hope the government can hear the people for once, and not think in their small little Island called the house of commons, the common people need help, Mick
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So, the Treasury is working to have RBS sorted on Thursday and Lloyds sorted on Friday.
Shareholders to be liable for first 10% of losses.
Well then, expect RBS to tank on Thursday and Lloyds to do the same on Friday.
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"Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to take deposits, and with a flick of a pen they will create (ie print) enough to buy it back again. However take the power away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the SLAVES of BANKERS and pay the cost of your own salary, let them continue to create deposits."
Sir Josiah Stamp Bank of England
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Straight off the RBS Citizens Bank Website about mortgages for ARM mortgages
Save with lower interest rates
Qualify for a larger loan amount than with a fixed-rate mortgage
Protect your interest rate for an extended period of time
Keep your monthly payment low with a 30-year term and amortization
No prepayment penalty
So what happens in 5 years time??????
Where are these assets???? - the US?
What is going to be insured????
Against what????????/
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ARM is just the grassroots detail of the old system still trying it on. You, the mortgage payer, take the risk of the future when interest rates are adjusted not the bank. Like shooting fish in a barrel!That's the way they like it.
Won't work stateside for quite a while. The housing market is still tanking or hasn't RBS noticed!
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it seems that one of the main reasons for the renewed nerves in the US and decline of the markets is to do with AIG, who are in deep trouble again and need another huge infusion of govt funds to avoid going bust and pulling everything else down around them; see this
http://www.nytimes.com/2009/02/24/business/24bailout.html?
also Citigroup in trouble and may have to be nationalised or split; automakers all begging for money to avoid bankruptcy
and on and on it goes; a lot of this is way beyond Brown's or UK's ability to influence now
it seems that the UK govt is copying the US initiatives or vice versa but they are not working; perhaps some of them will eventually begin to, but the crisis is moving too fast to tell.......
and there's the whole confidence thing; they still can't find a bottom to house prices as unemployment now grips people with fear
I believe that in the US you have to file your taxes at end of March and it's for the calendar year, so that all piles personal pressure on the tens of millions of individuals whose personal investment and 401k plans etc are currently in ruins
I've read somewhere a complex argument comparing long-trend price/earnings ratios to the stock markets, which suggests that the Dow will fall to 4,000 and the FTSE to 2,500; but the markets are unpredictable spooked horses now, so who knows
more importantly, the Anglo-American model seems dead at the moment and Obama/Brown should bite the bullet and begin nationalisations soon
here in the UK we need a National Investment Bank, Natl Savings Bank and the beginnings of an industrial strategy like the Chinese; no choice but to try and pick winners and losers
need to work out an agreed way of doing it EU-wide, which makes it even harder, but
giving all our money to the losers (RBS et al) and in an unco-ordinated nation by nation manner doesn't work
in the meantime don't forget your allotments folks; there will be green shoots to be seen there soon and a bit of shovelling will cheer us all up
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'The Treasury wanted the banks' owners, their shareholders, to be liable for the first 10 per cent of the loss.'
Have I missed something but as we own 70% of RBS the reality is that we would still pay 70% of the first 10%.
I just hope Flash does not decide to save M & S finnancial services because then my shirt will be gone as well.
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To paraphrase Winnie: "Never, in the history of man's development, has so much, been stolen by so few, from so many"
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# 14 MrT
"I'm seriously thinking about not paying my tax in protest. Why should the bankers get it?"
You may be thinking about not paying your tax. I can't afford to pay mine. By that, I mean my own small business faces a relatively modest tax bill of £4,560 for the Tax Year ended March 2008.
Since then things, have got much tougher. For me to pay this tax bill, I shall have to draw money from my family savings to capitalise my small business sufficiently to pay the tax man.
The cash from my personal savings will then presumably move seamlessly to a multi-millionaire banker's pocket. Something is going horribly wrong here.
Small wonder the Met Police are predicting a summer of rage on British streets. I'll be the first out there.
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# 83 somali_priate_SP500
"I believe that in the US you have to file your taxes at end of March and it's for the calendar year, so that all piles personal pressure on the tens of millions of individuals whose personal investment and 401k plans etc are currently in ruins"
See my post at # 86 above. It's not just in the US that this is a problem!
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So after paying up to save a failed business, being kicked in the face as said business then uses the money to pay immoral and unjustifiable bonuses, I am now expected to stump up again to save said business for a second time???
How about just letting them fail, the way any other business with a bad business plan and a total disregard for the views of it's majority shareholder would fail? Can someone please, finally explain to me why this is not possible?
If it wasn't so tragic it would be a terrific farce.
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There is only one way out of this massive lash-up, and the gov is already doing it.
They did it in Germany in the 1930s as well.
If all countries do it at the same rate, the problem should go away, although the cash in your pocket will be worth a bit less.
I hear this morning that the bankers want a pay increase. The farce gets bigger.
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You should have waited until the deal had been concluded, Robert. Do you have to make a "scoop" out of every bit of news?
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Yeah,well no doubt the shareholders will be whingeing again how the government is 'stealing' all their money. It's a damn shame that shareholders cannot be made liable for the huge debts incurred by these banks,instead the public now have to clean up their mess at the astonishing cost of half a trillion pounds. The chickens have finally come to roost for the Thatcherite years,the bankers and their investors have had a 30 year long party,siphoning out billions year on year out for their 'bonuses' and now the public are going to be paying for it for a very long time. Is it any wonder that the general public is angry?
As well fomenting a major worldwide economic collapse;decent hardworking people are losing value on their pensions,savings and property, and it seems we will be taxed heavily as well over the next few decades to pay for this fiasco.
Brown and the EU leaders are doing the right thing in strict regulation of the banking industry.Lets hope that such a situation never happens again.It's obvious now that big business can never be left alone to run it's own affairs without ' pesky state interference'.This has been tantamount to burglars complaining about street patrol coppers interefering with their own 'business practises'.
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Can the moderators stop multiple postings, and also those posting in capital letters?
Usually those trying to grab the limelight and not contribute to the discussion.
If we can weed out the non-contributory posts, the subject discussion gets a little more manageable.
Peter
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Alexandercurzon... do you think your semi-literate rants actually add anything to this discussion?
Please, let's at least try to discuss this very serious issue with a certain level of maturity.
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Face it, the UK economy is going over Niagara in a busted barrel.
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This comment was removed because the moderators found it broke the House Rules.
The main thing I have noticed being a regular reader is the increasing anger coming across.
This government is treating the electorate with utter contempt, ignoring the advise of sound economists, and the bankers are laughing all the way from the bank.
The police (under funded, but in some cases,over empowered) are right to be concerned about rioting and protesting in the near future.
I personally know of many, normally placid personalities, whose blood is boiling with the way the country is being ripped off.
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why do the government want to start lending again? isn't this what got the economy in the deep crud we are now in?
if a business needs to borrow money to do things or to pay for goods then obviously the business is filling the whole point of business is to make money not borrow it .
the government should start the ball rooling by paying people in cash again every 2 weeks and that way once your money is spent yuo will feel the effects people dont have any idea of the value of money today because of credit how many times have you been in a shop and seen someone pay by credit card for items costing a a few pounds? this where the problem lies and this iswere it needs to be fixed first
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Dear Robert
This crisis is a major case of Criminal activity within the bounds of the Finacial services in this country.The Government Know that Fradulant operations took place and they must be exposed and those responsible must be charged and put in the Dock.
There is a MAJOR FAILING regards the FSO, AND THE FSA, both these agencies are at best useless, BECAUSE THEY KEEP THE TRUTH FROM THE PUBLIC DOMAIN,--- and they should be Got rid off,-- in their place a SINGLE REGUATORY agency responsible for Finacial Services across the board, nationally and the Ability to work Internationally should be instigated.
UNTIL THESE BANKERS WHO STOLE OUR ECONOMY ARE BOUGHT TO JUSTICE THE PUBLIC WILL HAVE NO FAITH IN GOVERNMENT especially WHEN THERE IS EVERY POSSIBLITY SOME OF THESE MAY BE KNIGHTED TO KEEP THEIR MOUTHS SHUT.
THESE BANKERS ACTIONS HAVE REALLY hurt A LOT OF ORDINARY PEOPLE AND THEY MUST NOT BE ALLOWED TO GET AWAY WITH IT, HEADS HAVE TO ROLE.AND FAST.
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#92 Hear Hear!
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We have to ask why this is being done.
Most likley it is to keep "people" from thinking their money isn't safe in LLoyds/HBOS. Why not then just protect the depositers, unwind Gordon Brown's merger plan, then let HBOS be split into component parts? Perhaps a domestic mortgage business, based on retail savings could be spun out and start to offer sensible prodcust in the manner of one of the old Building Societies?
HBOS shareholders will suffer, but their business is practically bust, and Lloyds shareholders should be better off. Anyone with all metaphorical eggs in one proverbial HBOS basket will suffer, but the world in general will breathe a sigh of relief if the right spin is applied.
As the great leader, comrade Brown, seems to want to stick his fingers in everywhere, but unfortunately his track record of gold sales, pension-trashing, tax and spend, boom and bust, saving the world etc, makes him possibly the least qualified person for the job in the country.
PS Did I mention the pension-trashing?
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This is all very frightening. The numbers now sound like monopoly money and get more ridiculous each month.
By the way, Robert, what is this 60,000 businesses figure that Gordon keeps talking about. I noticed in an interview yesterday regarding LDV that he suddenly mentioned the Inland Revenue. Initially he gave the the impression that 60,000 businesses had benefited from the various bank bailout schemes on offer but now I get the impression he is talking about 60,000 businesses benefitting from some changes to the tax rules. Also, why do 60,000 businesses benefit within weeks of announcing his scheme, whilst the figure remains the same two weeks later. Has the scheme stopped over the last two weeks or are these figures the usual spin, not quite being what they appear?
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£500bn. Why not spend this money directly on British businesses going bust instead? If they're any good let the taxpayer have a stake in them.
After all, saving LDV vans, say, has the immediate effect of keeping 5,000 people paying taxes rather than drawing the dole. What does paying the bank back for their loss on the loan do?
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Yet another stich up of the taxpayers in progress!
"The Treasury wanted the banks' owners, their shareholders, to be liable for the first 10 per cent of the loss.
But on £500bn of assets, that 10 per cent loss would potentially destroy their balance sheets - and thus end up weakening the banks, rather than strengthening them."
If the banks are objecting to taking a first loss of 10% suggests to me that the toxicity of these outstanding debts (or assets as banks like to refer to them) is such that the banks are expecting the level of default on this tranche to be very significant, if the losses were expected at a lower single figure "normal" level then the point would be academic and not worth haggling over.
"Second, is the size of the fee payable by the banks.
This would be in the form of participating preference shares to be issued to the Treasury and would probably be classed under banking regulations as core tier one capital - which means they would reinforce the financial robustness of the banks."
So El Gordo and Comical have learned something from - how to turn toxic subprime debt into AAA securities.
Was this not one of the main problems which precipitated this mess?
This type of financial engineering is what knackered the system in the first place, trying to fix it with the same type of sleight of hand is just plain stupid.
Jilted John was so right!
"if the fee were set high, the Government's economic interest in these banks - it claims over the banks' assets - could approach 100 per cent.
In the sense of rights over the banks' profits and assets, there would be little or nothing left for Royal Bank's and Lloyds' private sector shareholders. This would represent "economic" nationalisation of the banks, if not formal nationalisation.
The banks and Treasury officials, together with teams of City advisers, are struggling to construct a formula that avoids this economic nationalisation."
RP seems to present this last as a problem - there is nothing left for the private sector shareholders, their alternative is to watch the banks fall over and then their shareholding is worth absolutely nothing.
Funding these banks through large future tax rises so the pension funds of those contributing to the mess are protected is just daft. Protected 50 quid of pension - no longer funded care costs increase 60 quid to pay for it - economics of the mad house.
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If you run a bad company that looses billions we will give you more taxpayers money.
If you are a drug addict we will give you disability living allowance and pay all your bills.
If you are young serial car thief we will give you a caution and a holiday to france.
If you borrowed too much to live in a house you cant afford we will pay your mortgage.
If you dont ever work we will give you free accomodation, free gas, free electric, free food and spare money for a mobile phone and flat screen telly.
If you claim benefits illegally whilst working for cash we will "give you a warning"
If you never borrowed and saved your money we will stop you receiving any intrest.
If you lived a frugal life and saved for your future we will decimate the value of your currency and savings.
If you put away money to provide for your future we will attack your pensions so you are no better off.
If you do the right thing for yourself and your country we will hound you and destroy you economically.
If you do the wrong thing for society and yourself we will support and encourage you to do it more....
Gordonomics....
Enough is Enough................
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# 96 dazjvans
"The police (under funded, but in some cases, over empowered) are right to be concerned about rioting and protesting in the near future".
Too true. I'm clear that I'm in the professional, middle-class category (or a member of the "Coping Class" as one newspaper categorises me). I'm 51 years old. Throughout my life I've always looked upon street protestors as either straightforward law-breakers or, at best, people with too much time and enthusiasm for their "chosen subject".
Now, for the first time in my life, I'm itching to take to the streets. Our political process has collapsed - destroyed by the Labour Party's contempt for the Palace of Westminster and democracy itself, by a decade of ineffectual political opposition and, not least, by career politicians in it for all they can get. We're been conned and stuffed all in one go.
Those of us who have the audacity to consider ourselves decent, honest, hard-working taxpayers have been taken for the mother of all rides. It is both outrageous and positively alarming the extent to which our political elite has been nigh-on criminally negligent in the fulfilment (not) of its duties to the ordinary people of this country.
It is not exagerating to say that we (individuals, businesses and the country) are staring ruin in the face. All this because our politicians have spent at least the last decade obsessed with their own desire for, and trappings of power: nothing else.
And the biggest culprit of all - the person who has the most to answer for in all of this - has been the arrogant, incompetent, dysfunctional, machiavellian antithesis of a statesman: Mr Gordon Brown Esq.
If/when I join the Met Police's kind offer of a "summer of rage on the streets", I'll be making it clear who I'm raging at.
What a shambles; who would have thought it, when we listened to and watched the Labour sheisters inveigling their way into power under the slogan "Things can only get better ...". Yeah, right.
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This is all becoming very disturbing
Force the banks to increase their capital base
Force the banks to lend more
Force the banks to take money which is massively over base rate
Force the banks to curb the way that they have employed people for generations
Force the banks to pay a fee to ring fence the toxic assets because they are long term mortgage instruments which might or might not default
At what point does the government believe that these now shackled, hobbled and beleaguered institutions will now make a profit and thus be able to pay back the debt? What is it doing for the morale of those individuals who are simply wage slaves in these businesses?
Maybe Gordon's idea is for the banks never to pay back their loans
On top of all that, Gordon's measures only affect the UK banks, not the banks who might operate in the UK, so therefore they are anti-competitive. At what point will all this dabbling run up against the minions of Brussels?
So well done Gordon, the smoking wasteland of UK banking could be there for many generations to come.
Maybe Gordon should read
http://www.guardian.co.uk/politics/2009/feb/23/icm-poll-february-2009
Just in case he hasn't fully comprehended the mood of the country, and let someone else do something which allows repayment of the debt.
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#50 blefusuc wrote:
The shareholders and their mis-judgements deserve to be punished not the tax-payer in years to come
Yes, but
a) shareholders have already lost considerably during this crisis. For example, the RBS price has fallen from over 5 pounds in 2007 to about 20p today. So 5000 pounds invested in 2007 is worth 200 pounds today. So most of the hit has already been taken. A remaining fall to zero is relatively trivial in comparison.
b) once the share price is zero the tax-payer is still left with the same potential liabilities as today.
c) many shareholders are actually pension funds. Millions of ordinary people who do not have the security of a final salary scheme will actually suffer twice, once as tax-payers, and again through the decline in their pension fund and hence retirement income.
I own, nor have I owned, any bank shares, though, like millions of others I probably have an indirect exposure through my pension scheme.
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Robert, with all due respect, but comments like: "In the sense of rights over the banks' profits and assets, there would be little or nothing left for Royal Bank's and Lloyds' private sector shareholders." Shareholders are not morons, they know this already. Comments like this however encourage short-sightedness and the impossible drive for quick returns which are the main causes of this disaster. If you are a supporter of market reform like you pretend to be, you need to be consistent in what you write and say.
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#102 pete_in_halstead wrote:
Why not spend this money directly on British businesses going bust instead?
Yes, but the Government is not spending 500 billion; it's actually guaranteeing certain bank assets in return for a fee (just as the original bank re-capitalisation was tax-payer funding in return for preference shares in RBS/HBOS yielding a 12% return). So the eventual cost to the tax-payer of supporting the banking system is nothing like the headline figure.
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With apologies to C N Parkinson I postulate the first of "New Labour's Laws":
#1
If a small banking loss justifies a small bonus entitlement, it follows that a large banking loss will justify a large bonus entitlement.
#2
Bankers' remuneration will be inversely proportional to their value to society.
#3
Bankers' remuneration will be geometrically proportional to the damage those banks inflict on the taxpayer
#4
New Labour ministers will rise to the level of their incompetence, and then one level above that
I'm sure you get the drift.
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It all looks very desperate. I agree with one of your comments that a complete crash could be coming. What happens then?
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Its too late to simply let LBG and RBS go bust. That would have been sensible and was argued for by me and many others on this blog at the time. Brown has given such extensive guarantees already that the survival of this country's economy is dependent on these walking disasters.
This proposal typically gets the worst of both worlds. The banks are still on the hook for enough to make the shares worthless and are bled of enough in fees to prevent them trading effectively. The taxpayer gets to shoulder an open-ended uncosted liability sufficiently large to impoverish the country for a generation.
I share the anger of many on this blog but it is now getting too late to do anything about this. A responsible government would be cutting Government expenditure by at least 5% a year for the next 3 years, cutting its pension obligations, increasing taxes and increasing interest rates. None of this will be in the budget which will probably do the reverse. By the time this Government falls nobody is going to be able to repair the damage. Anyone who does not have a public sector pension is doomed to poverty.
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#91 frglee wrote:
The chickens have finally come to roost for the Thatcherite years
Yes, but
a) as Robert Peston has explained before (in his New Capitalism post), until 2001 there was no gap between UK banks's lending and deposit base (the custmoer funding gap). The huge expansion in lending funded by short-term interbank deposits occurred in the years after 2001
b) similarly the expansion in US sub-prime lending and trading in mortgage-backed securities occurred in the last decade
c) much of the expansion of sub-prime lending occurred with the connivance of governments for social reasons. The US paricularly was keen to promote home ownership amongst economically disadvantaged groups who could quite obviously never repay (ninja loans, i.e. no income, no job, no assets)
d) the last decade has been a decade of banking regulatory failure coinciding with artifically low interest rates.
So whilst at a superficial level it may please some people to blame Thatcherism the actual mistakes were made by bankers and regulators on the watch of Bush and Brown.
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Robert - what is this supposed to mean:-
that 10 per cent loss would potentially destroy their balance sheets - and thus end up weakening the banks, rather than strengthening them.
As they are currently liable for 100% of the loss, nothing can 'weaken' them more.
Let them take the 100% loss - they screwed up, not me.
Retail depositors are already protected.
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I hope this means that the large amount of PFI monies that the RBOS are lending this goverment have been written off in this deal?
After all they are lending us monied at 10+% and we are bailing them out to the tune of billions.
Or would this condition of the bail out be one that might be negociated after we have handed over the cash, when some one in the press starts pointing it out. You know like what happened with the bonuses!
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What arrangements have you made to communicate when the government pulls the plug on the internet to prevent organising riot?
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#105
Things did get better - for those in charge.
I think the BBC should play that song "Things can only get better..." whenever New Labour appear on our TV screens, or whenever there is an announcement of more financial disaster.
The land would ring with hoots of derisory laughter.
A fitting tribute to New Labour.
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Having just posted a comment and reading the others what actually happens if things get worse? At what point are the government unable to meet their own financial commitments such due the loss in revenue or do they just print more money.
Also having read but not commented on these blogs, Robert Peston does seem to be getting more annoyed and exasperated with the non solution that our glorious leaders are providing.
Even my 16 year old son last night asked some worying questions about our own household finances. It seems to be affecting all ordinary folk whereas on the tv the only concern is making sure that bankers aren't too upset about not keeping their bonuses.
Also on the BBC today a city worker had started a new career as a teacher claiming that her skills in the outside world brought something to her new role. Indeed how to fail, spend more than you have and gamble away your shareholders stake.
A young fella who works for us asked this week after hearing the news, " what happens to all the city workers and bankers who lose their jobs, have they got to get a proper job now? " Sorry to ramble.
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#88 agc3167 wrote:
How about just letting them [the banks] fail, the way any other business with a bad business plan and a total disregard for the views of it's majority shareholder would fail? Can someone please, finally explain to me why this is not possible?
UK banks' external liabilities are greater than the UK economy. A failed bank would be unable to meet its liabilities to its creditors, depositors, and other banks both in the UK and abroad. The failure of a major bank in the UK (i.e. one left completely unsupported by its Government and Central Bank) would set off a chain reaction in which nearly every bank in the world would fail.
This would be the Great Depression over again, but far worse.
By the way, how do you know that the banks (I assume you mean HBOS and RBS) are ignoring the wishes of its majority shareholder, as expressed by the Government? I suspect the Government is actually playing a clever game of triangulation between the banks, and voters.
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Me thinks the 1929 crash is happening all over again - will they never learn.
Depression here we come!!
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£500billion? Try and justify this compared to the £25 million that LDV is seeking in a bridging loan and has been told to get stuffed! RBS probably spends more on toilet paper every year! Yes the government needs to prop up the banking system or else we are royally screwed but it really sticks in people's throats that the banks who caused the problem are bailed out while manufacturing is allowed to collapse, and I would consider myself as being right of centre on economic matters yet I thinkt he whole thing stinks! I would expect that Labour candidates at the election will be getting asked these questions by lots of very angry people!
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Economists are fast becoming historians rather than forward thinking theorists. We are probably in now the first truly global recession. However we keep looking back for the answers where as we should be now trying to think outside the box.
And to answer the question about affecting the majority, unfortunately it does if only in the way our taxes are being spent and the way our national debt is spiralling out of control. Even those of us who are lucky to evade direct impact will still suffer the consequences of what now appears to be a government who lurch from one quick fix to the next. And they keep saddling us with even more bad / toxic debt, £10 billion here £480 million there.
I recall a quote saying “will the last person leaving please turn the lights off” it would appear that the government are about to do that for us………..
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#118
It's your 16-year-old whose ability to save for his old age is being flushed down the pan by this government who has the greatest right to having a say. We protect children, he's not far from being able to die for his country and vote for it: don't protect him too much.
My own daughter, a couple of years older, may be one of the pathfinders out of this mess: trained as an economist by a continental school, she may yet be able to plot a course when Rahere sees hope disappearing twice as fast as Crash hangs on.
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so are the professional advisers who are advising the government and the bust banks on these ever more complex schemes going to trouser tax payers money in fees - if so how much - and shouldn't we as tax payers and the ultimate customers on this have some say in how much we are prepared to pay them.
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Unfortunately Robert this piece does little to report the facts in a calm, accurate manner but does a lot to promote hysteria (witness many of the comments on this blog)
To everyone who misunderstands. This is an insurance scheme. The value of the assets insured sounds big but only a proportion of that figure will go bad. If the economy picks up in the next 12 months or so then hopefully the bad debts will not be too large. In an economic downturn a bank can usually expect a bad debt ratio of 1 - 2% of the loans it makes. Even allowing for the fact that these are very abnormal times I'd be surprised if the bad debt ratio here was more than 5%. Still a lot of money but NOT 500bn
In return for the insurance the government will get a significant insurance premium from the banks.
The banks will also benefit from a capital adequacy basis in terms of meeting regulatory requirements which will allow them to operate more normally again.
The scheme is a good idea (one of the few to emanate from this government)
However what is not a good idea is the government and the regulators to carry on in their jobs. A lot of bankers and other people perceived to be at fault have lost their jobs. But the government who is most at fault for creating the environment that allowed this situation to happen and the regulators who, seemingly, were focussed on ensuring boxes were ticked rather than on real risks are still in situ. Only Sir James Crosby seems to have shown any decency.
The regulatory regime needs an overhaul - with ONE regulator in charge of regulating the banks not three. The people responsible for getting it wrong need to leave.
And there needs to be a general election NOW.
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we've got stocks and bonds
who's got the gold and cash
your creditors know who are
and are setting you up for a fall
http://thestartingfive.files.wordpress.com/2008/01/slickricktrunk.jpg
and who's your hero
http://images.google.com/imgres?imgurl=http://thestartingfive.files.wordpress.com/2008/01/slickricktrunk.jpg&imgrefurl=http://thestartingfive.wordpress.com/2008/01/24/the-chuck-d-of-public-enemy-interview-part-ii-whos-your-hero
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Peston, if you have any integrity, or intellectual weight, read and comment on the following assessment of this financial crisis and our government's response:
http://globalresearch.ca/index.php?context=va&aid=12418
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Why can't we have an 'Asset Protection Scheme' for taxpayers, to protect us from the incompetent and disingenuous actions of this government?
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Gordon Brown has forbidden the banks to
give 100% mortgages.
I have forbidden my cat to eat bananas,
Now I should get a headline as well.
mtbloggins
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~17 John_from_Hendon.
You could be nearer the mark than you perhaps realise.
For sure there is a real possibility of increasing civil unrest and increased crime. Angry and hungry people don't traditionally regard compliance with the law as a high priority.
And, you are also right, that it isn't necessarily the case that the police or indeed the armed forces will always do what the politicians think they ought to do. (Hell, the banks didn't do what the politicians thought they would, so why so we presume the 'civil militia' will, once riots start?)
However, perhaps the real issue is, even if anyone had a real clue of how to get us out of any financial / economic hole of this complexity and magnitude, will HMG (or whoever) be able to do it before lawlessness imposes considerations that make the rescue impossible to achieve anyhow?
If law and order does break down then the academic nuances of how good or bad a regulator the FSA is or was, or whether this chap or that one should get a bonus, is all going to become pretty irrelevant compared to even a fairly moderate amount of rioting and looting within urban settings. And, perhaps more importantly, to the fear that will generate throughout society for personal safety and the protection of people's property. (Remembering that very few assets indeed are insured against riot or civil unrest).
And human anger is a dangerous thing. People like to feel that they have wreaked their revenge on those who have harmed or cheated them.
Perhaps any potential rescue of the banking and financial systems will have to factor in increased resources for security arrangements to protect bank branches and admin centres from rioters or arsonists or the like.
On a positive note though, employing lots of people within expanding private armies of security personnel, might have a positive effect on HMG's attempts to get people back into work.
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Surely this merits a General Election?
I grew up a conservative. I moved my thinking to Social Democracy. I am now so incensed by this outrage that has destroyed millions of innocent lives, I would happily join the communist party! Or, perhaps this is all a Soviet plot to bring down capitalism?
Nationalise the domestice banking system and throw the rest of RBS HBOS to the wolves.
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My bet is that on 1st April 2009 there will be a really sensible plan rolled out by Gordon and his mate Darling.
The markets will rally, savers will be delighted and banks (well . . . who knows?)
Then at five minutes to midday, Gordon will appear before the cameras in front of No.10 and say:
"April Fools!"
Until then, I anticipate the same old policy to destroy our economy.
No doubt he is eyeing the £1,000,000 prize Dan David prize for leadership, which was won by his friend Tony this year!
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So hands up then.... who voted Labour in the last GE then?
To all those that did I hope you're enjoying the multi-cultural, "diverse" and now bankrupt nation we've become.
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#125 MarkL64
Lehmann Bros debts were sold off at 10 cents on the dollar and the buyers are still making a loss on th deal.
Given such a track record, 5% seems a tad optimistic..........
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And news from an independant channel:
Congratulations, your tax money is paying for the bankers to eventually double their wages.
Because they still believe they are worth all that money, so it's no longer going to be a bonus.
http://www.independent.co.uk/news/business/news/8216we-need--a-pay-rise8217-bankers-demand-1630307.html
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UK PLC already mortgaged up to the hilt with Browns other scams(sorry schemes).....So another 500billion.....thats only about 8k per person on top of what we have already lent.Unbelievable-just where does he think he's going to get this kind of money ????????? The taxpayer coffer is not a bottomless pit as he seems to think.We are already broke and now he thinks he can add to the national debt just like that ?
Why should we carry the can for a bunch of useless senior bank executives and an inept government that failed,failed ,failed to regulate these carryings on ? And still they fail us.
The price for this lunacy is far beyond the UK GDP can take and would be for years to come.Wake up everyone.......Browns mob are leading us into the abyss.
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#105 Moraymint. Your thoughts are not new. This from the late 70´s:
"An everybodys doing
Just what theyre told to
An nobody wants
To go to jail!
All the powers in the hands
Of people rich enough to buy it
While we walk the street
Too chicken to even try it
Everybodys doing
Just what theyre told to
Nobody wants
To go to jail!
Are you taking over
Or are you taking orders?
Are you going backwards
Or are you going forwards?"
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@125 MarkL64
Yes, your point about misunderstanding is well made, however in 'insuring' the banks bad debts, the state absorbs the risks for them.
If this scheme goes ahead (and there is a case for it), it is no longer a banking crisis, it is adding to a situation about the solvency of the country and its ability to meet its liabilities. The market will certainly bet against our weak currency and everyone will become poorer as a result. We may even default.
This is what can happen when financial institutions are allowed, or encouraged to get bigger than national governments.
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Hi Robert,
I must comment on all the colourful language in the blogs! It makes for wonderful reading. I am laughing heartily - only because I feel like crying.
What stuns me is the continued inability of Gordon Brown to accept that he as chancellor and nuLabour have made any mistakes in the past 12 years. He has proved that he is a truly arrogant, pigheaded man who is totally out of touch with Britain.
One more year of his incompetence and deceit. Only one more year. This time, let us never forget how incompetent Labour is. Even the corrrupt, out-of-touch Tories under John Major were substantially better than the oxygen thieves that sit in power right now.
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#94 FriendlyCard.
You wrote, "Face it, the UK economy is going over Niagara in a busted barrel."
It's because people ARE facing it that they are becoming increasingly angry and concerned for the financial and social safety and welfare of themselves and those near and dear to them. Few people seem to be ignoring it.
But perhaps the real question is,
Given that the UK economy is going over Niagara in a busted barrel, then what - if anything - can individuals do to increase their chances of surviving it?
Perhaps the answer is 'absolutely nothing' - though personally I would prefer to take an stance of 'where there's life there's hope'.
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Perhaps Robert you could turn your gaze from banking to the insurance industry.....i fear there could be some big problems waiting to happen here! Are insurance companies "too big to fail"?
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This is total madness by this government. A bank is just a business and like other businesses they can fail and maybe it is about time some did. Please stop spending tax payers money on failed businesses.
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# 166 OldNick666
"What arrangements have you made to communicate when the government pulls the plug on the internet to prevent organising a riot?"
2009 could, I hope, be the year when ordinary guys like me (and you?) redress the balance of power from our incompetent, arrogant, self-serving political elite back to Joe Public. We could all take up the Met Police's kind offer of a "summer of rage on British streets".
Could this be the year of flashmob perhaps?
http://tinyurl.com/7qpml
However, I note that (mysteriously?) www.flashmob.co.uk doesn't work right now: keeps coming up with Page Load Error. Anybody know why this is?
It really is scary the sense I have right now of living in a kind of pseudo-dictatorial fascist state, with our Supreme Leader clinging to power at virtually any cost, oblivious to the views of his (spineless) cabinet colleagues, his (emasculated) parliamentary party, the (ineffectual) opposition, opinion polls and the blogosphere screaming for his head. Supreme Leader Brown steamrollers on with his 10-year tractor plans, spouting all sorts of fantastic, incomprehensible guff about global supremacy, global grand bargains and world-saving antics.
Meanwhile, I and my polite, quiet, professional, middle-class family face bankruptcy this year (really).
Er, which planet is this please?
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Mr Peston,
With your investigative skills, can you please find out and let us know how much of say RBS' and HBOS' losses were caused in the retail bank and how much in the investment banking arm? It is all well to call bankers irresponsible (which they have been) but to the extent of losses in the retail bank, perhaps some blame is attributable to the people who borrowed the money as well.
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This comment was removed because the moderators found it broke the House Rules.
*117 *
With respect to your idea of playing "Things Can Only Better",
May I suggest that now would be good time for The Who to re-release "Won't Get Fooled Again"........
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Is this Government or Disneyland because it smells distinctly of the kind of Mickey Mouse accounting that got us into this mess in the first place ?
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£1.5 trillion divided by the adult population (around 48 million) = c £32,000.
Divided by the number of workers in the UK (around 25 million) = c £60,000. Or to put it another way, if I was to create a new bank with £1.5 trillion in assets and only lend to people with good credit, or who actually needed cash (let's say 15 million people this year) that equates to £100,000 each person. You charge on average 1.5-5% interest (depending on the security) and you would make an absolute killing as well helping people who are currently stuck with their 23% Visa Card.
Let the Government create a GOOD BANK not a TOXIC BANK - so that the taxpayer's money is being loaned to people WHO WILL PAY IT BACK (I know it sounds so revolutionary) and then let the other banks concentrate, not on loaning out new money, but on getting the other money back - no more lending out until you have recovered the previous stash. That sounds really easy to me.
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104. So right. You precised the whole mess for me.
I am fifty next year, thinking about packing up work now, not much point working really. The government will support us all at the same level in our old age, there will not be anything left in the pensions pot, the currency will be on a par with the zloty and only those with property and land will be wealthy. No change there then.
We have been robbed and lied to.
Welcome to Socialist Heaven.
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125 ..... you sum it all up quite succinctly and accurately -
Without doubt the VERY BEST post on this whole subject.
I would urge everyone to read it rather than get inflamed by the fires of journalistic headlines.
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Robert, at what point do you intend to do a piece on the total destruction of the financial future of this counrty by this imbecile? He is putting the desire to ruin the future for Tory's above the well being of this country. He knows he will lose and is leaving chaos behind. Surely, you and your colleagues can see that? As a minimum he is just making it up as he goes along at worst it is a planned ruination of Britain PLC on a massive scale. COME ON SAY SOMETHING!!!!
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the government are obviously in a no win situation here
ethier nationalisation of lloyds and rbs which would result in complete restructuring and job losses in both banks which would obvisouly be unpopular.
or an asset insurance scheme which would levey a whole load of debt against the government balance sheet of which most of it is likely to turn sour.
personally id go for nationalisation because the government would control the banks destiny and assests rather than the banks who created the mess in the first place
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This comment was removed because the moderators found it broke the House Rules.
#9 - my sentiments exactly.
I can't find the words to express my absolute rage at that dreadful, dreadful little man. All those smug, self-satisfied years of telling us how fantastically prudent he was, end to boom and bust, blah blah blah... the incompetent, plasticine-headed buffoon.
He has presided over the ruin of my country for a generation. Shame on him.
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Can someone please tell me why British taxpayers should take the International losses of British registered banks that are PLC's?
The very least we should be doing is throwing the Dollar liabilities at the USA. After all RBS was quoted on the New York stock Exchange.
The current bunch of political parties could well find there is an alternative at the next election, it is not a forgone conclusion that it is a 2 and a half horse race.
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I read police are now speculating about and planning for civil unrest.
Many here on this blog were doing so about a year ago while others claimed there would be no recession and chided us for being 'doom merchants'
We are not selling doom we were preparing for a new future. Doom is going to be visited on those in deepest denial and the most ill prepared not those warning about the financial madness over the past decade. That most people have been in denial about their profligate greed says more about them than reality. Nothing wrong with being ordinary and following the herd. The herd is usually the most comfortable place to be.
Getting Northern Rock to make more dodgy loans and making £500 billion guarantees using paper money that will soon be worth a fraction of its current value will not deflect the unfolding crash. This is why the markets are continuing to fall as many who can are disinvesting and hoarding real assets. The last hatches are being battoned down. Many millions of westerners are about to realise that they are poor. History tells us that providing the poor remain contained they will be forgotton.
It may well be the case that in a year or 2 the people who have quietly begun to fill lockups and garages with canned food bought and paid for now might seen less than crazy. I am planning to buy 2000 cans of food since seeing another blogger talking about it. It makes perfect sense. For £1k-£2k today the need to worry about massive inflation down the road is reduced. A better hedge or investment does not exist right now.
The thing to look out for will be a spike in food prices that economists did not predict. After that time will be short. Then will be the age of the soup kitchen and proper depression.
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Hi Robert
Thanks for an interesting post.
I would like to question your last paragraph or two. Why do we want to protect the shareholders? If us taxpayers are going to effectively increase our equity stake why should it not be us who benefits if things improve? In any negotiation you play your hand not give it up.
I bear no ill to bank shareholders who have been misled by the bank's directors but fail to see why they should get a free lunch.
Another piece of news is disturbing in this context. I see that the Royal Mail pension fund is very underfunded. Has this not been under government control? Have not the board been paid very well? And yet the pension fund is in a parlous state.
This does not inspire faith in the Treasury when it deals on our behalf with the banks.
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I can’t help but think one of the reasons for not nationalising the banks seems to be some consideration for the shareholders.
I can see that we desperately need to save the financial infrastructure of the country (albeit needs a radical overhaul)
But there are any number of businesses going under where no consideration is given to shareholders.
Is there someone in particular going to lose out if the banks are nationalised?
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It's the same in my household:
The missus (Gov.) is going to give me (Econ.) the money to buy that nice, shiny new Harley Davidson I always wanted.
Even though she's printed all the money needed I'm still to repay it back to her over time. Just think, she'll be quite well off later. I wonder what she'll do with all that money?
But she also knows I could well be losing my job soon. So, not being stupid and making sure she's protecting what's hers, she's enforced, without agreeing around the family table, upon our children as well as me (GDP) the payback liability for this bike. This will be for years to come if I never a get a new job.
Never mind though, the neighbours will think we are successful if I can show off this new bike. And if it doesn't wok out then, knowing the missus as I do, she'll take off and find herself a nice sugar-daddy in the sun to look after her and I'll still have my bike somehow.
The children? Oh, they'll manage, after all, we had to!
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137 At 09:32am on 24 Feb 2009, armagediontimes :
+
sorry
it was
http://en.wikipedia.org/wiki/White_Riot
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Last words in your article, Robert: "economic nationalisation".
Tautology or wot?
Little wonder, then, that all these wizards are "struggling" to find the formula whereby the "nationalisation" is avoided whilst the "economic" is put in to place.
Words, words, words...
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The government effectively transfered the banks' bad debts to the public balance sheet when it decided not to let the banks fail. This was presumably an attempt to maintain confidence in British banking. The collapse in share prices show that this failed. They were also probably conned into believing that the banks would respond by restarting normal lending.
The best way to dispose of bad debts is by bankruptcy. The retail sections could have been bought from the administrator, recapitalised and quickly brought back into operation.
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The steamroller lumbers on and on and on and on.Still.......nothing happens.This government completely useless at sorting anything.Hasn't a clue,hasn't the will,hasn't the support...........hasn't the ability.They let us fester,more each day......... the game is up.
Brown,Darling,Mandelson,Smith,Straw.....you should alll hang your heads in shame.But you won't-you are all in complete denial and tout yourselves as this nations salvation.Nepotism begets fear.......thats why you all sing off the same hymn sheet.You are all spineless and watching over your own backs not to be seen singing a different tune.Protectionism ??? We already have it in our Cabinet and beyond.Nobody dare strike up a different tune.....that's what you've done for this country.You have spread fear among your peers,anger and disgust among the masses.You are all just in it for yourselves.....Yes indeed,power is blind.You protect it at all costs.........Losers.
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Trying to inflate another housing bubble is not the way out of this mess. Consent has not been given for this action. Once McBean has finally faced an election and been removed from office he should be put on trial.
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Is it true that Ireland (and some other Euro states) are on the verge of going bust, can't we buy them out instead, expand the old empire etc... a far wiser investment.
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TAXPAYERS UNITE!
THIS IS OUR MONEY!
ITS NATIONALISATION WITHOUT THE BENEFITS!
ENOUGH IS ENOUGH!
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To No. 127
"integrity or intellectual weight" ? ? No need for silly insulting remarks. We are all angry - but not at our splendid reporter, Mr Peston. Followed the link you gave. Nothing new about the use of "the language of deception". Around two and a half thousand years ago Thucydides wrote that the debasement of language was one of the first results of war - the changing of the meaning of words. We are at war today against the faceless
super rich who run Britain and the rest of the
world. One might consider Robert as a War Correspondent reporting daily from the
financial Front. His work is essential. Intelligence is a vital factor in any conflict .
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An employee came to see me yesterday - he is personally bankrupt but his mum is planning to give him some money to try and sort him out - however from the figures he discussed it won't be enough - just pouring insufficient money in won't stop him going under.
The solution would seem to be - declare himself bankrupt and use his mum's money afterwards to help start again - he's going to discuss with an IP.
Hmmmm - now if the RBS & Lloyds came to see me and not Gordy perhaps this model might.............................................
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The melting pot of vitriol is simmering.......so plain to see.Anger ? You betta believe it Brown.........asses leading masses.
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Astounding.
1 The Prime minister, as Chancellor presided over the creation of the requlatory environment that is at the heart of these issues. He is probably more than any other individual responsible for this almighty mess. As others have pointed out, a head of any other organisation so heavily involved in such an incredibly costly fiasco would have walked or been pushed long ago. Instead Mr Brown, his ministers and other apologists stand around blaming the recession for all our ills - when they are most responsible for creating the conditions that allowed it to develop so quickly.
2 If a private company were to go to a bank and say, "look, we have already lost billions, probably have liabilities running into the trillions, and don't quite know how it happened,
but just lend us all the money we want and we might be able to fix it all again.", they would rightly be shown the door. It is utter madness to throw good money after bad - and OUR money to boot.
Our political leaders have no "cujos". They could have grasped the nettle, and as Roosevelt did in the early Thirties, frozen the banking system for a short period, retained and heavily regulated the viable and useful parts of the banking system (retail banking and mortages) and let the rest go. This would have been extremely painful for some years, but at least consumers and businesses would have had some confidence that a line was being drawn under the liabilities the tax payer would assume. As it is, we are in the strange position of denying at most a few billion to keep hundreds of thousands off the dole, and yet throwing trillions at failed banks, keeping the traders in the style to which they have become accustomed.
If just a tenth of the amount we are betting on the banks was invested in useful businesses and public infrastructure there could be massive long term benefits to the community.
3 How can we trust our politicians to protect our financial interests, when theirs are so detached from most of the population? MP's, government ministers, MSP's, MEPS et al almost all have guaranteed and incredibly generous pension arrangements, under written by tax payers. If they were as affected by their decisions as most of the population, I think we would have seen some very different and difficult decisions made.
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I dont want to insure the bankers mistakes, That is what companies like AIG were for.
They took the risk now let them fail, and if it takes the rest of the worlds banks with them so be it, they also took the risk.
In fact if it takes down a raft of American banks that would be justice as they are the ones that packaged up this toxic waste in the first place.
The Banks are not fit for purpose, the government is not fit for purpose. Who really cares if the bankers leave if they dont get a bonus, 55 million people in this country couldnt give a fig. They were incompetant in the first place let them leave and try and get another job. I would be surprised if even McDonanlds would employ any of them to work the tills let alone do the accounts.
The sooner the IMF come knocking the better
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Robert, this is terrifying stuff. My god just nationalise the damn banks and be done with it. last night there was a thing on the box about the reluctance of the banks to support SMEs. Good people with sound businesses were being denied adequate funding and support from the banks. These banks are bankrupting the country. The Brown administration has to recognise this. I've thought for quite some time now that those banks that have messed-up should have gone to the wall. All of this new bail-out madness just convinces me of that. Lets get the money to where it's needed. Sure, support viable businesses that have been damaged by the banks but turn the tap off for the banks. If they're a special case then effectively they're not subject to the dictates of the market, and if we accept that, then they ought to be nationalised or subject to draconian regulation to stop them acting as they have done in the past.
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To No 129
You are so right. The Cats' Protection League
really should run a campaign to stop irresponsible cat owners allowing their pets to eat bananas. Bananas can play havoc with feline digestive systems, leading to all kinds of
unpleasant symptoms.
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To No.116
Carrier pigeons would be a good idea. They did splendid work in World war One.
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# 156 maxrelax
"It may well be the case that in a year or 2 the people who have quietly begun to fill lockups and garages with canned food bought and paid for now might seen less than crazy. I am planning to buy 2000 cans of food since seeing another blogger talking about it".
Maybe that blogger was me? I have spent the past 12 months stockpiling 3 months worth of food, fuel, (dare I say) ammunition and other essential household supplies, as well as purchasing a water purifier and other items from the list of 100 things that disappear first in a crisis:
http://tinyurl.com/2s33zf
I've been turning over my garden to fruit, veg and hens. I hold some cash and gold coins too, as well as some bartering goodies (a few cases of whisky).
This is not survivalist nonsense. Like I have life insurance, building insurance, contents insurance, car insurance and pet insurance ... this is my "When-Gordon's-Cunning-Plan-Goes-Horribly-Wrong Insurance".
It'll happen for the first time later this year, and will then come in ever-worsening waves as the unholy mess we're in now is exacerbated by the beginning of the end of mankind's era of cheap energy:
http://tinyurl.com/cnxmw3
http://tinyurl.com/d3ca6g
Best wishes to all the fervent optimists out there.
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Is getting things back to what they were really the best idea out there?
I seem to recall things going pop on the old trusted ways of easy lending and low interest rates when demand was high. With lower demand and large numbers fearing for job security I cant see any quick fixes but they keep waving the wand in hope.
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Can I interest anybody in insuring the contents of my dustbin? They are on my books at 100 billion. I am quite prepared to pay a hefty premium and I am quite prepared tp take the first ten per cent of any loss. Mine is a big dustbin, and, in my opinion is too big to be allowed to go bust.
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Beware the ides of March (15th) ! Could this date be significant ?
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For those who still think that the government is just providing a bit of insurance to banks which got things a bit wrong, just listen towhat the market is telling you.
The British GDP has, in international terms been devalued by some 30% since last summer. All those foreign investors who hold British debt denominated in Sterling have already lost by that amount. They are not happy.
Gordon and his banker chums are preparing to spend big time. How many Treasuries will be sold and and what rate to make them attractive?
The Americans are finished (for the same banking and political vices as the UK)
Without the Chinese and others buying the debt (that is how the world economy built the bubble) and so are we in UK plc.
Why should they support a failed fiat currency in the long term?
The world trade system has seized. Look at the Baltic Dry Index (the best index in the world if you need to know what is really going on). Shipping costs have plummetted- there are so few cargoes.
It is not about a few (1-2%) bad debts. The bubble deflation is ripping the world's economy to shreds.
What Gordon and pals could do is just get up and tell the British people what is going on. They have already withdrawn their refusal to implement controls for the city of london (regulation, taxhavens etc) publicly in Brussels on Sunday. I suggest they tell the UK in Parliament why this has to be done.
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morning me hearties; looks like we're shaping up for a week of doom, climaxing with RBS year-end loss figures and no doubt some other nasty surprises to come from the good ole USA and maybe Eastern Europe, Russia or the Far East
the global economy is certainly being mullered at the moment Robert
#127 newdoublethink I agree that's an interesting article; for those in a rush they could just skip to the last section but I tend to agree that our politicians (of both main parties) remain firmly in the pocket of the boys in the City
#129 mtbloggins speaking of cats, I have recently carried out a stress-test on my consultancy's ability to survive a full-blown depression and as a result have had no choice but to put my workforce (a lovely old cat) on reduced rations of 2 packs of catfood per day instead of 3; she's threatening to go to her union (UCAT) but what can I do if the govt only bails out banks?
despite such drastic measures, I must say to all of you going along with that policeman's predicition of summer riots:
come on and get real! a million+ of us marched against the Iraq invasion and lies about WMDs and the govt were quite easily able to simply ignore us; it would be good to see some direct protest but it will be smaller and mainly polite
the police are just talking up their overtime pay for the summer; like at Kingsnorth last year where their 'serious injuries' in dealing with 'dangerous' protestors turned out to be sunburn!
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This is a massive redistribution of wealth from the ordinary punter to the rich. Disgusting, outrageous, morally bankrupt, economically unsustainable- in a nut-shell: wrong.
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#148 hurstvanrooj wrote:
1.5 trillion divided by the adult population (around 48 million) = c32,000
Possibly I'm being unfair, but I assume you are referring to the 1.3 trillion total banking package. If so please refer to the excellent post #125, and perhaps my own modest contributions; or read Peston's New Capitalism, which is accessible from this page and one of the best summaries around.
This 1.3 trillion is NOT the cost of the banking package. It's not assets that could be used in other ways either. It's mainly guarantees/insurance.
One can only debate solutions to the current crisis if one makes an effort to understand it.
Some people (and I may be unfair to you personally, and I may have misunderstood your post, and I only chose it as an example) are making no effort to understand at all. Which is their right of course, but increases the probabilty of writing nonsense.
I think the media have played a pernicious role in this. Headlines with lots of zeroes make good copy.
Lest I'm misunderstood, we are in a mess and everyone is correct to see it. However, the solutions are technically complex. Banking is not like any other business.
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#172 potkettle wrote:
I dont want to insure the bankers mistakes, That is what companies like AIG were for. They took the risk now let them fail, and if it takes the rest of the worlds banks with them so be it, they also took the risk.
Would you like the world economy to collapse as well? Because it would.
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125. At 09:15am on 24 Feb 2009, MarkL64
I think you may have misunderstood what the purpose of this scheme is. The £500 billion is classed as Toxic Debt. Not because it could be at risk, no because it is at risk. The financial institutions would have moved it on if there were any chance at all. Once again I think you are either a total optimist or somewhat naive to think that this situation is going to turn around in twelve months. If this were the case many of the financial institutions would not have gone public in the first place. There is an element of battening down the hatches for this is going to e the long haul. And finally, I would like to end with a question. Why are none of the big insurers / reinsures beating down the door to take on this risk if the was only going to be a 5% conversion to junk? If I may offer a possible answer – you may have missed a 0 to the number. Just look at the projection for home repositions’ this incoming year alone and that can account for around nine to ten billion.
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I'm sure that this has been spotted before and I'm very late on it, but have been reading everywhere that hedge funds are taking short positions on the big insurers.
All the newspaper reports add that the news has been divulged because of recent regulations which mean that the funds have to divulge what they are doing.
Can't help but think that if all the hedge funds are shorting various stocks and are forced to divulge, surely it becomes a self-fulfilling prophecy?
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This comment was removed because the moderators found it broke the House Rules.
#71
I fear you are correct, although the troops will be brought home to quash civil unrest. Who'd want to invade us? We've nothing left worth taking.
"Rivers of Blood" as someone once said.
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@184
In a nutshell yes.
If you hadnt noticed it has already.
The sooner this goes to the wall and we start again with what you possess having a value (your life) the better.
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#125 MarkL64
There may be some truth in what you suggest, but there is not much about the detail of the deal. Is it not the case here that the government is attempting to apply the protection to only the debts that are likely to go bad? - both banks must have total liabilities much greater than the 250bn each.
As these are the debts the bankers view as likely to go bad (and hence think it is worth insuring) then the losses are going to greatly exceed the 1-2 or even 5% bad debt ratios that you quote.
I'm with #134 and #138 here.
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Surely now is the time the Conservatives or the LibDems should be tabling a vote of no confidence?
If there are any honest MPs left (and that is a first class oxymoron) they will vote according to their consciences and the electorate will know exactly who to blame if Browgabe and Zanulab keep power.
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http://www.bbc.co.uk/dna/blog69/comments/acs
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#174 possumpan et al
I can assure everyone that I would never feed my cat bananas, no matter how tough things get
#176 moraymint
where is your lock-up by the way? just curious
yours
A PIRATE
ps: I have stockpiled flags of convenience, cutlasses and posters of Keira Knightley for the coming insurrection
I assume that at the moment of the final capitulation of Anglo-American capitalism regular BBC programming will be interrupted by a message from Robert Peston who will use the secret code word to alert us regulars of the blog that it's time to hide in our allotment sheds
at the same time the Captain of our remaining serviceable Trident sub (the want that isn't dented) will open an envelope with a message from Peston; nobody knows what it says, not even Gordy
what do you mean you haven't been told the secret code word?
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Some interesting observations here, and it is indeed outrageous that ANY bank had paid even a single PENNY of any bonus to ANY employee.
However, (and I may be wrong) I'm not sure we can just guarantee depositors and let the banks fail quite so easily. There's ample evidence that the Chinese held a gun to Paulson's head when Fannie/Freddie were in trouble, and he was effectively FORCED to nationalize them, since so much of their debt was held abroad. Ditto for AIG which threatened the CDS system. Ultimately, these actions ensured that the dollar remained attractive for Asian central banks and investors.
A smaller version of this plays out with the pound. Several central banks keep up to 10% of their foreign reserves in sterling. The day the Asians abandon sterling will be the day the UK is totally finished, not able to import its next olive.
So Gordy CAN'T let the banks default on their foreign debts. So he's doing the lesser of two evils and all but nationalizing them, whilst at the same time letting woolies and LDV go to the wall, because he doesn't have to support them.
Also, the bank are not just ordinary private companies, they are also a reflection of the health of their customers, a hopelessly overborrowed corporate and home/personal loans sector which is insolvent. Its equally fair to ask a bankrupt borrower to lose a home or return the vacations he took for the last 5 years. Our banking system is also a REFLECTION of UK borrower and UK Plc, hence the support. Again, the payment of any bonus above 2k is ridiculous. Or for that matter, a salary above 20k.
Lastly, whilst I agree that indeed the middle and lower classes have been shafted AGAIN by the elite, when was it really any different? In fact, the Banking illusion allowed some from the bottom to get wealthy. Now, as we roll along, it will be more of same ol same ol with the boys at the top controlling the employment of the vast majority. No different to monarchy / feudalism, save the odd footballer or slumdog thrown in.
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#184 johnharris66
The world economy is collapsing - it makes no difference whether you, I or anyone else thinks this is a good idea.
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Crystal ball.
ALL savings confiscated by ZanuLab and Browgabe bonds given in exchange.
Low fixed interest rate and irredeemable.
Impossible?
War loan from 1914-18 anyone?
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news headlines
Obama will HALVE huge deficit by 2012 for the sake of future generations
Brown will HAVE huge deficit by 2012 for the sake of future generations
SHURELY SHOME MISHTAKE!
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There is one thing that's been niggling me through all this. My understanding is the building societies were run differently to the banks. They couldn't borrow money on the markets. They were run with tighter controls. So how is it that Nationwide etc need the same medicine as the banks. Why are they crying desperation as well?
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Robert
So, we have swapped their high quality assets for Treasury bills ( SLS and Discount Window), we have guaranteed their commercial paper/bonds ( CGS), we have capitalised them at inflated values ,we are buying their commercial paper which we guaranteed and bonds and asset backed securities ( APF). We have taken their liabilities, including foreign currency debt, onto our government balance sheets.Now, we are insuring their 'assets'- loans / debt instruments and all that.
Now comes the moment of truth : who is going to underwrite the risk ( 10 - 15 - 20% who knows?) in the so-called asset 'value'. By the look of it the directors dont. Stephanie says dont worry, the assets match the liabilities. Do they? These are our HMG's banks now and everything else is a figleaf to cover the embarassment and defend sterling from bearing the risk in its value.
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Why are there only losses on a deal? Someone sold these dodgy securities in the first place and must have made a mint! so where has the money gone. There is the same amount of money in the world as there was a year ago, just different people have their hands on it, whey is that never reported. Where has it all gone, and who has it all now.
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maxrelax wrote:
This is why they bought tens of thousands of tasers last year.
The authorities know what's coming, and what we're seeing is the slow burn before the anger and resent finally explodes onto the streets.
I currently have got about a couple of months supply of food, and hope to expand this over the next few weeks and months.
Unfortunately it prolly won't be enough.
The Greatest Depression is set to last years, unless World War 3 takes care of ending it for us.
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Various comments re valuation of toxic assets.
The problem is quantifying is since it is a variable. It depends on the market, and the economy.
Toxic assets appears to be unsellable to all intents and purposes. Several attempts and schemes appear to have been put forward but effectively failed.
Toxic assets (US) have been reported as being sold at 8 cents in the dollar in late summer 2008 to speculators who felt they could hold them long enouigh to gain a healthy return.
An 8 percent market valuation on toxic assets may be the extreme end of the scale but it nevertheless is a market valuation and a real one. It is a long way from the effective 95 percent somebody has suggested.
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# 183 johnharris66
The difficulty I have with all those that argue this-is-not-really-as-bad-as-the-headliner-writers-would-have-us-believe, relates primarily to the issue of 'contingent liabilities'.
OK, so all of these liabilities and insurances that we (taxpayers) are now having foisted upon us by our Supreme Leader are not cash-out, so to speak. However, the liabilities are contingent on risks that nobody has the faintest idea how to measure. The situation is so fraught with complexity, unkowns and downright fraud that the risks to the taxpayer are truly mind-boggling, verging on incomprehensible. No other transparent commercial transaction between two, law-abiding parties would proceed on this basis, ie without due diligence. We're being conned and stuffed at .
It's all very well some posters citing technical banking arguments for us all to keep our hair on. However, that old chestnut, common sense, is telling me that this mess is unprecedented, gargantuan and being tackled from a largely political angle ("OMG we must retain power ...") rather than in the best interests of the taxpayer. Fat chance of Gordon Brown ever taking the taxpayer's interests to heart; when did he last do that?
For these reasons, I shall continue to assume and plan for the worst, all the while treating every statement and action made by our political elite as being highly suspect at best, and downright b******t at worst.
As any fule kno, these guys are desparate to hang on to power-for-the-sake-of-power, their John Lewis List, second homes at our expense and gold-plated pensions. What's a few trillion quid's worth of unquantifiable contingent liabilities on the taxpayer, amongst (banking industry) friends?
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For those advocating full nationalisation how will it solve the problem?
NR has been fully nationlised and look at how the government has run that.
We are seeing more and more confidence in our economy being eroded with few people now willing to invest, and pension savers who are the main investors in equities being destroyed.
The £500b is an insurance policy not government cash out of the door to the banks, and is designed to restore confidence.
If it doesn't work (and it should providing the banks are not forced to lend recklessly) UK plc will be in a very sad state and the government will have to take on all the losses one way or another, as it would if it fully nationalised the banks.
If confidence deteriorates further (and headlines suggesting £500b is being given to the banks don't help), forget your pension savings and property values (and in millions of cases jobs), and forget domestic and foreign investment in equities, corporate bonds and government bonds - the UK will be regarded as a complete basket case, with very high inflation and running to the IMF.
Confidence will be zero, with nobody willing to spend anything and the government unable to finance public spending, as hyperinflation would build up, as the only way to finance this would be through printing money, rather than through tax revenues and "gilt" issues.
Let's hope sensible compromises are reached in the negotiations, and confidence begins to spread through the banks and into the wider economy.
And let's hope Mr Peston and other journalists report the scheme without their headline grabbing and often misleading sensationalism.
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You say that the taxpayer will end up supporting the banking system to the tune of "£1.3 trillion, more-or-less equivalent to the entire annual output of the British economy or GDP."
Figures like this make no sense to the average person - rather like the situation we find ourselves in. We need a forensic explanation of exactly how this happened.
We are told that it was caused by the collapse of the 'sub-prime market' in the US. Oh, I see, that explains everything.
How was it possible for the people charged with responsibility with the world's finances to have ruined them so dramatically?
Could you imagine the NHS being so badly managed that it ended up killing more patients that it cured?
The bankers, like the politicians, all say "It wasn't me, Guv - we didn't see it coming."
In any other profession they would be joining the dole queues - if not in prison.
But the fat cats are still fat, having creamed off millions in pay, bonuses and shares.
As Terry Thomas would say, "What a shower!" Never mind all the wheeling and dealing currently going on between them and the politicians at the moment, unless the public sees these crooks held to account, the banking system will never be the same again.
And I can't help adding that the Home Secretary's claim for more than £100,000 of tax payer's money for a 'second home' seems part of the malaise and corruption that binds politicians and bankers together. The ethos seems to be 'feather your own nest' and make platitudes about public service,
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I'm also stockpiling Credit Default Swaps paperwork in a local garage; a friend of mine who does contract cleaning of RBS offices in the City brings me a skip-load every week
they will burn quite nicely and there is no danger whatsoever that anyone will steal them
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#184/#190 - effectively I think what we would be talking about is the end of money? or certainly a semi colon and then starting again.
Would that be a good or bad thing - discuss?
Here in UK plc it would be quite bad short term as we would starve coz we have nothing to barter and not enough food to feed ourselves - but once enough of us have starved to death the population would start to look after itself and we are still an island so not very attractive to invade us - dark ages here we come - now where's my suit of armour?
Suddenly all the public sector workers would be freed from their desks and paperwork and tasked with knocking down offices and turning back into fields for farming - we would all be alive again - freed from our desks and paperwork forever - I'm getting quite excited at the prospect!
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176 - Did you also stockpile before the "Millenium Bug"?
I'm sure our government has solid plans in place to look after the population if the worst should happen.
Please read the above and try not to laugh.
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RBS via Natwest are threatening to pull our company's overdraft in, not because we are not paying the interest but because we "are looking less viable". And who's fault is that? Our small and medium sized customers have no money available because of the banks, we are only at our limit because we are owed money by people in trouble, plus of course losses on bad debts. All caused by the banks.
IF Golden Clown were to give each of our employees their own part of the taxpayer's contribution to RBS, which we would prefer, we could pay off the overdraft and would still be quids in! Why continue to give banks money to spend on themselves? They screwed up, yet job losses are relatively miniscule, while the private sector has lost 100's of thousands of jobs.
It's like buying coal to keep a steam train running when no-one can afford the fares to ride on it! Give the public the cost of the fares and the train owner can buy his own coal from the proceeds.
And I don't mean 'give' the public a 2.3% VAT cut while increasing fuel duty, actually increasing costs and thus prices as the duty cannot be claimed back in the way that the VAT was.
Who are these people advising Clown?
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199. Inspired. Bravo.
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Why cant this blog be moderated reactively like most other reputable equvelents
Is it because they dont want any real dialogue on here which cant happen due to the intrminable delay in approval
PS RP still cant bring himself to lay any blame on labour directly can he? the price hes paying for the odd scoop at the expense of the damage to his reputation and integrity isnt worth paying IMHO
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192. sosraboc
'Surely now is the time the Conservatives or the LibDems should be tabling a vote of no confidence?'
Why. Oppositions do not win elections, incumbents lose them. Conservatives gain from the meltdown of Labours China Crisis as do LibDems. Labour are playing how low can you go and cannot see any other avenue. They now expect to lose the GE and nobody will step forward there to take over from Brown to cop it at the GE. Cons and LibDem waiting for nearer to economic upswing to agitate. Will make no immediate difference anyway situation demands responses whoever is in charge and money limited. Main activity has to be to trim public sector expenditure and too early.
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Robert,
From the the greatly increased anger in this and other recent blogs are we at or approaching a tipping point?
The public are rejecting the notion that the taxpayer can reflate this economy by taking on ever more public debt.
Paraphrasing Keynes 'market remain irrational for longer periods than anybody can remain solvent'.
Given the parlous state of UK plc's fantasy finances going into this depressoin it is utterly foolish and irresponsible for Brown to presume he can become the first successful 'Canute'.
The sooner QE is assigned to the wastebin and the unending unaffordable initiatives stop gushing from this financial incompetent government the sooner the country can rebalance itself to an economy that makes the finance sector its slave rather than its cruel and greedy master.
Actual work has to be prioritised and rewarded and the 'skim' and 'scam' that the unregulated finance industry has to be truly coralled and financially disincentivied the better.
The UK public has to told the stark but true facts of life before weare all sunk by the government's continued thrall of the financiers and the self serving accountants who have constructed the house of gossamer whilst enriching themseves with the money of the working masses.
The UK needs to take its financial bitter medicine before it really is too late.
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At 06:37am on 24 Feb 2009, frglee wrote:
"Yeah,well no doubt the shareholders will be whingeing again how the government is 'stealing' all their money. It's a damn shame that shareholders cannot be made liable for the huge debts incurred by these banks,instead the public now have to clean up their mess at the astonishing cost of half a trillion pounds."
Please remember that many of the funds invested in the likes of the major UK banks included pension funds. The huge drop in the value of these pension funds (partly reflecting the wider market drop) are now hurting ordinary people. Many of the people hurt are not financially particularly sophisticated and/or have little control of their pension fund investment strategies.
Such people are differnt to the number of ordinary people who invested with the banks directly because they provided good returns during the "bubble". In those cases, the due diligence issue is more relevant.
But, besides these distinctions, the people one ought to blame and I believe should be prosecuted are the leading bankers who knowingly presided over the irresponsible lending. This is no more than criminal negligence in my mind. Also, certain members of the regulatory services should be up for judicial inquiry into their conduct.
Unfortunately, this is never going to happen.
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#181 Somaili pirate - The anti war demonstrations were just that - demonstrations.
When people realise that they are about to be permanently dispossessed they will be less restrained. Think coal miners in 84, but with the numbers several orders of magnitude higher.
Going to an English jail maybe preferable to sleeping on an English pavement.
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To No 194
I'm afraid we have a problem. The POCRTCL - aka the Protection Of Cats' Right To Choose
League is rumoured to be sharpening its claws in defense of its ancient rights. Its membership doesn't like bananas, many have never seen a banana and wouldn't recognise it as a banana if they did, but it intends to fight to its last whisker to defend its freedom of choice. It demands free access to bananas for all felines. Oh dear !
Guess we're in for many ripped sofa cushions, and clawmarks on our wallpaper.
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#71 Bob Rocket
Get a grip man you are panicking. There is not one shred of evidence pointing to the scenario you paint.
Even if we end up with a mere 70% of able bodied adults in work life will go on.
The bills ARE payable. Here's how;
-Reduce public sector budget by 50% for three years
-Impose 100% taxes on critical purchases like imported fuel and imported food for three years
-Print 1 Trillion pounds exactly and not one penny more.
-Reduce the minimum wage to 2 pounds an hour
-Do deals with debtors eg. accept oil wells, fisheries, farms etc in lieu of cash wherever possible
What I describe is what Thatcher may have termed the foul tasting medicine.
We would need some form of emergency interim government to push through these measures.....but they would work
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So let me get this straight. Because people can’t afford to repay their loans to the banks, Mr Brown comes up with the idea of underwriting these loans to enable the banks to lend more money, which in turn, customers will not be able to repay.
Sounds like one of Baldric’s cunning plans to me!
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LALALALALALA
nothing is wrong, all this bad "stuff" will go away
LALALALALALA
meanwhile in the real world,
Im quite prepared to admit that i might be very stupid, but i dont think this government knows what they are doing.
Our country lurches from one crisis to another, with no one at the helm. We are up against a lee shore and Captain Brown has bought us no sea room, he just stands by the leeward hances shouting
"trust me boys, i can sail through this"
well i say its every man for himself.
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#210 DavidJWest
"Please read the above and try not to laugh"
I tried, honestly, but I failed.
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"I'm a great believer in the people. If given the truth, they can be depended upon to meet any national crisis.
The great point is to bring them the facts"
Abraham Lincoln
Over to you Gordon, Alistair and Yvette....
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A further thought as to reasons for protest.
Where I live (in the EU) it is very hard to become a national of the country - but it is not so hard to obtain the right to live and work.
Jobs advertised here all say "preference given to nationals."
I wonder why that might be? and I wonder why the UK is seemingly unable to follow the same policy. Could it be that your government despises you?
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One more point I forgot to put on my list (above).
SEQUESTRATE 25% OF ALL UK. PENSION FUNDS IF NEEDS BE.....these funds are sufficiently well stocked to enable a recapitalisation of our key industries
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Gun powder...no problem.
Treason...well, we have that in abundance.
Now...to sort the plot.
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There are probably about 400 comments on this blog a day - say c 300 people - it is definitely true that the anger, rage, frustration and resentment can be seen growing in the comments made.
Are 300 people a valid sample to base the general feeling in the country. No - I suspect that most posters by the quality of their posts are at the upper end of the Knowledge profile - so we are not a fair sample.
However the reality is that if a fair sample was taken the anger, rage etc would actually IMO be even higher - this is going to be a summer of violence - if I was a banker or a politician I would be looking to change jobs - of course what will happen is that the banks will be attacked but the counter clerks will be under threat whilst the money men 'work from home' - I just can't see the current set of circumstances ending well.
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I'm with 29 & 30, this is outrageous!
Public unrest soon is a VERY REAL possibility Mr Peston.
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Some of the comments on this thread are just plain bananas in pyjamas. The current projection of 3Million unemployed is 10 percent unemployment, actually not much higher than 1997. All the media coverage is focused on big indebted business problems. If the problems were less localised and layoffs smaller case by case there would not be all the uproar. The big businesses are good at shouting for a handout. They are not exactly objective in their comments. For individuals there is the welfare system, nobody is left starving or on the street. As for food. If it becomes more valuable then you will see more than the current couple of percent working on the land. Then you can write about the Cauliflower Wars.
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For those that think that Gordon Brown is harming the future of our children by excessive borrowing, maybe that is the least of their problems.
Not only are we going to run out of cheap oil shortly, making getting about prohibitively expensive but there was someone on the Today programme yesterday predicting that the world population would fall from nearly 7 billion to 1 billion by the end of the century (due to global warming).
Fortunately he admitted that he could be wrong.
He said the hot countries were the ones in trouble but the survivors would be in the cold countries and fertile countries like Canada, New Zealand and the UK. So maybe the UK is not such a bad place to be.
So Gordon making a pig's ear of the economy maybe just a minor historical detail and nothing to get too worked up about.
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I hope this comes out correctly being as I'm doing this link thing for the first time, sorry if the lay out is a bit gone wrong.
While doing a bit of research on Deutsche Börse to find out what kind of organisation was funding this prestigious photo art prize I discovered they owned
Clearstream formally Cedel and read about Ernest Backes and his collaboration with Denis Roberts on the book Révélation$
You just cant get away from banks, banking and a grubby dirty feeling.
Id love to see a good interview with this Ernest Backes .
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Gordon,
I've got 35,000 (in a basket of currencies) ready to go to the stock market (and support those pensions whose value you are currently destroying by taking on the gambling debts of the zombies) the day after you stop pussy-footing and nationalise the viable books (not off-balance sheet losses) of the said zombies and bring over the decent management from the virtuous banks and British Industry.
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215 G
Because if it is left too much longer it will be too late for the country.
A vile pox ridden plague on all thier houses.
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AT least the queen is fine!
http://news.sky.com/skynews/Home/UK-News/Queen-Elizabeth-The-Queen-Mother-Memorial-Unveiled-By-Queen-Close-To-Londons-Mall/Article/200902415228261?lpos=UK_News_Carousel_Region_1&lid=ARTICLE_15228261_Queen_Elizabeth_The_Queen_Mother%3A_Memorial_Unveiled_By_Queen_Close_To_Londons_Mall
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Apologies
215 should read 214 .
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re #125
Whilst a 5% bad debts allowance might be satisfactory in the current climate when viewing a range of investments it all depends what investments Lloyds & RBS will put in to the scheme. If say they were property and related then the losses could be much higher. If securitised assets e.g credit swaps then even higher......
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I don’t profess to know much of the financial mess we are in, nor do I profess about politics. But how can current events in this banking/political climate continue to carry the over riding anger and generic mistrust I have read on this blog?
Will this lead to the masses taking to the streets?
What will a change in leadership do to help?
And if a total crash is on the horizon, should I go out and buy tinned food and shot gun cartridges?
Please advise...
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116. At 08:44am on 24 Feb 2009, OldNick666 wrote:
'when the government pulls the plug on the internet'
Much harder to do than you imagine, the internet was designed to be resilient to attack from any source.
Moraymint, don't forget to store seeds as well, kept in a cool dry dark place they should be good for a few years.
Re. my post #71, ok I may have been a bit hysterical, it was 2:00am and I had just finished an 11 hour shift at work.
Gordon, Ally and co. are only following (to the letter) what the IMF has been saying for months (if only so that he will get a sympathetic hearing if we have to go cap in hand).
Unfortunately the IMF is running out of ideas, the latest bulletins just prescribe more of the same (confidence, bank lending, public spending, fiscal easing) whilst acknowledging that this may damage national economies.
The public lack confidence and so won't spend
The banks lack confidence and so won't lend to each other or anybody else
Nobody is spending or lending, only pulling up the drawbridges
A massive program of public works, if it had been started in November, might have worked, but now people will see it as makework, devoid of actual value and diversionary.
It will no longer inspire confidence.
All the western economies are facing the same problems.
The only way to get the wheels of production turning again (and so inspire real confidence) is to put the country on a war footing.
Massive nationalisation of key industries, massive re-armament, massive food production, huge numbers of (currently idle) workers pressed into the service of the nation.
There is a need to focus on getting out of this mess and whilst nero is fiddling rome is burning.
Putting the UK on a war footing would also stimulate the rest of the western economies as they can't sit idly by and watch us tool up.
Two years down the line we can stand down the war machine and enjoy the resulting peace dividend whilst our glorious leaders bask in the glow after having truly saved the world.
You know it makes sense, the alternative is to watch our industries die a slow death followed in the end by our total financial collapse, civil war and poverty for generations.
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Do it Gordon, declare a state of National Emergency, stuff the election, give the economy the only fiscal stimulus it understands
Post 71
That's so outrageous it is probably about right. I think Gordon will still be in power beyond the next election. If not him, then Mandelson. This lot really are evil.
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#30 - What bonuses?
Where I work, 99% of those who would have been eligible for a bonus under the old rules played no part in the decisions that affected our current predicament.
SInce then, it transpires that minimal bonuses will be paid (most of those who had exceeded all their targets in good faith have been told they will not get a bonus).
Those that do get a bonus will receive a smaller amount, spread over several years, paid in subordinated debt with the potential for it to be taken away again in the future.
Not complaining about the lack of bonus but given the measures that have been taken, it would be nice if people could move on to the next "issue" rather than continuing to bleat on about this one.
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No. 227 Grimupnorth
I'm not so sure... comments on other blogs i've flicked through generally have plenty of smug homeowners with lower mortgages...also BTL landlords who have gotten rich impoverishing the young population generally
let's not forget the benefit system which WILL vote Labour and are quite removed from the problems of high finance...add deflation and they are content
SO, a swathe of middle england, a swathe of poor england, and the property enthusiasts are quite happy .. not to mention the vast public sector
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panic ye not, spokesman within the Bank of England, says this morning that this recession is no where as bad as the recessions of the 70's and 80's...he obviously took his brown happy pills today!
so, move along, nothing to see...
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Wouldn't it be cheaper to guarantee deposits and let the banks go to the wall?
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The march date should be budget day then.
Take back the power from gordo + co and give it back to the hard working people of this country.
Perhaps the votes of swanley were correct to vote the way they did then ?
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# 210 DavidJWest
Nope, I wasn't bothered by that Millenium Bug mularkey; always struck me as a highly unlikely route to Armageddon.
Indeed, I go about my current 'Armageddon Insurance' activities described at Post # 176 above in a light-hearted fashion; it's quite good fun preparing for the precipitous end of Gordon Brown's regime (I shall relish that moment), along with the impact of a soon-to-hit-us stratospheric increase in energy costs as we start to come out the other side of this mess, whilst simultaneously running out of sufficient supplies of easily-extractable fossil fuels.
Rocketing energy costs will hit global food supplies first, diminshing them savagely, pushing up prices and no doubt causing all sorts of argy bargy at Waitrose.
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#237 uk-jay
Lets look at the options:
£1,000 in bank earning you next to nothing and being lent out to bad risks in order to save the government. If there is high inflation you will lose much of this money's worth. If there is a crisis and people rioting you may not want to leave your home. If the government needs to they may devalue our currency - ie steal some of your money. If the government needs to they may invent a tax on this money. If they need to they may close all banks and suspend the stockmarket.
Or you can spend £1,000 on cans of food that may be much more expensive in the near future. If things turn out well you can still eat them and cancel your some of your trips to the supermarkets. What have you lost.
You do the maths.
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I watched an interview with Theo Paphitis about his panorama programme regarding the plight of small businesses in the current climate.
He blames the banks entirely for the fact that 100-120 businesses are going bust every week and normally I would just stick the boot in here like everyone else..however
The one interview I saw was with a guy in some undisclosed line of business who had to go bankrupt because the banks halved his overdraft and refused to lend him any more money. He explained that turnover and profitability were both up by 30 percent or so in the previous twelve months and it was unbelievable that the banks had pulled the plug on him. Theo just nodded sagely and reiterated the word 'profit' over and over again - but hang on a minute..if this business was so wonderful how come they could only survive by borrowing way beyond their means? Profitability and turnover may well have been up by 30 percent in the last twelve months but they obviously still couldn't cover their costs.
Banks aren't charities (anymore), I'm sorry but I have no time for business models in the current climate that rely completely on external funding to have any chance of success. Whatever happened to sustainable growth? Reinvesting profits into the company to expand without prostituting yourself to financial institutions is the way forward, and bugger shareholder value and analysts forecasts, at least you will survive any downturn better than the losers on Panorama last night..
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We cannot avoid bearing the loss (and once the problems had started, we could not possibly have done so). We owned the banks (via shares, pensions etc.) even before they were (part) nationalised. If they fail we all pay with a recesion (via loss of job or paying taxes to cover benefits of those who have). The question is not whether taxpayers bear the cost but how should that happen? Any way that restarts lending wil be better than any that will not; it will reduce the total cost we bear. If the insurance works the payout will be (relatively) low.
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Mr Pest'on
Cheery as always.
Have you ever considered taking a lead role in a West End Play?
You would make an ideal drama queen.
Wince Cable could be another candidate.
PS, your sources. ( perhaps mis-spelt) but would that be tomato or Brown ?
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#238 robrocket
Crikey, you make me feel like an optimist and that is saying something!!
I am slowly heading towards the conclusion that I can not do anything about this and it will unfold like a pre-determined slow motion car crash no matter what I do.
I would better serve society by building the modern equivalent of an ark somewhere in brazil, stocked not with animals of every kind but with scientists, doctors, and engineers of all kinds, far away from the grasping hands of bankers, lawyers and politicians.
All I need now is about £1 billion to get the ball rolling while money can still actually be exchanged for useful goods and services.
Anybody out there think it may be a sound investment?
Jericoa
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217 armagediontimes
'When people realise that they are about to be permanently dispossessed they will be less restrained. Think coal miners in 84, but with the numbers several orders of magnitude higher.
Going to an English jail maybe preferable to sleeping on an English pavement.'
'About to be permanemtly dispossessed.' Well they are the types to cause the problem. Dispossessed people are not likely to be the problem it is those who facing a loss of comfort who will agitate. eg Ireland recently. The psychology of dispossession is such that the focus is on a very basic level - food and cover. Look at natural disasters and the behaviour there. People retreat and become numb. So it is comfortable but fearful people who will be the problem, with the usual bunch of misfit anarchists. Amazing how many people complain that benefits are far too generous but do not want to actually be a claimant. I mean if benefits are so attractive what is the problem. But if demonstrating is ineffective because the problem cannot be solved it too will petter away as per Russia pre the wall falling.
I dont see your pavement bit. It may be a fear to some but accomodation has to be provided by statute. There are still the same number of people and the same number of properties. And Local Gvnmt has the right to seize unoccupied property and rent it out to solve housing problems. That could be interesting.
The main social problem as I see it is if you disrupt severely the link between hard work and reward and there is no motivation. Disrupt severely the link between investment at a personal level and return eg investing in University, but no job outcome, and the numbers drop. What is the point. You commented about the number of UK drunks the other day. I would suggest it is because they can see no future, just a form of limbo. It is the same work - reward failure mechanism.
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#183johnharris66
Maybe you did misunderstand, I was not saying "Oh, look, the Government's got a trillion quid laying around, why not give it to the people and not the greedy bankers!"
I was pointing out that if we started a bank at zero it would take a lot of people all rushing to borrow a lot of money to equal the 1.5 trillion. I'm also asking why do we have to create a toxic bank so that bad debt is off-loaded onto the taxpayer.
Why can't the taxpayer gurantee new loans from a new bank and let RBS concentrate on recouping it's investments or just close down.
For example:
If I was to create a new bank today with zero assets called vanroojTrading with the aim of loaning out money only to those with a high credit rating, with no defaults, with a 10% deposit towards house purchases, who had saved a minimum of £150 per month for 12 months BACKED BY GOVERNMENT ASSURANCES that all the money loaned would be returned.
Would I look like a good investment? Better than RBS? Better than HBOS?
Do you understand my comment now?
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#240 and # 30 Re "What bonuses?"
There were NEVER bonuses for most of the bank employees. Take someone on £30K + 10% "bonus" for hitting targets-->£33K.
It was really £33K with a deduction of £3K for not hitting them.
For contractual and practical reasons they pretended it was a bonus...but it never was.
Since both schemes have identical outcomes, you can think of it either way. If you are the sort of dummy who likes cheap spin you will complain about bonuses.
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How bad are bad debts - is there any chance of these bad debts being repaid?
Are these bad debts unsecured?
Would it not be better to buy the assets, thereby nationalising the assets (rather than the debts) and letting the banks sort themsevles out - let market forces dictate.
And the nationalised assets can then be sold on to or back to banking instituations as and when the instituations are solid enough.
Or is that too simple?
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First time poster - be gentle with me...
Maybe, just maybe, these calamitous events will be looked back upon, in a few years time, as a tipping point.
The talk of civil unrest, is just that, .......talk.....and should remain that way.
We live in a democracy, and we have a general election looming.
Now just suppose for a minute, that the current triumvirate of political parties that we can sensibly choose from to lead us into an uncertain future, were joined by a fourth political force.
With a manifesto containing a promise to prosecute for fraud, wherever possible - bankers, company chairman, politicians et al , who drove this gravy train (multiple Ponzi schemes packaged up as sound investment packages ) off the rails - I would think that current opinion polls would be shaken up, somewhat.
If there was a promise to investigate collusion between bankers and politicians leading to this financial meltdown, I would imagine that support for this new party, would be even greater.
We, the populace, have the destiny of this great country, within our own hands.
Direct action is needed, but within the democratic framework.......no civil unrest whatsoever, but direct action that would have more than a squeak of succeeding.....
what say you all ?????????????
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I see Zimbabwe politicians are attempting to sell Congolese gold in Switzerland.
Compare the Mugabe sale with the Brown sale. Who tried to get the better price?
Brown, much worse than Mugabe.
You heard it here first.
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The system as a whole has failed due to the corruption and complicity that exists between nearly all banks and governments. Money is debt and this particular government will make each of us work longer and harder to pay for their sponsors debt.
Re banks I was so fed up with the behaviour of most Banks in the UK that I decided to switch all of my accounts to the Co-op about 6 years ago. Not only do they have an ethical banking policy but it would now appear that they are the only one with a sustainable banking policy. Investing money in greener technologies, UK call centres, saying no to arms dealers and bigots has certainly seen them prosper for all the right reasons. Time for everyone to join the party.....
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233 sosraboc
Well I would like to see some movement because I cannot see the incumbents admitting they were wrong which I think is needed to allow a different route. But a pox on the lot or not I believe we are due to have to wait till the GE. I did wonder if the unexplained fireball in Texas was Obamas budget funds burning. Have there been reports of fireballs in the UK.
I do not think the establishment understand the social impact it has to take establishment structure professionals out of the system and dump them. It is dangerous to the establishment because you end up with a large number of disaffected knowledgeable people who know whats been going on and how the system works. It can have quite hilarious consquences because the disaffected know which buttons to press and the establishments position is only protected by disinformation. It will all go in the mix and change the state of things in the next few years.
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~181 somali_pirate_SP500
Sadly, I agree with armageddiontimes at ~217.
We're not talking about well-intentioned, mainly middle-class people, mostly polite types, demonstrating to make a political point. What will happen is that more and more, increasingly impoverished and desperate people, will seek to take out their anger, frustration and desperation on someone / something.
Despite 'civil intelligence', electronic surveillance and the like, we know historically that it's hard to predict (and therefore quickly move resources to) actual flashpoints. Which leaves the 'establishment' forces being reactive rather than proactive.
Even if you drag in the army, just how much peace-keeping resources has the UK got in the face of anarchy and the breakdown of law and order? (Yes, I can remember the army 'squaddies' being sworn as Special Constables, given a police uniform and brought in to front line at the Wapping dispute).
And, even if a percentage of perpetrators are caught, who's going to pay for the police/army costs, the treatment of casualties and to put the repair the damages causes to banks, shops, cars, utilities, etc., etc.
Look back at events like Toxteth (July 1981) and Brixton (April 1981) - and they were, in some respects, fairly well contained, as the perpetrators were mainly only from one section of the communities.
Insurances virtually never pay out for losses caused by riot or civil unrest. (Check you own car / house insurance policy small print because you or yours could be a victim of such unrest if it happens in your neck of the woods).
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247 Very true citygambler. The only thing that counts is Net Profit. Turnover, Gross Profits etc are all very pretty but can be easily manipulated and do not give a true picture.
Only one thing does - Net Profit - what's left after all the bills have been paid, the business re-stocked and you've had your drawings.
I was in the pub game years ago as a tenant licensee. The amount who go bust because they can't understand the difference between Gross and Net profit is unbelievable.
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#220
Tony Robinson (Baldric) is/was a member of the Labour Party NEC so perhaps your thought is not so risible as you might imagine,
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194 - the secret code word is SCOOP
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#247 CityGambler
I emailed Panorama after the Theo Paphitis circus to complain it was pathetic spin . It was also grossly misleading in places. Would you think of contacting them to complain as well please? The BBC needs to be told; it is becoming a very dumbed down organisation. Much of the business/economic reporting, with some obvious exceptons, is at a tabloid level.
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247 citygambler
I did not see the programme but I cannot but agree your comment. There seems to be a desire for automatic access to debt which I cannot understand. There was as similar type of programme with a Lrd Digby, ex trade minster I believe, who seem to think that the solution was endless taxpayer money given to businesses until there is a upturn. As though the production of unwanted goods should continue as some form of ritual. It is the over indebtedness of business which has lead to their vulnerbility. There cannot be an ever expanding taxpayer wallet. He also went on about the JobCentre Plus and it seemed completely beyond him that whatever money you put into a recruitment agency did not make more jobs available in the private sector.
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#249 A little unfair I think.
Vince is top class.
Robert P suffers only because he sounds like LLyod Grossman on valium
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re #247
You could have the situation where you are profitability providing services/products to the big corporates. However trying to get them to pay is like extracting blood out of stone / sense out of Crash Brown etc and an overdraft might be required to keep the business with sufficient cashflow..... Loans would allow business expansion - e.g. buying new stock and then selling at a good profit in the coming months....
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250 - you should see the list of injections required before going to Brazil!! scary
Not mentioning the carbon footprint, each country could do its own ark with the candidates selected by other countries counterpart.
They could use that period to put into place the new world order, decide about equitable distribution of the earth resources, plans to work together on the solution, eg we are running out of water we know about do de-salinisation plants so let's build them etc, do something fair about medicine and its distribution etc etc
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253 13thMan
Try using a dictionary and looking up the word bonus. If a small group of people collude to use a word differently to the English Language but also expect that private deviation to be covered by the English Language and English Law, I have no sympathy. It appears entirely in keeping with the Banking sector that it appears to think it can make its own private law and interpretation.
So
bonus :
- unexpected extra: an extra unexpected advantage
- extra money: an amount of money given in addition to normal pay, especially as a reward
- premium paid to somebody: an extra dividend or premium paid to the purchaser, holder, promoter, or vendor of a stock
Encarta World English Dictionary, all rights reserved etc etc.
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Back to the government and VAT - and lacking anywhere else to raise visibility on the subject! When the PM announced his "mini budget to stimulate the economy" I seem to remember that part of the claim was to benefit small businesses. This claim has also been repeated in other measure announced in the pipeline this week. As a small business owner I was horrified to find that far from the VAT changes helping they have actually directly COST my business money. I use the Flat Rate VAT scheme and this scheme was not reduced by 2% as in the main VAT reducion. The impact of this on like for like numbers is that my VAT bill has INCREASED post the "reduction". Is this another case of complete incompetance by this government or just another cynical PR exercise?
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Much as I think Brown is an incompetent fool, and as much as I think banks are teh parasites of our Economy - the reality is none of these participants are doing anything other than their jobs.
The Government creates regulation
The banks circumvent regulation
The Government creates more regulation
The Banks circumvent the regulation
It matters not how much regulation GB creates - the banks will - and HAVE TO find a way round it - otherwise they will be destroyed by the 'laws of the jungle' and the 'laws of free market competition'.
When will you all get it? Brown keeps telling you it will be different this time - just like Norman Lamont said it would be different after the last debacle.
Just think about it for a moment.
Mortgage market principles.
In order for banks to grow they must find NEW people to lend to. Exiting borrowers switching are no good unless they extend their mortgage.
The first time buyers disappeared about 3 years ago, as they couldn't keep up with the risng prices.
The banks had to keep finding new markets - so they found ways to lend to people who weren't FTB's nor existing mortgage holders.
This is where the NINJA mortgage came in. The British banks found their new market by lending to people 'who would not have been eligible for a loan before' - neatly done via a packaged CDO or SIV.
Viola - there you have it. In order to sustain constant growth you need to have new markets appearing all the time.
The only way to stop the recession is to find a new market to sell all this 'over production' we have created in the west.
Sadly, there do not seem to be any markets left. Previously we have been saved by Asian markets, South American markets and other emerging markets.
Unfortunately all these markets have already been exploited - and are now suffering the same problems we are - OVERPRODUCTION.
DON'T BLAME THE BANKS
DON'T BLAME THE REGULATOR
DON'T BLAME GORDON
BLAME THE SYSTEM WE ALL SEEM TO BE HAPPY WITH.
Everyone who blames anything but the system is like a Doctor who says that your sneezing is the problem that needs curing - and not the cold / flu infection that CAUSES IT.
Sadly whilst I and others have worked this out - you lot are all still fighting over 'which sneeze was worst'.
COMPLETELY WASTING YOUR TIME AND ENGAGING IN THE SAME DIS-INFORMATION THAT THE GOVERNMENT IS SENDING OUT.
There are no ill winds, there is no global financial problem - it's simple overproduction, too many goods have been produced and the market is flooded.
I know it must be hard to accept the fact that your whole Economic life has been based on a load of codswallop - but I had to face it and deal with it and so should the rest of you.
ANYONE WHO BELIEVES THEY CAN 'WIN' THE GAME OF CAPITALISM IS SADLY MISTAKEN.
Classic king with no clothes - no-one wants to believe it because it will dawn on them that the whole economic growth system will have to change to put it right and that would mean a serious loss for all those idiot capitalists.
Keep your eyes closed Capitalist fools and you will walk into a police state as the Government finds it harder and harder to rebuild the Economy and is forced to take punitive action to maintain control.
YOU HAVE BEEN WARNED.
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266. afroylnt
''You could have the situation where you are profitability providing services/products to the big corporates.''
If you need finance because a corporate will not pay its bill in a sensible time then regretably you are not in control of your business. And the tendancy is for the abuse of not paying in a sensible timescale to steadily expand, 150 days are being requested by some corporates according to previous posts. If you cannot control your business why should a bank be expected to fund the instability.
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So, commit £500bn of our money to free up £30-40bn of their money. On what planet does that make sense? Digging their friends out of a hole using our money is more like it, and the figures can only reflect the true extent of anticipated bad loans and credit defaults. And that for just two institutions apparently. Well, at least we found out somehow. Now we've some idea just had badly the world is screwed, could someone please switch off the lights when it all gets closed down?
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re 271#
I think you are being over optimistic wanting every company to be in complete control of every part of its business ; some do have this but many do not.... its just reality.
Why should'nt small business supply the big corporates ? Someone such as this still has some control over their business but not as much control over when they will get paid... A small business may supply many corporates... so the effect could be multiplied..
The plus point with solvent big corporates is that they will pay - they are just slow most of the time.. but such a small business therefore represents a good risk for a bank to supply an overdaft etc...
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I read in the Telegraph today that Brown and Darling are querying the debt market where all the banks have their bonds
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4789111/Creditors-fear-new-losses-on-Northern-Rock-bonds.html
What effect could that have on all the UK banks if no one will buy the bonds?
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270 writingsonthewall
Sorry do not agree your outcome. Trade continues just at a lower level, values migrate, demand changes. You assume the players remain the same, they do not they react. The definition of consumption shifts. Jobs become less easy to obtain possibly. Incomes may drop for some. The word oversupply is applicable to mainstream mature product groups but innovation continues it always has. If you wish to attach yourself to goods in oversupply then you suffer when the sector suffers. The problem is employment for many comes from big business and government, and both those entities on the whole like mature products which inevitably move closer to oversupply with time. You are seeing a clearout.
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I agree with jolo13 and others, guarantee the retail deposits and let the rest go to the wall. We simply cannot afford to guarantee bonds and overseas depositors. Johnharris66 thinks this may trigger another great depression, but this may just be the lesser of two evils.
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#268 Glanafan
If the two have the same outcomes in all circumstances they are the same to me.
Try reading what you wrote....
" unexpected".
The so called "bonuses" are not enexpected...so, by the definition you quote, cannot be "bonuses".
-----"It appears entirely in keeping with the Banking sector that it appears to think it can make its own private law and interpretation."
Why does my comment tell you what "the banking sector...appears to think". I'm not the banking sector, nor was I ever a member.
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273 afroylnt
''re 271#
I think you are being over optimistic wanting every company to be in complete control of every part of its business ; some do have this but many do not.... its just reality.''
No sorry, you are not facing the fact that if you let a customer control your business then your business model is wrong and the outcome, however slow or painful it may be is inevitable.
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#254 The debts are the assets. Hopefully most of them are not bad.
Isn't the problem nobody is sure which ones are? That is why it is insurance. I hope!
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Re 278#
''re 271#
So in effect you are saying only big corporates can sell to big corporates ? Sorry but that's a very poor way of running industry ; Big corporates can often work more effectively when they purchase goods and services from small companies that can often be more reactive, offer more innovative services/products and sometimes also at lower cost...
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I've seen the phrase 'sustainable growth' and the word 'growth' a couple of times on recent posts (sorry for not quoting the references).
Once the cow has run out of milk, it's no good sending the milking maid into the shed with a bucket.
Sustainable growth? How? With what? With the credit that neither homebuyers or businesses can actually get hold of? With the toxic assets that no-one will touch with a barge-pole? With a banking industry that is untrusted and highly discredited?
There's not enough to go around, let alone to go around and around and around, quarter after quarter, year after year. The well has run dry and no amount of winching buckets up and down will give water to drink.
And that is why people are being made homeless through repossessions and jobless through lay-offs and why businesses are going bust.
Unless of course they meant sustainable growth in their gardens or allotments, rather than economically speaking, perhaps.
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#255 I'll be gentle with you.
I'm a member/was of many purple groups if you know what I mean to do with the family courts and I can tell you this. Having had 13 years on the recieving end of what they call justice, something that GB+co seem to be very proud of. But many know that it has cost the lifes of many children,parents and extended family and is total corrupt but is run in the image and ideals supported by NU-labour
WE DO NOT LIVE IN A DEMOCRACY.
IT IS KNOW A POLICE STATE must like USSR was.
This is the the time for a General Election to kick GB out BUT he will not give it to us.
This is a tipping point where the country MUST HAVE its saw where we go from here,
not just a single unelected man ?
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#229 glanafon. If current projections are for 3 million unemployed, then how do you explain that some 8 million people of working age are currently not working - i.e. they are unemployed?
Whilst the definition of "unemployed" will not be the same as the definition of "bonus" the recourse to a dictionary and the application of the same principles of reason will lead to an equally accurate defintion.
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#225 iceland-express wrote:
SEQUESTRATE 25% OF ALL UK. PENSION FUNDS IF NEEDS BE.....these funds are sufficiently well stocked to enable a recapitalisation of our key industries
I find this post really depressing. Pension funds are a store of value for millions of ordinary workers, especially those who don't have a final salary pension fund.
And, by the way, Gordon took an additional 5 billion per year in tax from these funds (50-60 billion since Labour were in office).
Our key industries don't, generally, need recapitalisation; they need increased demand or working capital.
Proposing to take money from pension funds is a true child of the age of irresponsibility.
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280. afroylnt
No. I am saying if you do not have control of your business then whether you like it of not then the control lies elsewhere. If the control lies elswhere then by definition you are fooling yourself if you think you have control. You have all the disadvantages of being a subsiduary and none of the advantages. The customers attitude, often wrong, is somebody else will fill your shoes if you disappear. Why do you think sectors do not return after problems in a recession, it is because the support of the supply chain is irrecoverably damaged. The abusive customer, if it survives, has no suppliers that trust it.
There are couple of classic cases of not being in control of your business -
1 Over 40 percent of your output is taken by a single customer or cartel of customers. You cannot afford to lose them. They are your profit on your whole activity. if they walk you fold in most cases.
2 The customer base is a relatively few large customers who dictate payment terms so you are in fact supplying financial services as well as product or services. The customer base strips money out of their operation to prop up their share value, to the extent that they cannot put it back in, ever. Therefore in cases of increased competition, credit squeeze, downturn, whatever then they demand longer and longer payment periods.
In both of the above cases the only justification for further trade with these abusive cuistomers is more trade, continuation. It is a road to ruin. I have seen it time and time again, with large businesses as well as small - and had to shut up shop with a business under continual demand but ever extending payment timescale. On one phone somebody asking for services, on the other the accounts dept saying they cannot pay yet. Blue chip companies FTSE 100, paying high dividends to keep shareholders happy at the same time.
You want to play this game or work for a business playing this game - up to you. The fact is your customer is controlling your business not you. This is why we now retail direct via the internet, to cut these idiots out.
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#276 ozymandias wrote:
I agree with jolo13 and others, guarantee the retail deposits and let the rest go to the wall. We simply cannot afford to guarantee bonds and overseas depositors. Johnharris66 thinks this may trigger another great depression, but this may just be the lesser of two evils.
Yes, from your name we may agree that we will look to Gordon's work and despair.
I disagree with your post, but at least we have moved on and recognise that there are costs and advantages of default.
I would like to argue, simply, that:
a) defaulting the UK banking sector is equivalent to defaulting all of the UK's external liabilities
b) if any major economy defaults the international banking system and international trade will collapse. Domestic economies will continue, but perhaps,say, at 1890 levels
c) international organisations (UN, IMF,OECD, etc) will have no soverign political backing
d) the probability of war increases
I am no supporter of Gordon Brown (far from it). But we have to try to first save and then reform the existing world order as the alternative is far, far, worse.
If the world economy collapses retail deposits would be close to worthless anyway.
Finally, remember that the UK has just as many external assets as liabilities. We would suffer if other countries followed the course you suggest. Indeed as a major trading nation we would suffer more.
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GORDON IF THERE IS ANY JUSTICE IN THE WORLD YOU WILL END UP HOMELESS AND PENNYLESS ON THE STREETS.
Well one can dream, we truly are now in scorched earth policy territory. Gormless Gordon the Feckless knows this is the only way the Labour Party will ever be elected again. Come the next election the Tories will form the next Government if you think what Thatcher had to do to get the country back on its feet it will pale into comparison with what Cameron has got facing him. For starters at least 25% of the civil servant will have to go both in National and local government no more trivial posts such as officer for counting white lines et al. Public services will have to be slashed as there is no money to pay for them. Taxes will have to go up to pay of a small part of Gordy's debt and the big one is tackling the gold plated pension of the civil servant again both national and local. This will lead to the inevitable year long strikes that Gordy et al have been wetting their trousers about and did not tackle. With immediate effect all workers should be brought into line on their pensions why should we who have saved hard to provide for our retirement loose our security and still have to pay for that of a bunch of feckless layabouts who spend most of their days doing nowt. So it will be back to Robinson and his mate telling us the Tories are at it again they don't care about people its not that they don't care they will have no alternative.
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283. armagediontimes
Many of the non registered unemployed are those who find it uncomfortable to be JSA claimants. This is because they do not want to comply with the prescriptive demands of being on the JSA books. Attending workshops, CV writing, voluntary work, work experience etc. pointless, by and lareg retraining programmes. This is usually because they have sufficient reserves, or a income such as an early pension, that they do not get any cash benefit payment so why bother. They are the result of a relatively affluent society. If they did not have access to money they would sign up for JSA. If they have sufficient funds in what way are they a problem.
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I wonder when the government is going to start getting ME out of debt?
Ironically, if I didn't have to pay tax, all my student debt would have been paid off by now. Instead, I pay tax to support the banks, who then come after me for my debt, interest and charges.
How EXACTLY is that fair?
Shouldn't they owe ME?
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#252 hurstvanrooj
Firstly, thank you for not taking my comments to your original post personally. I'm sure we both wanted to debate the issues.
The problem I raise, and I've raised it in various forms all day, is that we (the UK, though the same principle applies to other countries) are still responsible for the liabilities of RBS, HBOS, etc. However, we dice and slice the assets of these banks the liabilities remain. The UK Government is the ultimate guarantor of these liabilities.
There is the possibility of the UK defaulting, but, as I keep arguing, to do so would wreck the world economy.
I'm not an academic economist. I'm sure someone more qualified would make these points better than I can.
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#287 Johnharris66
I don't quite agree with your premise (a), defaulting the UK banking sector is only that, it does not mean a default on sovereign debt. It is a default of private debt. Yes most banks around the world will collapse and yes there will be a collapse of international trade, but the alternative is that the earnings and taxes of future generations, for 30 years or more, will disappear overseas, not benefitting the UK in any way, whereas the converse does not happen. We can start again with new banks and a level playing field, initially in a domestic market, but everyone else is in the same boat and we can work our way back up. If we guarantee overseas liabilities I see no way of doing that.
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re 105 moraymint and 122 CMills010
I agree 100% with post 105... and there is no need to say anymore... so I won't#
Re 122--Agree as well about the Economists unable to sort it out have reverted to sorting things out that happened 80 years ago;
They want to engender confidence...?? Then put interest rates up to 4% and pay some of the money out to people's savings (they don't have to put mortgage rates up for anyone with --well anyone can think of the parameters for being left off) ----- disrupting the pattern has to be sudden and unexpected
That is how you create confidence by getting ahead of the curve...not by wailing away blaming the Americans, the world, and whoever else springs to mind....
And write on the Downing Street Blackboard :
"You do not create any confidence by prefacing everything with; " The main task we have is simply to create confidence, ....."
It's like saying 'If you were happy you WOULDN'T BE sad'.... it just kind of makes you even sadder in a funny way..
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#288 glanafon: I hope you are not adopting the argumentative style of a previous combatant!!
I did not say they were a problem - I said they are unemployed.
To be serious: They are not doing anything productive, (even though they might want to) they are simply consuming their own wealth.
In any event this is only one group. You have something like 2.8 million people on the disability register. Some of them are genuinly disabled, some of them suffer from painful fingernails, or maybe their eyelsahes hurt.
I know people who have been thrown out of work - people that have always worked, and people that want to work. They go down to the government man and he spends hours trying to find a way to classify them as disabled.
They don´t consider themselves disabled, but the government man offers more money if they will agree that they are disabled. What is a person to do?
How long before some loony wants to introduce a pogrom against disabled people, because they´ve noticed that a lot of disabled people don´t seem to have any kind of disability?
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277 13thMan wrote:
....''Try reading what you wrote....
" unexpected".
The so called "bonuses" are not enexpected...so, by the definition you quote, cannot be "bonuses"....
So in what way does this change what I have written. If the item in question is not a bonus then why call it a bonus. Why not call a zebra a lollipop. If it is called a bonus then expect it to meet the definition and variability of a bonus.
I have never suggested you work in the banking sector. Where have I done that? The fact remains that the banking sector seems to think it can have its own private interpretaion of the English language. This fine as long as it remains within the enclosure of the banking sector. It causes problems with the public at large because they use the English Language. In what way is the fault of the public.
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Re #285
Your points are well made.
The only defence is to have a very clear agreeement to every good or service that a small comany supplies and get agreement/aceptance from the Corporate in writing. Also to agree payment terms even if they are long but make them adhere to the agreed terms.
I agree it is riskier for a bank to give a loan to a comany that has one very dominant player within its customers. In this case I would expect the loan to maybe start at a higher APR but then to be reduced iff the company could demonstrate it had lessened its reliance on one/two very large customers....
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#291 Ozymandias
Thanks for your thoughtful post. I've read a few articles about the UK defaulting on its banking liabilities. The consensus was that it would be a total disaster both for the UK and the world economy, but yes, there's always the possibility that the consensus is wrong.
I suspect that if any serious political party proposed default then it would become impossible for the UK to fund its deficit in the market. And as governments implicitly stand behind their banks I'm not sure whether classifying debt as sovereign or private (banking sector) debt would make much difference.
I also repeat the point that we have billions of external assets.
Certain South American countries have defaulted in the past, but they were not central to the world economy.
We are in crisis, but there are many degrees of crisis. We shouldn't reach for extreme solutions yet.
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295.afroylnt
What is needed is statute ensuring that invoices are paid within 30 days of presenting, which I understand is the case on most of the continent. That then destroys the entire industry that has built up of insurance companies giving 80 percent payment policies at the cost of the supplier. In the face of a lack of financial instrument being available then the whole outward drift collapses and corprates have to behave sensibly. At present the funding mechanism stretches and stretches until dramatic failure. In its worst case it is simply used as a mechanism for a failing corporate to trade onwards. There was a lobby after the 90s recession to correct the matter and ministers did agree the point but never enacted anything.
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Under the circumstances, propping up bad banks is a terrible idea.
Terribly expensive too. What they should do is create a GOOD bank. A national commercial arm of the Bank of England. Then all the bad banks can fail without too much damage to the economy. Loans and savings can be transferred to the national institution.
However, it may be too late.
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What would David Craig say about "Taxpayers to insure £500bn of bank assets"?
He claimed in his book "Squandered" (Apr 2008) that Gordon Brown wasted over one trillion pounds of our money.
Health £269bn, education £185bn, police/public order £80bn, welfare £343bn, others £350bn. Total of about £1229bn over 10 years which doubles in 6 month with the banking handouts.
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alexandercurzon how many times have i told you to not go on the computer until you have done all your homework!
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293 armagediontimes
''I hope you are not adopting the argumentative style of a previous combatant!!''
Ha Ha Ha. Yes you are on the top of my list to pick an argument with. No Thanks. I was happy to see your last arguement BTW. I got modd for something, can't quite see what.
I am trying to do something else on the internet so comments tend to just be typed. So any mis statement apologies. I take your point about stats. The main area to question them is fact within the definiton of working. Eg Part time work, Working families Tax credit etc. BTW your contacts may have been recommended to go the incapacity benefit route but it is under review. If you say the imbalance is growing between wealth creaters and the rest then I would agree. If things get really bad it is simple for us - we leave and take the interent business with us. Our offspring have been encouraged, not forced I might add, to take trades and professions in demand, both here and abroad. So they are not as vulnerable as some.
There can only be one long term outcome, that those wanting to live off the taxpayer can expect a smaller cake to cut up with a Marie Antionette saying what is the problem. Increasing numbers of unemployed will be asked to contribute efforts to improve the community. A big sueeze is coming.
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299 puzzling
I thought David Craig was a singer. Is that the answer - make the bankers and HMG sing. A dawn chorus, or should that be sing for your supper. Or song song blue ready to welcome Dave Cameroon.
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There just seems to be a lot of people overly interested in fiddling while Rome burns.
And it IS going to burn.
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Robert!
When will you advise your blogging public that you have a short position on UK Gov bonds??
You are the most pessimistic one side peddle merchant I have come across.
Surely this 500bn is if all the debt held actually went sour and not just a proportion of it? If this is the case surely forget the banks the Western World is in trouble.
Also where is your comment about the potential downturn of thee industrial giants in Germany or France or are they immune?
Tell the whole picture not one side.......that of your own view which may not be shared by every economist.
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Banks are spivs with one useful function, looking after our money, and lots of useless ones. Probably Johnharris66 is right in that letting them go to the wall is worse for the UK than bailing them out, but I definitely think that its what is good for the UK which is important, not whats good for anyone else. he makes the comment "governments implicitly stand behind their banks". Probably true now, but when did it come about? And how far does it extend? Private equity vehicles? Hedge funds? Somewhere it has to stop.
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SOME DIRE PREDICTIONS FOR 2009/2010 according Dr.M.D Weiss
Stock market crash & shutdown;
Corporate bankruptcies;
Megabank failures;
Nationwide epidemic of small and medium-sized bank failures;
Insurance failures;
An epidemic of defaults by thousands of cities;
Credit market deep freeze;
Government bond collapse;
George Soros said the financial system has effectively disintegrated, with the turbulence more severe than during the Great Depression and with the decline comparable to the fall of the Soviet Union, while ...
Paul Volcker said he could not remember any time, even in the Great Depression, when things went down so fast and quite so uniformly around the world...
We are going to witness a swift plunge in stocks to about 5000 on the Dow, 500 on the S&P 500 and 900 on the Nasdaq ... or lower. ("Stocks to fall AT LEAST another 40%")!!!
A chain reaction of Chapter 11 filings in the US where Federal takeovers will have repercussions globally, including not only General Motors and Chrysler, but also Ann Taylor, Best Buy, Jet Blue, Macy's, Saks Fifth Avenue, Sears, Toys "R" Us, U.S. Airways and even giants like Ford or General Electric.
Bankruptcies or nationalization not only of Citigroup and Bank of America, but also JPMorgan Chase and HSBC
A virtual shutdown in all debt markets except U.S. Treasuries. An avalanche of selling — and virtually no buyers — for corporate bonds, commercial paper, asset-backed securities, municipal bonds and all forms of bank loans...
A steep decline in the price of medium-and long-term government securities, as the U.S. Treasury bids aggressively for scarce funds to finance a ballooning budget deficit...
The final piece of the puzzle is the drying up of lending between China and the US eventually leading to a conspiratorial military strike in the Asiatic region by a nuclear bomb leading to China, Taiwan, North/South Korea and Japan being drawn into a nightmarish apocalyptic scenario of Biblical proportions.
It is from here the full onslaught of WORLD WAR 3 will truly begin where a 100 million people will die in one swoop...
Hard to fathom...
So were the last 2 major world wars and its aftermath...
The whole world is in a state of unrest...
It is only a matter of time!!!
It's time for a rethink!!!
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from the "it cant get any worse department"....
Alistair Darling has offered to drop a £480 million interest bill charged to Lloyds on taxpayer loans in exchange for a pledge by the bank to increase its lending by billions of pounds.
GB's big idea...lets fuel a housing boom...it worked last time didnt it?
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OK sure thing we need a banking system - well at least if we, the UK, is to function as a modern market economy. But the question is the Government doing the right thing by writing a blank cheque and saddling taxpayers of the future with a huge debt. Wouldn't it be somewhat cheaper and better to sack all senior management of banks ( those that were around before mid 2008 ).
After all banking is NOT rocket science - or at least it shouldn't be ( perhaps that has been the problem Senior management has thought it was - and thought they had developed a system to win in the big casino of the various equity and debt markets ).
I think the Government should nationalise the banks fully (they are not far from doing this already). I think existing private shareholders should receive somewhere between zero and a very small amount for their shares - OK they may not be the same shareholder as those who owned the banks when they got into such trouble but shareholders risk their money that is the nature of being a shareholder and if they failed to adequately supervise the management it is their own fault.
and while they should guarantee savings (deposits) all UK resident deposits up to a certain level (???) they should serious consider defaulting on large wholesale loans / funds held. The alternative is to saddle taxpayers for huge amounts.
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More alarmist nonsense today Robert.......yawn
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#306 - Your analysis of forthcoming economic events is reasonable. Most of what will unfold economically is probably unstoppable.
The large scale violence that you prophesy is also likely - but this is not inevitable and there is still time to prevent economic meltdown from morphing into a wider meltdown.
However the incumbent system owners and system managers most likely prefer total destruction than to cede their power - but there is no power that can match the power of the people.
Will the people exercise their power before it is too late?
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304. At 5:32pm on 24 Feb 2009, N17Forever wrote:
'forget the banks the Western World is in trouble'
yep, that's about right, but it's ok cuz the east is hot on our heels
Have a look at the IMF website http://www.imf.org
'they're the wrong trousers grommit, and they have gone wrong'
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To POSTER alexanderscurzonsmum
Like the humour.Better than the sour
jibes from the GORDY HUGGERS!!
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It just gets better!
Don't worry, bonus payments are safe.
225% bonus my arse.
It's all very well bailing out the banks, but what about the wider economy? What plans for manufacturing? what plans to help people losing jobs all over the place? what plans to reduce home repos?
I don't mean another meeting between quangos and agencies either, I mean real help for real people in a real mess, because one thing is certain, they ain't gonna get it from the banks.
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# 306 dreamstaragents
Good Lord! Time to start erecting the Anderson Shelter in my garden?
Seriously though, I think most folk are largely oblivious to what now lies ahead. My own view is that this mess has hardly begun to unfold, despite many commentators and politicians making soothing noises about the whole thing being over by Christmas.
Where have we heard that before?
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Why do we allow Gordon Brown and Alistari Darling to squander our hard earned income supporting banks that will not support us?
As a small businessman - running a small business and not Ronnie Corbet diminutive size - I am absolutely and categorically opposed to the government's recent actions in its forlorn attempt to deal with both a genuine credit crisis and also a deep lack of confidence in Gordon Brown and Alistair Darling. Neither man has shown himself to be proficient in managing our economy and neither has had the honour or decency to accept that the course of actions taken thus far have been too late, too woolly and indecisive. Because of this dilatory stance I cannot condone paying further taxes to support banks that refuse to support the businesses that are generating the income and subsequent taxes that are being squandered on obvious widespread financial mismanagement.
I do not wish to see any payments that I make to the HMRC being used for these wasteful purposes. If the British public fundamentally disagrees with the decisions taken by Government (particularly in light of Jack Straw's statement that the Government does not feel it needs to abide by its own Freedom of Information Act) surely can we decide to NOT contribute to such irresponsible decisions.
Gordon Brown has lost the confidence of the British public and of British business, I believe that a resounding note of no confidence and the withholding our our hard earned income is right and proper to establish that this Government has proven itself unfit to govern.
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Without my commenting on any company specifically, I would like to ask a couple of pertinent questions which are worthy of Robert Peston's excellent input, if he would be so kind, please.
1) Is it not worth revisiting the precise wording of the so called 'apologies' certain companies made to the Treasury Select Commitee? One executive said he was very sorry for 'the turn of events'. That would appear to deny any fault then? After all, just about the whole country is sorry for 'the turn of events', but one might reasonably suspect that most of us had rather less input into creating those events.
2) Is there potential in some cases for legal proceedings to be brought against certain companies/individuals before the Treasury Commitee, for either maladministration or shear negligence, or was that likely to be the reasoning behind the aforementioned closely worded 'apologies' in the first place?
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keep up the good work Pesto. Why were you prerecorded on Today program this morning - are you getting censored now???
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This comment was removed because the moderators found it broke the House Rules.
Sir Robert .....
History as shown in times of econmic downturn or should i say [COLLAPSE] that the people unite. That time in history is now coming upon us, And when it does only then will the people who caused this mess will be held accountable.
But make no mistake they will answer for what they did to our nation.
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As the Managing Director of an SME I have to ask "what's in it for me?"
Currently we're supporting the banks, but the banks aren't supporting us - so what's the point? Why should I pay my taxes to support the banks when they have no intention of supporting SMEs?
Wouldn't it be more constructive to withold a proportion of our taxes - "opt out" of the bank support, and use the money to support our companies? And taking this further - what proportion of our taxes is financing the morally corrupt government and european ministers who stretch / bend the expenses rules to feather their nests? Why should we contribute to this nest egg?
SMEs have power as a combined force - it's time we used this power. Forget the CBI or the FSB - they have no teeth; they exist to create jobs for wannabes. So, SME's - how do we get together to use our strength? How do we drag the banks and the government into the real world, and make them support us, rather than issue endless empty promise after endless empty promise?
The change has to start somewhere - why not here?
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This is a historic time.
When Fannie May, Freddie Mac and most of the western banks go broke, that is not a recession or a credit crunch or a downturn....that is the collapse of capitalism.
The system that has served us for so long has been hi-jacked by "fast-buck" merchants, on a wave of bank-fuelled property speculation.
But it need not be the end of the world.
If govs recognise the situation quickly, and get their heads together, they may be able to get out of this by re-capitilisation.
But I feel this needs currency exchange rates to be fixed for a while.
We must respect the currency of eastern bloc countries and fix a sensible rate.
Currency speculators should be taken out of the situation.
Re-capitalisation at say 20% of GDP per annum for 5 or 10 years across the board may work, not forgetting the international debt problems to come.
Of course countries that have been sensible and cautious will be greatly enriched, and so they should be.
After that agreement, mortgage lending rules will have to remain tight forever.
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I thought i was going nuts, when we first heard about the credit crunch, way back all those many moons ago.
I sat my son down on my knee, and i said to him
"son behold the end of the world"
Well not in so many words, but it does have that apocalyptic feeling, please dont misunderstand me, i dont believe in aliens, i never watched the X files through choice and 09/11 was not an inside job.
I believe in what i can touch.
I have a background in the study of history, and one of the first things you learn is small things lead to BIG things very quickly. I believe this probably has similarities to Chaos theory.
Anyway, sorry im rambling, my point is this i have been thinking about £5 notes and wallpaper. Now a couple of folks on this post have been considering buying canned goods for the possible revolution, I say you are not thinking big enough. For myself im going to buy alcohol and fags they make excellent trade goods and hey if armaggedon doesnt come i can have one hell of a party!
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#215. relevanceman wrote:
"Given the parlous state of UK plc's fantasy finances going into this depressoin it is utterly foolish and irresponsible for Brown to presume he can become the first successful 'Canute'. "
#318. oldgroucho - removed by moderators.
Oh dear, moderators - are you really that sensitive?
I was only stating the obvious - comrade Braun is NOT successfull, nor were his predecesors.
You (BBC - Braun Broadcasting Corp) surely don't believe that the correct spelling "CNUT" is more offensive than paying Jonathan Woss £6m per year to insult retired respected actors. What have we come to?
I though that aversion to purience ended with Johnny Rotten 30 years ago.
Old grouch
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#323 oldgrouch
Correction - Not 'purience' - I meant to say 'coarse language'
Or do you object to my slur on Brown's record, ability and competance? - seems I'm in company with about 99% of other posters on these blogs.
I think the Beeb are also in danger of acting like "Canute(s)"- you can't hold back the tide forever.
OG
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I had a Halifax Credit Card. I have now closed the account and cut up the card. I ran up a bill of over £2000 very easily. Instead of saying enough is enough the company just kept raising my credit limit in the end I could have spent up to £5000 on my card. This makes it very easy for people to just spend and spend and I think is the reason you see so many in debt of over £30,000 and more. I have now extended my bank loan and cleared the credit card and cut it up.
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What's more worrying than the dangerous incompetance of HMG is the fact that NO ONE ANYHERE in public positions - least of all in parliament are asking serious questions which might stand a chance of leading to criminal convictions or at the least lead to resignations.
Google Gary Ackerman and his grilling of the SEC a few weeks ago or watch:
http://www.youtube.com/watch?v=ElsL9u6tRNU
or Google Ron Paul.
http://www.youtube.com/watch?v=PoxlzPGIPt4
I'm no lover of the US, but least there are some independant representatives who ARE asking pertinant questions,
Unfortunately they're NOT getting any meaningfull answers.
When is someone in Westminster going to publicly ask questions? Given past performance I won't hold my breath.
OG
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I do not understand why tax payers money is being used to bail out the banks that caused a worldwide economic recession through their own incompetence, unprofessionalism and risk taking. Like many people i have been charged excessive bank rates and over inflated mortgage rates for years. By assisting in getting the banks out of their own problems can the tax payers with loans and mortgages be trated with special reduced rates and offers in the future or is this once again a one way street ?
i would also like to know why the government are so hell bent on helping out the banks financially without any form of control or restrictions in term of forcing the banks to start authorising loans and mortgages. The small businesses are suffering and no one is helping them.
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Rahere, ForedeckDave, MorayMint, armagediontimes, somali_pirate_SP500, GRIMUPNORTH77, KikiDread, EdEagleHeart, StrongholdBarricades - Your contributions
(and links) are excellent, thought-provoking and give me some hope that all is not lost; that there are still some intelligent and articulate people - what a sad indictment of our society that these views are only discussed in a BBC blog and not by MPs and publically funded 'regulators' and think-tanks.
Rahere/Zootmac/TigerJayJ morayMint - I lost the plot a little over your Papal / Dunblaine /Knights Templar thread - but can see obvious paths to 'Bohemian Grove' / Skull and Bones / and 'chicago school' noecons - easy to see how T.B. Liar comfortably swills around in that atmoshpere (and has done so for years with his
close holiday buddy - the Italian Town Councilor with the TV shop - Harriet H's convict (ex)hubby knows him well.
The real fundamental issue, and the reason why no amount of underwriting banks' losses with public money will work, is because of PEAK OIL.
It's a little foolish of the beeb to block discussion on this issue - everyone else is talking about it. Without addressing this (peak oil), further debate on the banks' /HMG's past criminal incompetance and current blundering is just so much hot air.
OG
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#327. CriticalBlogger
"I would also like to know why the government are so hell bent on helping out the banks financially without any form of control or restrictions..."
Several possible answers - take your pick'n mix...
1 - They are incompetent and living in the past with a fialed economic model.
2 - They are totally in awe of the banksters and of 'wealth'. certainly true of T.B. Liar.
3 - They are supine and simply doing the banksters bidding.
4 - They want to curry favour with their future employers.
5 - They already have their snouts deep in the trough and don't want any exposures or too many (any) questions asked - very likely.
6 - They couldn't give a toss about the electorate - we are merely peons. Obvious, given recent headlines.
So there you have it - take your pick. Stupid, venal, weak, vain, greedy, frightened , selfish ... what else did you expect from politicians?
If they go much further in the popularity stakes, historians will be comparing them (and their demise) to Nicolae Ceausescu of Rumania
http://www.youtube.com/watch?v=qZoqBUA7eVw
By the time that happens the police (and army) will have been very busy trying to ensure that it does not happen.
Of course this may just be a bad dream as John Bull seems to have fallen asleep years ago... But is Ladbrooks prepared to take bets that John Bull might wake up?
My guess is that all bets are off. While 'official' comentators and MPs agree that "we are in un-charted territory" - they are wrong. There are plenty of charts - Russia, China, Rumania, Pakistan, even good 'old Uncle Sam in Guantanemo .... it's just that they don't really want to look at them. They certainly don't want us peons discussing them.
OG
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Robert,
The taxpayer could of course make a tidy profit out of all of this!
Or would that be good news?
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Robert Preston:
Taxpayers to insure £500bn of bank assets
(**//**)
It is sad that the taxpayers are on the hook for the massive amount of money....And the chances of it ever getting paid back to the taxpayers are low or none...
~Dennis Junior~
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If the banks can insure their toxic assets with the government what is all the fuss about in the first place?
Also if the Government controls RBS, Northern Rock, Bradford & Bingley, and LLoyds/HBOS whay can't these banks lend to each other?
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275 - Glenafon
I might agree that trade will continue at some level (we've all got to eat) - but it will be the pace at which we go to that level that will create the problem.
The credit markets are the same, it's not that credit isn't being issued - it's that the amount is dramatically less than it was - and that;'s what causes the damage.
I don't think you realise the scale of retraction.
Every bank lends out up to 10x the amount they have in deposits.
So how low will the new level of consumption be?
Also, your common belief that we will all simply take a wage cut - or loose our jobs - is not very humanistic.
What you are basically saying is that 'some people will have to starve / freeze to death in order to make more room for the rest of us to over-consume.
NICE ATTITUDE TOWARDS YOUR FELLOW MAN.
Also, all these people who loose their jobs will become a burden on the state. The only solution for the Government to keep these people alive will be to print money (they can't raise taxes as there won't be enough people working to cover it)
Finally, innovation generally doesn't produce new growth of markets, but transfers growth from existing markets (albeit in a more efficient way). In order for innovation to provide the backfill for our over-produced economy then we should have hover bikes by the end of the month and teleportation by the end of the year!
- it's not realistic.
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Unfortunately, the Bank Bail-out is necessary if we wish to avoid a very deep recession and wholesale unemployment.
Its purpose is not to compensate the bankers who got us into this mess. Its purpose is to save the rest of us from the consequences of their mistakes.
The costs of doing nothing would be much greater for us than the costs of something like the current plan. Without a functioning banking system we will all be in deep trouble.
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#314 MorayMint
Which Christmas? I am convinced you are right
All that our Government has achieved is to defer the seemingly inevitable domino effect.
I really hope I am wrong though!
Carpe diem
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I'm staggered by size of the numbers involved here, especially the debt which is being taken on by us and the next generation. At which point does the UK run out of money which it can use for bail outs?
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Gordo should have the decency to bail out the pension funds as he's bailing out everybody else!
It was Gordo who caused the collapse of the pension funds with his scrapping of tax relief on dividend income. They have never recovered form this and nearly all companies have closed final salary schemes leaving our future security to a roll of the dice on the stock market..
Come on Gordo Darling, while you're at it, put that mistake right as well!
In the scheme of things it's loose change once the stock market rebounds, which won't be long now.
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Poor loans...what are `good loans' -to BT? BB? Lehmans? Cookson? Barrat? Jarvis? Tullow? This is a meltdown...how are good and bad loans to be defined? Seems to me, as it stands, loans to the UK, US are bad loans. Is anything a good loan? Yes! only if you anticipated what was to happen...but...this is not what `logical incrementalism' would anticipate. As it stands, everything is for dissolution...this is the period of solvents not glues....all that was solid is melting into air. i dont think we are heading to a revolutiuon, but notions of corporate legitimacy (and anybody that tries to defend such) are/will be avapourated. We are entering into an age of post neo-liberalism in a context of sceptical `democratisation'. I am afraid the enlightenment project- with its notions of `progress, rationality, scienticism etc is dissolving...about time
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If anybody wonders what Gordo The Grate and the rest are trying to do, look at the people, Banks, and Government of Iceland.
Basically Gordo The Grate and the ashes of prudence are having a fire sale of bridges...
It's warm at the moment but soon it could be much colder than Iceland if a head of steam isn't up soon...
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come the next election put a cross in every box as a protest to this so-called democracy
200 labour
300 tory
50 lib dem
& 10,000 destroyed their cards.
It's time to take our power back x
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