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Geithner versus Darling

Robert Peston | 17:46 UK time, Monday, 23 March 2009

Timothy Geithner's partnership with the private sector to buy impaired assets is considerably less ambitious than Alistair Darling's asset protection scheme.

That can be seen from the crude numbers.

geithner_afp_darling_pa.jpgThe British chancellor is providing insurance against losses on more than £600bn of poor loans and imprudent investments held by just two banks.

Geithner, the US Treasury Secretary, is helping to fund the purchase by newly-created investment funds of £350bn of such assets held by all US banks - though the total could rise to double that.

Even allowing for important differences between the two schemes, such as how the assets are valued and what share of loss goes automatically to the private sector, there's little doubt that in this instance, US taxpayers are less at risk of loss than British taxpayers - which is another way of saying that it represents a more modest "bailout" (to use the emotive phrase).

Geithner seems to be hoping that the mere existence of buyers for these hard-to-sell assets will lead to a rise in their market price, thus strengthening US banks' balance sheets even if the banks retain the relevant assets.

In that sense, his scheme is smaller than the UK's and is more market-based (and see this morning's note for a broader evaluation of the US and UK initiatives to restart bank lending).

But it'll be a bit eggy for Geithner if it turns out that he can't persuade private-sector funds to stump up even the relatively modest amount of readies he wants from them.

As Stephanie Flanders says, the two governments are attempting to skin the same elusive feline with different techniques. Which is better?

My hero Harry Hill would say: "there's only one way to find out - FIGHT!"

If the contest is in the stock market's reaction, today's bounce in share prices looks good for Geithner.

But it will take months to determine whether either the US scheme or the UK one - or both - has at last brought a bit more vital certainty to the valuation of banks and their assets.

It's certainly worth noting that the British insurance scheme has had a very positive impact on Lloyds' share price, which has risen almost 50% over the past fortnight or so.

Unless there's a sudden and unexpected reversal in Lloyds' share price, the new shares it is selling may not after all end up being dumped on taxpayers: they may be bought by mainstream, private-sector investors and the state could yet remain with a stake in Lloyds of less than 50%.

Comments

  • Comment number 1.

    Nothing emotive about 'bailout'. That's what it is - candy for the pigmen - bread and water for the taxpayers.

  • Comment number 2.

    Its ALL SMOKE AND MIRRORS SOON THE MIRRORS WILL SHATTER AND THE SMOKE

    WILL LIFT LEAVING A PILE OF TOXIC WASTE AND SOME VERY RED FACES!

  • Comment number 3.

    Yes, It's less ambitious. I might just agree with you there but is it fair ?

    In fact, is any of it fair ? You still haven't answered that question and guess what ? You're too late now. Frank field has beaten you to it !

    http://news.bbc.co.uk/panorama/hi/front_page/newsid_7955000/7955859.stm




  • Comment number 4.

    If my calculations are correct, the British insurance scheme is for 25% and 17.5% the total assets of Lloyds and RSB respectively. From this can we put an estimate on all the toxic assets held in the banking industry worldwide? Assuming that most banks were in the same game and that total banking assets worldwide are in the order of $100 trillion, then total toxic assets amount to somewhere around 20%, or $20 trillion.

    Since the whole banking system is interconnected, the insurance scheme would have to apply globally. Total losses over a period could amount to several trillion. How can these losses be covered? Looked at in this light, the future of the global economy looks pretty bleak.

  • Comment number 5.

    The markets are up today Bob because Geithner`s plan is very much skewed toward the Wall St. set. There is very little risk here to investors - a case of heads I win and tails you lose! Either way it`s the taxpayer who will come out the worse for wear.

    Here`s a good article which breaks the whole thing down.

    "Geithner's Five Big Misconceptions"
    http://creditcrunchedoutinuk.blogspot.com/

  • Comment number 6.

    Here is an exploration of the degree to which the taxpayer will get our money back from these guarantees:

    http://www.knowingandmaking.com/2009/03/lemons-and-toxic-assets.html

  • Comment number 7.

    I don't understand why media pundits and econo pundits constantly use stock exchange indices of current day actions as some sort of prophetic reading. I am often left with the sense of reading tea leaves. The market moved up today when we announced "-insert news story-" so that must mean it is a good thing. Except there is no correlation beyond pure speculation on top of the current days speculation. Speculation on top of speculation is a horrible way to measure the actions of politicians and bankers as having some sort of merit. Maybe we should start sacrificing animals to the stock exhange priesthood in hopes that it will move in the direction we desire. Or are we actually sacrificing in the form of bailouts to our new gods?
    Please move away from speculating on speculation as giving merit to current political actions. It is very difficult to take a journalist or economist serious when they use this method of tea leaf reading as a valid measure of actions yet to have an impact, especially in this sea of chaos which they created.

  • Comment number 8.

    if the US toxic buy-back is smaller than lil ole Britain's, then today's big stock market rally is yet another example of irrational exuberance

    it's a good thing that Robert explained to us last week that the markets can be irrational, otherwise our confidence in the system might be shaken

    Q: what do McNulty, Goodwin, Jacqui Smith, Tony B and George W (regarding WMD and Iraq), Margaret Thatcher (regarding the Belgrano), Mandelson and Osbourne (regarding Russians and yachts), Diego Maradona (hand of God), Israel (re Gaza) and various execs and ex-execs at Merrill Lynch, AIG, Lloyds, HBOS all have in common?

    A: obvious isn't it; they did nothing wrong, from a technical point of view at least

  • Comment number 9.

    What happens if the debts sell at junk rates? It is possible since an asset used for security such as a house have collapsed in price. The price is going to be the value of the underlying asset after disposal since default can be assumed on the purchaser who is paying for something he thought was worth a lot more. This could be something like 40% of the loan value. You need to factor in a profit and cover legal expenses so that takes it to 20% of original value.

    We shall have realistic valuation of banking assets but it may trigger another panic as we realise that the banks are worth much less. Mind you bank shares have fallen more than asset prices so the net results for the banks might be good - I suppose hence the rise in bank shares.

    Does anyone have any figures for what percentage toxic debt is selling for?

  • Comment number 10.

    And look at the markets go..

    I keep vacillating between thinking things are much worse than anyone in a position to affect the global economy believes (or wants to believe) or that actually all of these initiatives are really going to work, in the sense that global financial catastrophe wil be averted. All it takes for stock markets to rise is any news that suggests that banks are going to be ok and given the ability to resume lending again at some indeterminate future point. High unemployment,weak or debased currencies,even the 'threat' of higher taxes in the US all seems to be irrelevant in the mindset of those who set the prices for stocks and bonds, so really Roberts seemingly endless banging on about the bank bailouts is probably justified..

    Just as an aside - 25 Regional US Banks HAVE failed this year already, 45 in total since December 2007 but of course they weren't 'too big to fail' having between 2-12 branches confined to one state or city within a state..The FDIC, the body that 'monitors' the banking system in the US estimates that there are 250 more in danger of going under, but apparently that isn't 'news'...

  • Comment number 11.

    It only serves to show that the UK tax payer is taking one almighty gamble in helping the banks to such an extent.

    Which bears on one other news story at the moment...... Honda employees are taking a 10% pay cut, following on from Toyota having done the same, and with managers taking an even bigger 15% pay cut.

    These guys are doing the right things in a downturn and showing how you should run a business properly, even when things are so bad. Pulling together, and with the more senior people showing leadership by taking greater cuts.

    The contrast with all the UK and US owned banks, hedge funds and financial gamblers could not be more stark. Grab as much of the money for yourself, and keep hold of it until it is forcibly prised out of your hand, seems to be the mantra here.

    Given that RBS, HBOS, Barclays and co (and all those other so called 'investment banks') are in considerably deeper dudu than Honda and toyota et al, and have all benefited from our bail ot money, can we look forward to hearing of pay cuts in the banks too?

    I would suggest a 5% cut at the bottom, increasing to a 50% cut at the top for board directors?

  • Comment number 12.

    Robert,

    "Timothy Geithner's partnership with the private sector to buy impaired assets is considerably less ambitious than Alistair Darling's asset protection scheme."

    Just a couple of points

    - the UK scheme may need to bigger than the USA one as our clever banks may hold more duff worthless assets!

    and

    - neither side of the pond has worked out how to value the assets the schemes will 'buy'.

    Another thing that has occurred to me: The reason the deposit takers who are supposedly desperate for liquidity are not offering better interest rates to savers is that there is too much money coming from the taxpayer and they do not need savers' cash! That is QE and zero interest rates have already destroyed the value of money to such an extent that it is now only worth a fraction of a percent!!!!

    Now buying gold bars!

  • Comment number 13.

    I have been trying to calculate based on a thirty year repayment term how much the accumulated rescue debt would take every man and woman in the UK to pay back in increased yearly tax payments and have arrived at staggeringly high numbers. I wonder what the government's fiscal projections are in this respect? (acknowledging my own lack of expertise in this area and the very basic assumptions this forced me to make). I also wonder what the public will make of it when the truth finally hits home as to the penury they have been committed to without so much as a by your leave from the government? I sense that the anger will be sustained and problematical. Your own calculations Robert and those of other contributors would be much appreciated as at present the answers I come up with are testing my credulity.

  • Comment number 14.

    Timothy Geithner's partnership with the private sector to buy impaired assets is considerably less ambitious than Alistair Darling's asset protection scheme.

    I don't understand this statement.

    If it gets the market moving and enables transparency then surely that is what the markets require

    In the UK Crash and Burn, the dynamic duo, want arm lengths control

    Apart from that it seems to be an argument generally found in a play ground..."mine's bigger than yours"

    Won't it be embarrassing for Crash and Burn if the US stimulus works whilst ours leaves us with debt for generations to come?

  • Comment number 15.

    Your hero is Harry Hill???

    Your the first person I have ever heard admit this. Are you hoping for a cameo appearance?

  • Comment number 16.

    Robert Peston tells us everything we need to know about him:

    "My hero Harry Hill"

  • Comment number 17.

    So Darling is doing a good job??????????

    Do us a favour Peston, give up the attempts to paint this pathetic government in a good light, Darling couldnt organise the proverbial whatsit in a brewery

    Further attempts by yourselves to convince us otherwise merely gives added weight to those who state you are blatantly biased towards Brown & co

  • Comment number 18.

    Robert Peston:
    Which is better?

    I will be waiting to see, Geithner versus Darling plans, will win....I am not choosing sides....Like My hero Harry Hill would say: "there's only one way to find out - FIGHT!"......I concur with the sentiment.

    ~Dennis Junior~

  • Comment number 19.

    NO MODERATION AS USUAL!! ANY SURPRISE?? NO!

  • Comment number 20.

    can we try and get some posts moderated on here sometime tonight???

  • Comment number 21.

    Which ever way it is cut you have to understand that it is the real economy that is hurting and needs help.

    Bailing out the bankers and similar nonproductive folk only piles on the agony for the real economy.

    When will folk realise that they should work for a living?

    Once the nonproductive to productive ratio gets too high then no amount of massaging of figures and bailing out will work. Folk will just have to get proper jobs. No hangers on allowed.

  • Comment number 22.

    It's official: Risk is now socialized, and profit privatized.

    Welcome the the Moral Hazard Economy, where the path to riches is to engage in insanely risky behaviour with other people's money.

  • Comment number 23.

    AS USUAL THERES NO MODERATION SO THE BLOG IS POINTLESS?

  • Comment number 24.

    Come on Robert, give up banking. It's an unhealthy addiction and makes you blind - to the rest of the economy.

    In hindsight, I am sure now that it would have been better to give up on the bad banks too. Administration, receivership, writing off the bad debts while guaranteeing depositors. Then the economy could have been reflated from the bottom up by tax credits to working people and manufacturers in proportion to their sales. Then REAL entrepreneurs could become wealthy by trickle-up. QE is printing money to help bankers and hedge funds instead. Tho them that hath (or have quandered) shall be given. THAT is immoral. Why should people aspire to make an honest living when larceny on such a huge scale is not only unpunished, but rewarded.

  • Comment number 25.

    Mr Preston

    In light of todays US "market support" please comment on whether you think "$1" today is better for the "medium term" ( 3-5years) invested in equities or treasuries. Please respond in relation to it being your "$1" not some hypothetical investment.Thanks.

  • Comment number 26.

    It's all just a load of smoke and mirrors.

    What the stock market are really gleeful about is the amount of manufactured money that's got to be poured into the system.

    It means high inflation and the stock market likes nothing better.

    Wasn't it the Item club's report yesterday that confirmed this and advised people to put money into shares and property as a hedge against inflation?

    Although that may have been the right thing to do in past recessions I have my doubts this time around. After all companies still have to perform well or we could find ourselves in a different bubble.

  • Comment number 27.

    Grow up. It is so NOT a competition between the UK and the US.

    We must all hope that both countries' approaches to quantitative easing will work marvellously well.

    Meanwhile, I would just note that the politicians and officials from US have generally knocked spots off their UK counterparts.

    And, of course, the Germans have knocked spots off everyone ......

  • Comment number 28.

    Geithner and Darling. What a class act. Nothing to choose between those two. Both robbing the public purse
    with impunity in order to prop up 'unfit for purpose' systems and by so doing reward the very individuals who brought about the current financial catastrophe.

  • Comment number 29.

    three hours and not one post...this is becoming a joke, i have complained to the trustees.....move to post moderation or these blogs will die

  • Comment number 30.

    will the fund managers play ball and buy the assets? This is crucial to any chance of success.

    http://creditcrunchedoutinuk.blogspot.com/

  • Comment number 31.

    Geitner's plan has a rather large hole in it..where are these private investors so keen to throw more money down a black hole?

    This will come to light in the next 2 months and we will await yet another version of the plan.

    A point re Lloyds - the share price collapsed after it did not enter the scheme, falling from 75p to 38p...now that it has entered, the share price closed today at 61p. Playingwith percentages is nice, but the reality is that Lloyds is worth less than before it entered the scheme.

  • Comment number 32.

    #7 SirBlogger "I don't understand why media pundits and econo pundits constantly use stock exchange indices of current day actions as some sort of prophetic reading.

    Quite. There is absolutely no need for all this trading. The fluctuations are wild - sometimes from hour to hour - as traders and brokers generate themselves commissions by using "news" as a pretext to gamble with other people's money, assets and futures. Generalising a little, every commission paid is less in the collective pensions funds and savings of the ordinary population. There should be a return to Short Term Capital Gains Tax, starting at 99% for day trading, tapering downwards the longer an asset is held.

    This might encourage some traders and brokers to get an honest job, like sweeping the streets.

  • Comment number 33.

    Jolo 13

    The death of the blog appears to be Auntie's master plan!

    Just in case my contribution is moderated before Christmas, I venture to say the following:

    Robert, dear heart, are you the business editor or the banking editor?

    If you are the former, guess what, there is a real business UK out there-seemingly under your radar. Not China, THE UK!
    Surely you know that the UK is NOT all banks? Other nations could be forgiven for thinking that our sole industry is banking, but I know of hundreds which aren't, and their names don't end in '...Bank plc'. Would you like a list to get you started?

    If you are the latter, please ask Ayntie to update your title on the Internet, and I'd be most grateful if you could let us know who is the business editor now. Many thanks.

    Regarding bail outs of banks here and across the pond-our economies are different, so does size really matter? This whole mess is uncharted territory, so who knows the answer? I know who doesn't! Ha ha!

    And (please correct me if I'm wrong) but don't the Americans have a teeny bit more gold to play with? Unfortunately, the only toys Ally D appears to have are wings and prayers! And didn't Gordy throw all his out of the pram when asked to say sorry?

    Finally, is there any chance you might respond to your bloggers as Paul Mason does? He gets my respect for that more than anything else!

    Night all!

  • Comment number 34.

    Blast off!

    Allowed to post again after countdown!

    Why am I being told I'm a new member? For goodness' sake, can't this site get anything right?

  • Comment number 35.

    What ever way I look at both options, be it UK or US, to get banks lending again, I can not help but think who they are going to lend to. Is it people with rock solid jobs, or business with full order books who need to expand ?. Although I am sure such people and business exist I find it hard to think of any at the moment. That leaves people or business in dire need of funds because they are up to their necks in debt. Now correct me if I am wrong but is that not what got us into this mess in the first place.

    I can not see how any economy, financial system, or person for that matter can work on the principle that to move forward you must borrow more money.

    In the event that the whole world got the message that borrowing to much money is not good, and to tighten the belt and reduce their debt is good, would not both plans fail anyway ?.

  • Comment number 36.

    and also from The Prince

    'besides this, he(the Prince) ought, at convenient seasons of the year, to keep the people occupied with festivals and shows'

  • Comment number 37.

    On a plane today I read about a guy who taught youngsters that investing in individual companies via their stock should be about the long term. Look at the debt, look at the revenue, the earnings, the products, the need, the customers.

    One day movements in indices tell us nothing about tomorrow or the long term just as the 50% chance of a head or a tail tells us nothing about the next throw of the dice.

  • Comment number 38.

    #27 "Meanwhile, I would just note that the politicians and officials from US have generally knocked spots off their UK counterparts.

    And, of course, the Germans have knocked spots off everyone ...... "

    While the Chinese, Indians and other East Asians are busily gathering up the spots, recycling them into some useful but cheap and selling them back to the very people they came from !! Hooray for the New World Economy !!

  • Comment number 39.

    #36 "and also from The Prince

    'besides this, he(the Prince) ought, at convenient seasons of the year, to keep the people occupied with festivals and shows'"

    Smart chap, old Machiavelli !! Perhaps a Public Hanging or ten from the Tyburn Tree of failed bankers, financiers and politicians will encourage the others and provide the aforementioned "festivals and shows" !!

    Might even turn it into a weekly tourist event - See Buckingham Palace and visit the Public Hangings at the Tyburn Tree (aka Marble Arch) !! A good way to earn more tourist Dollars, Euros, Yens, etc !!

  • Comment number 40.

    It's pretty simple really.
    U.S. and British banks are the proud owners of millions of houses in the USA, which are worth precisely.....nothing.
    Clever people, these bankers.

  • Comment number 41.

    To No 27

    Open your eyes and ears and see and hear how quantatative lending is already working" marvelously well." In the supermarket you can see old age pensioners and young mums alike despairing over the ever rising prices. 5p here - 14p there. It's a never ending struggle to pay for the necessities of life.
    Nothing to the well heeled. At the same time you can hear the pleased comments of the better off whose mortgage payments have fallen spectacularly so that they can carry on enjoying the luxuries they have become accustomed to. Quantatative lending working marvelously well" I don't think so - unless of course you want to make the 'well-off' 'better-off' at the expense of our poorest .

  • Comment number 42.

    Contraversially, perhaps, my view is that both the US and UK need to nationalise the banks, irrespective of the perceived problems with that way forward.

    My logic for this is that it takes so long for governments and international experts - shackled by political considerations - to achieve any consensus on a way forward, that globally organised banks (and the shadow banking industry) are well able to (and therefore very probably will) run circles around the lot of them, in all nations.

    A state-owned finace industry is the only way to get banks and the finance industries under some sort of proper scrutiny and accountable control.

    Oh yes, I know all the counter arguments, but the biggest problem we really face is the lack of trust (ironically, even trust of banks by banks) and the only way to get that back is for the financial system to be taken under control by some serious firm pairs of hands that won't let them run off and do crazy things, or just socially irresponsible things.

    If these people were responsible for, say, the health of our nation, or child protection, or anti-terrorism, we wouldn't dream of leaving them to their own devices ("market forces") in the way we do.

    In actual fact, what they are in control of has just as significant a socio-economic impact upon our society at national level, our communities at local level and ourselves and our families at individual level.

  • Comment number 43.

    Robert

    I wonder if any of these toxic asset dumping/insurnace schemes when being devised were stress tested for deflationary periods?

    I think not..............

  • Comment number 44.

    Even if this plan were to do some good - and that`s debatable to say the least - all of these plans and bailouts in both the US and UK address what has already happened.

    There is a vast amounts of informaton out there by very credible financial experts which points to further waves to hit in 2010 - 2011. There is a commerical property meltdown on the horizon which could be bigger than the subprime mess. Also there are the Alt A and Option ARM mortgages which again could cause and even bigger subprime mess in 2010 - 2011.

    Are we going to find ourselves in a situation where we manage to ride out the storm we are presently in only to find a category 5 hurricane roaring toward us as soon as we start to get a bit of confidence back?

    "Meet The Subprime Mortgage`s Ugly Cousins"
    http://creditcrunchedoutinuk.blogspot.com/2009/03/meet-subprime-mortgages-ugly-cousins.html

  • Comment number 45.

    You can slice the argument whichever way you want but the reality remains the same: Big Business is being bailed out by Big Government and the taxpayer acquires all the risks.

    Is this fair? Discuss.

  • Comment number 46.

    Robert

    The timing of this speech from the Chinese, questioning the role of the US Dollar as the reserve currency for the IMF is quite intriguing. Just a week before the G20 summit, could this idea hijack the summit agenda?

    http://news.bbc.co.uk/1/hi/business/7960620.stm

    They do not suggest an alternative, but rightly they are concerned about the volatility of the american currency. It could be a New World Order, except it will not be Brown's one. More likely the Pacific rim countries plus the Emirates and Arabia, as all the old western economies (US and Europe) are basket cases.

  • Comment number 47.

    #8 somali_pirate_SP500

    Regarding your joke, I wish I could laugh, but unfortunately, there's nothing funny about it. It's a tragedy that exposes the flimsiness of law. Oh, and by the way, you missed a good one Truman (H bomb - Hiroshima/Nagasaki).

    In terms of Geithner v Darling, well, that's obvious, Geithner wins the match and the US won't be bankrupt if it doesn't work (they can put a bit more in).... Darling (and Gordon Brown) have taken the most ridiculous gamble with the UK economy that will wipe us out if it goes belly-up.

    A conspiricy theorist might even suggest that someone could move to wipe out the UK economy if so inclined.

  • Comment number 48.

    Once again, the Americans seem to have a better understanding than the Brits on how to solve the toxic assets problem.

  • Comment number 49.

    BBC spent 110 million on the internet last year (36 million over budget!)...... and the trustees have agreed an additional 30 million over next 3 yrs....... any chance of employing another moderator?

    Or are there cutbacks?

    BBC online services - Beating the Credit Crunch!

  • Comment number 50.

    Robert

    I think we need some explanation of the inflation figures...

    Spinning expected a decrease, but we get 0% RPI and an increase in the government chosen rate....so much so that the governor of the BoE has to send a letter to Darling

    Is this the start of the hyperinflation? In a world where things move 24/7 has the QE had such a dramatic and immediate effect or is there something that they aren't telling us about?

    Or a blip?

  • Comment number 51.

    I do think that Steve Schifferes' article makes some rather relevant points, and is well worth reading.

    http://news.bbc.co.uk/1/hi/business/7954532.stm

    What I found interesting was that private bankers were secretly at another set of negotiations. O.K. the were put up to it by Roosevelt, but I still found that interesting.

    Of course, nowadays, you don't need to all travel half way around the world, the bankers could all get together by video-conferencing, with or without any political push, or indeed, agreement.

  • Comment number 52.

    Robert

    And there I was thinking that the US were doing the same as we were.....well that's what GB keeps telling us.....so it must be true.....no?

    I'll never trust NuLabour again!

  • Comment number 53.

    #47 extremesense you are right that it's no laughing manner

    But as a Pirate it is part of the job description to have a good line in gallows humour and I always like to include a joke or two whenever anyone needs to walk the plank or be keel-hauled as it helps to ease the tension (or break the ice in the latter case, handy if sailing the Arctic seas); I find these skills in constant demand in the current economic circumstances

    Speaking of jokes did anyone here Jaqui Smith on Today today explaining her Project Argos plan to train 60,000 shop assistants to spy on their customers?

    It is truly inspired but a shame it's too late to save Woolies, whose 27,000 staff could have been usefully employed in the run-up to the G20, IPL and Olympics by pretending to sell pic'n'mix whilst taking notes on the citizenry

    By 2012 the transformation of the UK into a passable copy of East Germany c. 1978 would have been complete

    I don't know about the rest of you, but I'm going to avoid Argos from now on; if I want to sleep around at my sister's house it's no-one's business but mine

  • Comment number 54.

    on another matter, I would like to add to the many many complaints about the deplorable state of the BBC blogosphere

    the supposed upgrading of these blogs has only made them worse

    they should be post-moderated; the often 2-3 hour delays in pre-mod are killing any chance to comment back to other posters

    they should include a 'recommend' buttom

    they should be operated by a sufficient number of staff who are within the same time zone as the UK and not in the same time zone as Peston (on another planet)

    if everyone else can run a moderated, serious blog properly then why on earth can't the BBC

  • Comment number 55.

    To No.54


    Stop being such an ungrateful misery. In many countries of the world we could all land in jail for speaking
    our minds as freely as we are allowed to do on BBC blogs.

  • Comment number 56.

    #47. At 09:06am on 24 Mar 2009, extremesense wrote: "A conspiricy theorist might even suggest that someone could move to wipe out the UK economy if so inclined."

    They could certainly try*, extremesense, for such a move is easily done by any competent player in such extreme games, against such pathetic guardians of sovereignty and nationality as have been Rooting for the Union Jack. And they are abject apology are they not, having been so easily led by the nose to feast on the folly of personal greed and money for nothing culture of artificial celebrity and reality TV star...... the Mini Hollywood Game.

    However, there is another Holywood with QuITe Different and Uniquely Positioned and Stationed Non-State Actors, who would have Extraordinary Rendition Powers which punish any such inclination against economies, with a Virtually Unstoppable Chain Reaction Markets Collapse of Targeting and Targeted Systems, which you may like to consider has been Initiated and Launched.

    Naturally, you will not be aware of the who or the where or the what, but its Essence of Being is revealed in all that is especially commented on in this Magical Mystery Turing Bombe** tale ..... http://www.theregister.co.uk/2009/03/23/bletchley_bombe/

    * ... although why would they need to bother, whenever there would hardly ever be a mole as good at causing wholesale destruction by invisible means, as the Zions of GB and New Labour,...... Pawns in a Game, they know not of ..... is probably the answer.
    ** A little something which the Home Secretary will probably plausibly deny, and we all know just how well we can accept the truth of her comments. No Contest there, unfortunately, which would sort of make her position untenable, in the normal course of events?

  • Comment number 57.

    I've had enough of the Sir Fred Goodwin & Co's blogg's, please, please can someone make sure they don't get to spend one dime / penny of it. By whatever means they think appropriate, you'll go down a hero with millions saying you're name!

  • Comment number 58.

    Anyone who thinks that either the UK or the USA intends to honour its debt obligations is living in cloud cuckoo land. They are in absolutely no position to do so. Just for starters it would mean turning on our TV sets at 7:00 to find a sombre and grave Mr Brown, flanked by Alistair and the Milliband boy saying something along the lines of: "The Nation must be told that XYZ have demanded that we pay back what we owe them. Of course, as an honest and responsible Government we must do so. I must tell you, with regret, therefore, that spending on the NHS, Schools, Defence - indeed, across all Departments - will have to be slashed by 50%. All NI benefits will be capped at £70 per week. Other savings will have to be found, and income tax will have to be doubled across the board. I ask you to spare a thought at this time for those tireless workers in the interest of the Nation - its MPs - upon whom there will be a terrible burden at this time. To compensate them, if only a little, for the torrid time they will now have, I am also announcing that their pay will rise by £40,000 p.a. After all, what's fair is fair. I wish you a good night. Dunkirk spirit all. God save the Queen

  • Comment number 59.

    In his evidence to the Treasury Select Committee today Mervyn King said that "bank lending to households and companies has slowed sharply. The latest data show that it is growing at an annualised rate of around 3% - having averaged over 10% in the ten years up to the end of 2008."

    He also said: "the sterling effective exchange rate has depreciated by about 5%, bringing the total depreciation to 28% since the summer of 2007."

    Put the two together and we see an interesting scenario emerging. It is this:

    (1) Bank lending to households and business has, in summer 2007 terms CONTRACTED by 25%.

    (2) The growth rates of money and demand have slowed sharply.

    (3) Then why did we need quantitative easing?

    There is more than enough money to go around. No one wants it if they don't need it. The banks just won't give money to those who say they need it, for the simple reason that they don't believe they will get it back. They are scared to death of lending to hopeless cases who don't make profits and can't live without credit.

    We have gone beyond the tipping point. That is the way once great nations and empires go. Ask the Mughals, ask the Tartars, ask the Mongols, ask the Africans.

  • Comment number 60.

    Here`s an excellent illustration of how Geithner and Bernanke will pull off this smoke and mirrors trick and convince the world that all is saved.

    "Anatomy of a Giveaway (or Why Stocks Soared Yesterday)"
    http://creditcrunchedoutinuk.blogspot.com/2009/03/anatomy-of-giveaway-or-why-stocks.html

  • Comment number 61.

    "In that sense, his scheme is smaller than the UK's and is more market-based ......"

    Obama and Geithner can afford to take a more modest and long term approach to their actions...... after all, they're not up for re-election for 4 years.

    Downing Street, however, must currently have more squeaky bottoms that the Old Trafford home dressing room.

    So, it is natural that Gordy and Ali are putting all OUR chips on a very big roll of the dice.

  • Comment number 62.

    Basically, it's all money laundering isn't it? Except that this time, it is the governments using taxpayers money to try to repackage the poison pill. Also, Darlings scheme has a bigger headline number ("Wow, look, impressive eh?") but he is hoping to get away with a smaller eventual spend. Pigs might fly - negligible due diligence done, more CDO/CDS liability than there is money in the world, money being printed a la Weimar, and deflation followed by hyperinflation beckoning. Start turning those ploughshares into swords!

  • Comment number 63.

    Here's an interesting development :-) ..... http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html

    "The banks just won't give money to those who say they need it, for the simple reason that they don't believe they will get it back." ...#59. newProtectorCromwell

    As someone who has approached the Banking System for a not inconsiderable Investment Sum, which I can positively guarantee to return to the System, for them to relend to another worthy customer, with it having generated goodness knows what extra business for the Bank to consider and administer to, and has requested a meeting with whomever would be qualified and enabled to credit such a Banking facility and with whom I would be able to discuss and/or further explain my business* and to answer any and all pertinent or even impertinent questions immediately so that a simple Yes/No decision can be given and the Facility either Immediately Activated or Denied, thus to allow for the Next Phase of whatever then would be Needed, it is somewhat irregular and quite unsatisfactory to be still waiting for a meeting to be arranged after two weeks, and having supplied them with as much information as they requested via email. One does wonder at their structures within and just who is in charge of making such a decision, and what would qualify them to make such a decision as to whether or not what was proposed was worthy or not of the free government funding that they have been given to energise innovative enterprise, and most probably in the case of innovative enterprises, quite probably something which they may not be equipped to grasp intellectually, even should it be shared with them in Simple English ....... which is thus the reason for the face to face meeting with whoever is in Charge and can Decide there and then. It is only money, they're being asked to Supply for Spending and Generating Wealth and Industry. It is not as if it is anything Really Important, is it, no matter what they might like to tell themselves and everyone else.

    I am starting to think that there is no one qualified to justify a Refusal, for that is what will be required with a Denial of Request, which will be not good for the Banking Business and the Economy.

    * I suppose that little exercise is always for the Bank to consider how much they are going to Make from someone else's Work/Intellectual Property, for Free.

  • Comment number 64.

    Robert

    This is the big problem about talking global and the UK - the german internal economy is in much better shape than ours in terms of manufacturing and trade even though germany has been importing too many cheap products - just like the UK.

    No wonder the Germans are fed up at being lectured by the UK government.

    On my local high street a shop has around 75% discount on most of its items and I went in for a 'nosey' and to have a look around and I asked the manager why the large discount and whether the shop was in trouble. The manager just shrugged his shoulders and said 'we're shifting old stock at cost price'. No wonder the UK is in a such a mess - the price of cheap overseas junk has been far excessive for too long. Further down the street are garages showing sales discounts on new cars and £10K for a poxy little super-mini style car and they call this a 'Sale'. I though that all car prices were supposed to be coming down?

    The price of UK goods and services has been too high for too long and it looks like the pigeons are coming home to roost.

    Anyone with the slightest monetary knowldge can see that this globalist fiscal stimulus package view promulgated by our UK government is naive in the extreme when the economies and finances even of e.g. two G7, G20 EU countries are really quite different and out of kilter.

    Brown and Darling are completely out of their depth on this and are set to make the UK the laughing stock of the world's new capitalism.

  • Comment number 65.

    Startling thought - if we now own most of ou big banks, isn' tthis the moment for them to start taking over foreign outfits in the way that more or less openly state-supported overseas foreign institutions (I'm thinking particularly French and Spanish) have been doing here and elsewhere for the last 20 years? I mean, if it all completely collapses who'll care, and if it doesn't we'd have cornered the market. Come on, let's use a little imagination here!

  • Comment number 66.

    Another lightweight piece from Mr. Peston. The central theme isn't even factually correct: Geithner is not being less ambitious.

    One would have thought it possible to at least include broadly correct indications of the relative magnitudes, given that this has already been discussed so extensively in the public domain. The US government has already provided insurance on hundreds of billions of USD of so called toxic assets, including those at Citigroup and Bank of America. So the new program goes above and beyond this.

    However, the way this has been structured in the US is interesting and contentious, although unsurprisingly not addressed in this article. From one perspective, if these toxic assets are indeed undervalued, as some claim, then the resulting valuation uptick from Geithner's asset purchase plan could result in a massive benefit to tax payers, who'd received preference and common equity consideration for the insurance granted over future losses on these same assets. But I suppose that wouldn't be worth writing about, as its obviously a huge conspiracy skewed in favour of the evil bankers...

    Perhaps this website could be renamed "Peston's Piffle"? It sounds more to the point than "Peston's Picks"; in addition, these articles are not picks which we are being treated to out of a larger oeuvre -- they are the only content on offer...

  • Comment number 67.

    I am not an economist but it it not true that, as a trading nation, we are doomed? As measured by the balance in all trade and services exchanged with foreign nations over the last 50 years, we are on the losing end. Instead of doling out money (which we don't have but can freely print) to worthless city spivs, has anyone thought long term. By this I mean, would, say, £10 billion be enough to kick start a British Car Industry? Could we regenerate a ship building industry with, say, £10 billion and, whilst we're at it, let's throw in another 5£ billion to re-establish a machine tool industry. Any prosperity that the nation has felt under Brown and his gang is merely an illusion in that they have simply picked my pockets and used it to fund a collection of jobs that simply fill spaces but achieve nothing. With the artifically earned money,cars, haircuts and the like have been purchased. But this merely has spread the existing money around and has not generated one wealth- earning pursuit.

    Please show me that I am incorrect or I shall feel obliged to throw in the towel.

    Wanderer

  • Comment number 68.

    Views from America
    Parsing the PPIP

    The Latest Bailout Moves: Finally Some Hope
    And, my favourite Acerbic columnist, Alan Abelson:
    In Dante's Footsteps

    "Every since first reading Dante, we've been dying to visit hell, but while loads of people have told us to go there, no one ever provided reliable directions on how to get to the place. Well, thanks to Mr. Topolanek -- or perhaps we really should be grateful to Mr. Obama -- it looks like we have an excellent chance of fulfilling a lifelong quest.

    Before we make any travel plans to retrace Dante's journey (we suppose summer clothes would be in order and we never have been sure, do we turn left or right when we get to purgatory?),..."



    All good reads
    Hesiodos
  • Comment number 69.

    For those still reading this thread here is a bit more information on Geithner's plan.

    Geithner's Plan Can Succeed
    http://globaleconomicanalysis.blogspot.com/2009/03/geithners-plan-can-succeed.html


 

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