View Full Version : The financial crisis- some questions
John Little
20-Jul-11, 15:55
I've got a few questions I want to ask about the current financial crisis.
But I want to ask them one at a time.
First question
It's my understanding that the banks got us into the biggest recession since the 1930s.
How did they do that?
Because they were sold investments, from american banks,, that is a very loose term investment,, lol,,
basically the american banks had been giving loans and mortgages to millions of americans who could not afford said loans,mortgages, ninjas is the term,,on the back of a housing bubble in america,,think commision for every loan mortgage, greed.
these so called investments were then packaged up as derivitives and god knows what else,, and then sold on ,asap,, as A grade investments to other banks ,, ie thats when our banks start getting involved, being sold these as A rated investments.
in essence it is just a giant ponsy scheme, that we the british taxpayer will be paying for a long time. thanks america.
John Little
20-Jul-11, 16:32
Thankyou.
Question 2.
If British banks lost so much, why did they not collapse?
British banks lost 5 billion quid - that's near enough bankrupcy! Also the USA was bailed out by the federal government and this saved the rest of the world. There's a good book on the subject called "Too Big To Fail"
Thankyou.
Question 2.
If British banks lost so much, why did they not collapse?
Actually, it is only a potential loss. As seen by the bounce back of Northern Rock.
They didn't actually write off these loans, otherwise there would be millions of mortgage free individuals wondering round with big smiles on their faces.
There must be another reason, because according to Gordon Brown, RBS was one day away from not being able to put cash in the machines.
I am trying to educate myself about economics and it is a tough slog - in spite of a number of great, sensationalistic books on the subject. The New York Times is very good at coming up with interesting questions and then answering them. See below:
http://www.nytimes.com/2011/07/20/world/europe/20europe.html?pagewanted=2&src=recg
John Little
20-Jul-11, 20:30
Thankyou.
But as nobody has answered question two yet, I cannot ask question three.
I've got a few questions I want to ask about the current financial crisis.
It's my understanding that the banks got us into the biggest recession since the 1930s.
How did they do that?
By lending money to people which they (the people) could not afford to repay, these people were so used to buying things which they could not afford that they kept borrowing more and more, then they defaulted on these loans and the banks which should have refused the loans in the first place managed to get the government to bail them out (with our i.e. taxpayers money).
So yes the banks played their part but the real problem was the people wanting things which they couldn't afford
John Little
20-Jul-11, 21:13
That is an awful lot of personal debt. I'd be interested to see any figures on the breakdown of what banks lost money on - personal debt, sub-prime mortgages, futures and derivatives.
However you answer question 2. The banks were bailed out using taxpayer's money.
So.
The money came from taxpayers.
That's us I suppose.
Question 3
What was that money meant to be used for before it was used to prop up the banks?
As all taxes and revenues go into a central fund and then are allocated back to various government departments, the armed forces, local councils, the NHS, education, the devolved parliaments to mention just a few, there is no way that we will ever know what that money would have been used for.
John Little
20-Jul-11, 21:40
Would the money have been used to fund all government departments, public services and armed forces if it had not been used otherwise?
(seeking clarification for q3)
My understanding is that the goverment had to borrow heavily in order to bail the banks out. This in turn has left the country with a much bigger deficit than it would otherwise have had.
If this is the case in all probability the money used to bail out the banks would not have been used otherwise.
NickInTheNorth
20-Jul-11, 21:52
Would the money have been used to fund all government departments, public services and armed forces if it had not been used otherwise?
(seeking clarification for q3)
potentially yes, or the government could have cut taxes
John Little
20-Jul-11, 22:15
Question 4
If the government used the money that should have gone to running public services to bail out the banks, what did they expect to use to pay for all the government departments, public services and armed services?
NickInTheNorth
20-Jul-11, 22:20
money borrowed from the international markets.
But I hope that you are factoring in a change of government to where your questions are heading...
The government has chosen to make the public sector the scapegoat in this mess. Budgets have slashed, jobs cut, vacancies frozen etc. Even in areas where the government pretends to be protecting spending, these areas are also having their real budgets slashed due to the high inflation rates our current government seem so fond of.
here john do yourself a favour and have a glance at this ,,http://en.wikipedia.org/wiki/Inside_Job_(film)
i watched the documentary, inside job a little time ago,, it explains a lot. good old american capitilisim at its best.
you can watch it on youtube just search for inside job, matt damon
John Little
20-Jul-11, 22:34
Thanks Trajan- I have bookmarked it for later.
Nick - yes- I understand that Labour's solution was to borrow to ease the situation over a longer period.
But the coalition rejects that because our 'credit card is maxed out'. So it wants another solution.
Question 5
Has the government of this country deliberately chosen to throw the weight of paying off the deficit onto the taxpayers rather than nationalising the profits of institutions that it effectively owns?
Maybe John would like the Caithness dot Orgers view instead.
Or at least those of us who reply to the thread.
Of course they have, 4 billion of cuts every year possibly,, or take shareholders profits every year from banks we own a majority in,, who do you think a tory government is going to support.
John Little
20-Jul-11, 22:45
Question 6
If that is so, is this fraud?
its the biggest fraud since the crash of 1930s,, but you will never see anyone found guilty of anything , these people run the us government,, they pick the president,they back all politicians who are going places and those that are not ,just in case one becomes a thorn in their side , later down the line ,,, money can buy you anything, including majoritys in governments,, lobbyists anyone.
I know this is your thread John, but I have a question of my own.
Given that the banks that got bailed out were on their knees and at our mercy. Why were the bailouts given with so few conditions and clauses? The government could have turned what was and is a crisis into a nice money spinner for the country for many years to come.
John Little
20-Jul-11, 22:55
Dialyser asks a good question to which I have no answers.
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
Dialyser asks a good question to which I have no answers.
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
Because asking e. orgers anything is not a sane strategy :lol:
basically cause the multi millionaires and billionaires wanted their money out first, or they would let our countrys home owners and small business crumble overnight,,, ie 1 million pound home on friday, come monday its worth about £150000,
could you imagine what would happen if every home owners property lost 90% of its value overnight,, total collapse,, so they had no choice but to pay them our money.
its called blackmail by any other name.
John Little
20-Jul-11, 23:01
Ha - Duke's spoiler post....
Actually I was hoping that you would answer the question.
Ha - Duke's spoiler post....
Actually I was hoping that you would answer the question.
Well I don't know the answers, but that hasn't stopped some from holding forth. I don't know which is best; busted banks or subsidised banks. I don't agree with Gordon's policies, fiscal or social, but I don't know what could have been done differently given that the warnings had gone unheaded and it literaly happened overnight see post#5
what we have seen over the past few years is the greatest movement of moneys from ordinary people to the super rich ,, in human history,
just think about that.
John Little
20-Jul-11, 23:12
It seems to me that to defend what has happened is a bit like slaves in the Southern States defending the use of the whip.
I must repeat the question;
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
what we have seen over the past few years is the greatest movement of moneys from ordinary people to the super rich ,, in human history,
just think about that.
You mean ordinary people are giving money to the super rich? That's jolly decent of them.
John Little
20-Jul-11, 23:15
You mean ordinary people are giving money to the super rich? That's jolly decent of them.
Another spoiler?
Actually it's jumping the gun because one of my questions relates to the consent of the governed to have their taxes used in this way...
Nope our government is , we dont get much say in it im afraid ,, thats democracy at work..lol
basically cause the multi millionaires and billionaires wanted their money out first, or they would let our countrys home owners and small business crumble overnight,,, ie 1 million pound home on friday, come monday its worth about £150000,
could you imagine what would happen if every home owners property lost 90% of its value overnight,, total collapse,, so they had no choice but to pay them our money.
its called blackmail by any other name.
What precisely are you basing this statement on?
A lot of hard work,, you should try it,,
Another spoiler?
Actually it's jumping the gun because one of my questions relates to the consent of the governed to have their taxes used in this way...
Hey! I question the flow of a thread containing an abundance of half baked claptrap as I always do and get accused of spoiling. I'll leave you to it.
toffee_pie
20-Jul-11, 23:22
banking crisis for dummies, volume I
started in the US of A towards end of 2007.
why?
1/ america is big... lots of banks, lots of money floating around, lots of mortages, lots of real estate
2/ not everyone could pay back mortages.. banks gave mortages to hill billies for estates worth milliions.
3/ In fact millions and millions and millions of dollars were left unaccounted for... By people like hill billy in 2/
4/ banks go screwed
5/ knock on effect to europe... banks in europe and joe public on moore street feel the pinch.
6/ this led to job cutbacks, companies going bust..
blah blah...!
thats my take up on it.
there aint anymore claptrap on this thread , than i dont hear coming from cameron and co,s mouths every day in the news..
by the way john keep reading chomsky,,or watch at youtube,, hes the man,, watched a lot of his pbs documentarys very informative,,
John Little
21-Jul-11, 07:18
I can't manage multiple quotes so this will have to do;
"Because asking e. orgers anything is not a sane strategy :lol:"
You mean ordinary people are giving money to the super rich? That's jolly decent of them.
"Hey! I question the flow of a thread..."
Is that what this was intended to do? I'm sorry - I took it for one of those flippant throw-away posts designed to trivialise a debate that someone is not comfortable with and so to disrupt its flow.
"...containing an abundance of half baked claptrap..."
I'm asking questions.
If you don't like the answers then give some alternatives.
The upshot of all this is that the last question has still not been answered.
So again;
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
I can't manage multiple quotes so this will have to do;
"Because asking e. orgers anything is not a sane strategy :lol:"
"Hey! I question the flow of a thread..."
Is that what this was intended to do? I'm sorry - I took it for one of those flippant throw-away posts designed to trivialise a debate that someone is not comfortable with and so to disrupt its flow.
"...containing an abundance of half baked claptrap..."
I'm asking questions.
If you don't like the answers then give some alternatives.
The upshot of all this is that the last question has still not been answered.
So again;
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
Nope. Not saying another word. (Brugger!)
What should have happened, and possibly a cheaper option, let a bank collapse i.e. the RBS. The gov't could have easily paid compensation to private domestic investors (i.e. Those with savings in the bank) then go to the board of directors and lock them up. (which they should do anyway)
tonkatojo
21-Jul-11, 09:58
What should have happened, and possibly a cheaper option, let a bank collapse i.e. the RBS. The gov't could have easily paid compensation to private domestic investors (i.e. Those with savings in the bank) then go to the board of directors and lock them up. (which they should do anyway)
The problem with that solution phill is they are the conservative party in being bankers and palls old school ties and relatives and share holders and probably more than I have the wit to think of.
tonkatojo
21-Jul-11, 10:12
This link says more than anyone has up to now,it makes me feel sick. The link contains readers replies if you do not want to read them the main content is below.
Andrew Hough, 8:27, Wednesday 20 July 2011
Bankers and finance workers earned bonuses totalling nearly £14 billion despite government attempts to curb city excesses, official figures have disclosed.
The sum is the equivilent of every worker in the financial and insurance sectors receiving an average bonus of £12,500.
Last year's figure for bonuses in the financial and insurance industries was £2 billion higher than in 2008/09 - immediately after the financial crisis struck - and was 58 per cent higher than in 2000/01.
The disclosures prompted a furious reaction from politicians, unions and campaigners who said the figures showed the "sheer greed" of the sector.
There were also accusations that banks had failed to tackle a rampant City bonus culture that helped trigger the financial crisis.
It also came amid dire warnings about the world economy, after the International Monetary Fund (IMF (Berlin:MXG1.BE (http://uk.finance.yahoo.com/q;_ylt=At2pDLEppHR.6TlZKFkZq2klsbFG;_ylu=X3oDMTEwd G5ub3ViBHBvcwMxBHNlYwNuZXdzYXJzdGFydARzbGsDbXhnMWJ l?s=MXG1.BE) - news (http://uk.finance.yahoo.com/q/h;_ylt=Ak.MvaNkrkrKdQI6NDSn.yglsbFG;_ylu=X3oDMTB1Y 2RwaWtlBHBvcwMyBHNlYwNuZXdzYXJzdGFydARzbGsDbmV3cw--?s=MXG1.BE)) ) urged eurozone leaders to take immediate action over the region's debt crisis amid fears it could prove "very costly".
The figures, released by the Office of National Statistics, showed that the financial sector accounted for 40 per cent of the bonuses paid throughout Britain despite employing just 4 per cent of the workforce.
The financial and insurance sector paid out bonuses worth £13.6 billion in the year to the end of March, which was the same as the previous year, despite ministers pledging a crackdown on the practice.
A slight rise in the number of people employed in the sector meant that the average bonus pocketed by employees dropped by just £100.
This compares to “negligible” bonuses for public sector workers such as teachers or nurses, the ONS said
Bonus payments in the sector peaked immediately before the financial crisis hit, when bonus payments totalled £19 billion and were worth 45 per cent of all pay-outs across the country.
Meanwhile, across the economy as a whole, bonuses of £35 billion were paid, which was the same as the previous year.
The average worker in the private sector received a bonus of £1,670, which was nearly 10 times higher than the average public sector bonus of £180.
The ONS said that bonuses in some industries make up a very significant part of the total pay. In finance and insurance companies, for example, bonuses accounted for 24.5 per cent of the total earnings over the last financial year.
Public anger against bonuses paid out to Britain's powerful financial industry has remained high in the wake of the credit crisis, which saw taxpayers' money used to bail out and rescue several leading British banks.
The top UK banks - Barclays (LSE: BARC.L (http://uk.finance.yahoo.com/q;_ylt=Ammn.YLoxVmwP.OoekD5yLklsbFG;_ylu=X3oDMTB2b WQ4ajB2BHBvcwMzBHNlYwNuZXdzYXJzdGFydARzbGsDYmFyY2w-?s=BARC.L) - news (http://uk.finance.yahoo.com/q/h;_ylt=Ai2Xr3cRaIaoNtM772b_PE4lsbFG;_ylu=X3oDMTB1a m10YmlwBHBvcwM0BHNlYwNuZXdzYXJzdGFydARzbGsDbmV3cw--?s=BARC.L)) , Royal Bank of Scotland (LSE: RBS.L (http://uk.finance.yahoo.com/q;_ylt=Ahk7jq6kyQaU0aqJOZkR.WglsbFG;_ylu=X3oDMTB1d GM4ZzJzBHBvcwM1BHNlYwNuZXdzYXJzdGFydARzbGsDcmJzbA--?s=RBS.L) - news (http://uk.finance.yahoo.com/q/h;_ylt=Amh0EQYAmch9p1EsisHtNVIlsbFG;_ylu=X3oDMTB1Z m9iMGw3BHBvcwM2BHNlYwNuZXdzYXJzdGFydARzbGsDbmV3cw--?s=RBS.L)) , Lloyds and HSBC (LSE: HSBA.L (http://uk.finance.yahoo.com/q;_ylt=Al_iR7VoBCnFg53CM17urqQlsbFG;_ylu=X3oDMTB2M XZ2bXVuBHBvcwM3BHNlYwNuZXdzYXJzdGFydARzbGsDaHNiYWw-?s=HSBA.L) - news (http://uk.finance.yahoo.com/q/h;_ylt=Aum9Db3A5i4WqSjw9lpMB0glsbFG;_ylu=X3oDMTB1d mNlbHVjBHBvcwM4BHNlYwNuZXdzYXJzdGFydARzbGsDbmV3cw--?s=HSBA.L)) - thrashed out a deal with the government earlier this year under a scheme called "Project Merlin".
The scheme, which was negotiated with the Treasury, ensured they pledged to moderate their pay packages and in return lend more money to small businesses to boost Britain's flagging economy.
The agreement only covered the four biggest banks, leaving smaller firms exempt. But in May the Bank of England said those banks had fallen short of those lending targets in the first quarter.
Lord Oakeshott, the former Liberal Democrat Treasury spokesman, said: "These banking bonus figures show sheer greed.
"Our country won’t believe 'we are all in this together' until the Government gets a grip on bank bonuses.
"Our broken banking system is just as toxic for Britain as politicians and police crawling up to Murdoch. We must get to the bottom of both scandals."
Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland and a member of the Treasury Select Committee, said that the bonuses are inappropriate given that small businesses are struggling to secure lending from banks.
“It is not the signal that the banking sector should be putting out, particularly to the manufacturing sector. In terms of access to funding, particularly for businesses less than five years old, the situation is getting more and more chronic,” said Mr Blenkinsop.
Brendan Barber, the general secretary of the TUC union, said: "The Chancellor's austerity message has failed to reach the City, where a small clique of super-rich bankers have grabbed 40 per cent of all bonuses paid out in the UK.
"City bonuses are still far too high and the incentives for risky and damaging decisions far too great, especially when bankers know that taxpayers always have to pick up the tab."
Dave Prentis, general secretary of the Unison union, said the figures show that "we are not all in this together", as Prime Minister David Cameron has claimed.
"Our members in the public sector are struggling to pay their bills and keep up with inflation," he said.
"Some low-paid workers are earning the same in a year as these workers are getting in their bonus package.
"The Government is doing nothing to clean up the City bonus culture at a time when it is demanding huge sanctions from the public sector."
A Treasury spokesman said: "That the overall bonus level has not increased reflects the government's commitment to tackle unaccaptable bonuses as part of the wider financial crisis.
"It is essential that remuneration, while remaining flexible, does not encourage excessive risk-taking or threaten financial stability."
M (http://us.lrd.yahoo.com/_ylt=Akf_i3dTfoYL1SC3u_rM5OwlsbFG;_ylu=X3oDMTFkczJ sY2cxBHBvcwMxBHNlYwNwcm92aWRlci1mb290ZXItYWQEc2xrA 21vcmVmaW5hbmNlcw--/SIG=11nq3ih7f/EXP=1312449009/**http%3A//www.telegraph.co.uk/finance/)
http://uk.finance.yahoo.com/news/City-bonus-row-sheer-greed-tele-3771496276.html
NickInTheNorth
21-Jul-11, 10:26
Question 7
If this is a fraud and a vast misappropriation of public monies, why are so many ordinary people lining up on this forum and elsewhere to justify it, taking the view that there was nothing else to be done?
I think that there are 2 major reasons for this.
Firstly as alluded to earlier there are so many ordinary folks so deeply enmeshed in the whole sordid debt crisis through excessive borrowing based on fictitiously inflated house prices that they have a vested interest in the whole rescue deal.
Secondly they have been led to believe that as Margaret Thatched once so stupidly said in a different context "there is no alternative". There was, and is an alternative to this continued kow towing to the banks, that is to nationalise them. After all we own the majority of several of them, so why not be honest about the status of them. Then we can appropriate the profits they are now turning in to the benefit of the real owners rather than to the shareholders that oversaw the whole stupid mess in the first place.
The problem with that solution phill is they are the conservative party in being bankers and palls old school ties and relatives and share holders and probably more than I have the wit to think of.Labour at the time, but the party is irrelevant these days, it is the old school chums brigade any which way.
John Little
21-Jul-11, 10:35
So the answer to why people accept it is that they think there is no alternative.
Question 8
Why do people think there is no alternative?
Why do people think there is no alternative?Because that is the lies that we were told. They said it so often they believed it themselves.
NickInTheNorth
21-Jul-11, 10:47
So the answer to why people accept it is that they think there is no alternative.
Question 8
Why do people think there is no alternative?
Because the media have peddled that lie so much.
There are always alternatives, it is just a question of what your preferred outcome is.
I have to be totally honest and say that I believe the world would have eventually become a better place had the banks been allowed to fail. I believe that a much needed dose of honesty would have been injected into all of our lives. Yes there would have been devastation among businesses, people would have lost a fortune etc etc. But fundamentally nobody would have been killed by it.
The REAL alternative was to nationalise the banks and allow the country to take ownership and management of these corrupt institutions.
Instead what was done was a totally dishonest fix. It involved taking money from the poorest in society to prop up the wealthy and then to assuage the guilt the wealthy managed to peddle a myth that the reason for the parlous state of affairs in which the country finds itself is due almost entirely to the excessive amounts of money being poured into the pockets of the ill, the unemployed, the work shy, immigrants, and various other assorted ne'er do wells.
John Little
21-Jul-11, 10:48
@ Phill
I could go for that - but as an extension to the question how did those lies get so widespread and accepted that otherwise intelligent people whose taxes have been taken and used for other things now accept that it is their fault?
John Little
21-Jul-11, 10:54
Pre-amble
The banks have got the money and regained liquidity so are in business making profits.
The people that the money would have gone to are now losing jobs, accepting cuts, seeing house prices drop and their taxes rise to pay for the tax money that was used to prop up the banks.
Question number 9
If the sensible thing to do, with banks that are effectively afloat because of our money, would be to nationalise them, stop them handing profits made with our money to their employers and shareholders, then why does the government not do it?
NickInTheNorth
21-Jul-11, 11:01
simple - ideology
John Little
21-Jul-11, 11:16
Question number 10
If the answer to question 9 was 'Ideology', was the Archbishop of Canterbury correct to say that the current government has no mandate to pursue the policies it is following?
NickInTheNorth
21-Jul-11, 11:24
No, he was incorrect.
Any person that can command a majority in the house of commons and has been invited by her majesty has a mandate to govern. Don't forget we are subjects, not citizens, therefore the monarch has given the mandate.
If we want a "more democratic" and accountable system of government it would be relatively simple.
Do away with "three line whips" and any other sanctions a political party is able to bring to bear against an MP. In theory each MP is free to vote as he or she wishes on any vote. Currently they all have to vote as their party dictates. That is why we get the ideological governments we deserve.
John Little
21-Jul-11, 11:29
Question 11 (one more to go)
Since this government has a mandate to continue with policies that are essentially partisan for another four years, what, if anything, could and should we be doing about it?
NickInTheNorth
21-Jul-11, 11:41
short of bloody revolution the best chance would be for everyone in LibDem constituencies to get together and make it very clear to their elected representative that if they continue to back the government neither they nor any of their ilk will ever get elected to the UK parliament again - and that just so is not going to happen.
In reality there is nothing we can do. Just put up with it, or maybe we could get the media to expose the corrupt practices engaged in by this and all recent governments...
John Little
21-Jul-11, 11:50
Lastly; this being the situation, and it being evident that I am not alone in following this line of thought...
Question 12.
Is the current situation symptomatic of a healthy working Democracy or of a banana republic run by an oligarchy?
I have no more questions for now though will comment. Some may occur later but I decided that 12 was a good number.
If anyone wishes to ask any more then please do.
We dont live in a democracy,, we live in a plutocracy
NickInTheNorth
21-Jul-11, 12:20
Lastly; this being the situation, and it being evident that I am not alone in following this line of thought...
Question 12.
Is the current situation symptomatic of a healthy working Democracy or of a banana republic run by an oligarchy?
I have no more questions for now though will comment. Some may occur later but I decided that 12 was a good number.
If anyone wishes to ask any more then please do.
Certainly closer to the latter than the former...
I have a question. If the banks had been allowed to fail, and the next day you went to the bank machine or the supermarket and there was no money in your account what would you and possibly 28 millionish other people do?
It was not an option!
Like I said Claptrap.
John Little
03-Aug-11, 08:56
http://en.wikipedia.org/wiki/Quantitative_easing#Printing_money
NickInTheNorth
03-Aug-11, 09:12
I have a question. If the banks had been allowed to fail, and the next day you went to the bank machine or the supermarket and there was no money in your account what would you and possibly 28 millionish other people do?
It was not an option!
Like I said Claptrap.
If it was not an option then we should have nationalised banks. If it is OK to spend public money to prop up a bankrupt dishonest company then we should as a nation have the possibility of a return on the investment.
We are supposed to be a capitalist society, where risks are taken in return for rewards. One of the risks is failure and if that happens then the penalty should be paid.
If the banks had not "known" for a fact that they would not be allowed to fail then they would have taken a far more prudent course of action on lending dubiously.
I have a question. If the banks had been allowed to fail, and the next day you went to the bank machine or the supermarket and there was no money in your account what would you and possibly 28 millionish other people do?It wouldn't have needed to be banks, but a bank.
The govt could have refused to bail out the bank, but taken over and protected the cash deposits of domestic account holders.
Once the signal is given to the financial industry that the the Govt isn't going to underwrite the gamblers losses they will find another way. And a competitor bank would come along and pick up the high st arm of the business off the administrators.
It wouldn't have needed to be banks, but a bank.
The govt could have refused to bail out the bank, but taken over and protected the cash deposits of domestic account holders.
Once the signal is given to the financial industry that the the Govt isn't going to underwrite the gamblers losses they will find another way. And a competitor bank would come along and pick up the high st arm of the business off the administrators.
RBS was one day away from having no cash in the machines. None of the above proposed solutions would have addressed that. Someone said no one would have died. I beg to differ.
I think the cash machine line is media tosh and bunkum at best and political lies at worst. I very much doubt that all the high street bank vaults were empty and the bank staff were coppering up and sending the pennies to head office to stave off the bailiff.
The reality is the bank we know in the high st is a different business to investment / gambling side, albeit all one group and effectively in the same pot, the money there is pretty liquid.
NickInTheNorth
03-Aug-11, 11:47
and let's face it most spending these days is or can be done with plastic. It is generally only dinosaurs like me that keep all my funds in cash and spend real folding stuff unless compelled to pay by plastic online.
I think the cash machine line is media tosh and bunkum at best and political lies at worst. I very much doubt that all the high street bank vaults were empty and the bank staff were coppering up and sending the pennies to head office to stave off the bailiff.
The reality is the bank we know in the high st is a different business to investment / gambling side, albeit all one group and effectively in the same pot, the money there is pretty liquid.
That line came from a BBC interview with Gordon Brown at the time (and he seemed very angry). And Nick, who do you think backs the funds for the credit cards and debit cards?
NickInTheNorth
03-Aug-11, 12:01
That line came from a BBC interview with Gordon Brown at the time. And Nick, who do you think backs the funds for the credit cards and debit cards?
Ooooohhhh, I don't know, would that be the tooth fairy...?
You made the point about cash and cash machines, I answered that objection, as Phill pointed out the retail banks are pretty liquid...
and I really could not have cared less if the banks ran out of money, or stopped paying on plastic, I long for the day which surely cannot be too much longer in coming when the whole dishonest mess that is the modern capitalist edifice crumbles and credit stops being the means by which funds are transferred ever faster from the relatively poor to the obscenely wealthy.
I am still waiting for a sensible answer to a question I have asked many times in my life. Why is it that we have had governments of all shades preaching to us for decades that "inflation" is bad and have a central bank dedicated to ensuring it stays low; at the same time the self same governments and banks have encouraged, cajoled and forced as many people as possible into home ownership, and then actively connived in ensuring house price inflation on a totally unrealistic and unaffordable scale. The only reason is for the borrowing it encourages and the debt that makes a fortune for the banks and wealthy that can afford to buy the property to let the the poorest in society that then have the rent paid by the state.
The cash machine line was just scaremongering, plain and simple, just like the US debt ceiling nonsense. To the vast majority of us the fact that our, or any, country owes Billions, Trillions or Quintillions is meaningless. It means nothing to us because we can't rationalise it, we couldn't earn it, we couldn't spend it. The majority of us can rationalise a few hundred grand, maybe even a million because it is within our scope of earning capability, spending / understanding in so much as a house cost £100k and to buy it means we would have to pay £xxx out of our wages of £xxx.
£100,000,000,000....... it's a bliddy phone number!
But when someone says the cash machines will be empty tomorrow or your not getting your social security check / DSS payment on Thursday then all of a sudden its panic among the voters until a politico says they have the answer.
Ooooohhhh, I don't know, would that be the tooth fairy...?
Er... No
You made the point about cash and cash machines, I answered that objection, as Phill pointed out the retail banks are pretty liquid...
That was an example of the seriousness of the problem. The point is no customer would have had access to their funds. And, indeed this may have been a perminent denial.
and I really could not have cared less if the banks ran out of money, or stopped paying on plastic, I long for the day which surely cannot be too much longer in coming when the whole dishonest mess that is the modern capitalist edifice crumbles and credit stops being the means by which funds are transferred ever faster from the relatively poor to the obscenely wealthy.
Taking out the emotive rhetoric, I honestly believe that, that will be the day before world war 3 breaks out, using as a primary weapon, rocks.
And anyway, it's all subjective. You seem to think anyone who owns (with a mortgage) a house is rich? Where is the cutoff point? Who is rich :mad: and who is poor :D to you?
I am still waiting for a sensible answer to a question I have asked many times in my life. Why is it that we have had governments of all shades preaching to us for decades that "inflation" is bad and have a central bank dedicated to ensuring it stays low; at the same time the self same governments and banks have encouraged, cajoled and forced as many people as possible into home ownership, and then actively connived in ensuring house price inflation on a totally unrealistic and unaffordable scale. The only reason is for the borrowing it encourages and the debt that makes a fortune for the banks and wealthy that can afford to buy the property to let the the poorest in society that then have the rent paid by the state.
Sorry, that bits just a rant.:eek:
Damn! Thought I had the multi quote sussed!
weezer 316
03-Aug-11, 14:29
Ooooohhhh, I don't know, would that be the tooth fairy...?
You made the point about cash and cash machines, I answered that objection, as Phill pointed out the retail banks are pretty liquid...
and I really could not have cared less if the banks ran out of money, or stopped paying on plastic, I long for the day which surely cannot be too much longer in coming when the whole dishonest mess that is the modern capitalist edifice crumbles and credit stops being the means by which funds are transferred ever faster from the relatively poor to the obscenely wealthy.
I am still waiting for a sensible answer to a question I have asked many times in my life. Why is it that we have had governments of all shades preaching to us for decades that "inflation" is bad and have a central bank dedicated to ensuring it stays low; at the same time the self same governments and banks have encouraged, cajoled and forced as many people as possible into home ownership, and then actively connived in ensuring house price inflation on a totally unrealistic and unaffordable scale. The only reason is for the borrowing it encourages and the debt that makes a fortune for the banks and wealthy that can afford to buy the property to let the the poorest in society that then have the rent paid by the state.
Ill answer the last question for you, its nothing to do with the wee people keeping the rich rich, they are very good at that themselves, its go everything to do with removing the burden of housing from the governement and transfering it to the individual. I know very few people who have bought that have went back the way and returned to council tenancy, and I know none who have done so willingly, rather, as a consequence of failure to pay their mortgage.
At the end of the day, you need to live somewhere and you are still paying the man, with a mortgage having an end date, as opposed to council tenancy. Also, it allows people to secure a place they desire to live, rather than hope your name is at the top of the list at the right time.
I assume you have a better way to distribute housing?
weezer 316
03-Aug-11, 14:30
The cash machine line was just scaremongering, plain and simple, just like the US debt ceiling nonsense. To the vast majority of us the fact that our, or any, country owes Billions, Trillions or Quintillions is meaningless. It means nothing to us because we can't rationalise it, we couldn't earn it, we couldn't spend it. The majority of us can rationalise a few hundred grand, maybe even a million because it is within our scope of earning capability, spending / understanding in so much as a house cost £100k and to buy it means we would have to pay £xxx out of our wages of £xxx.
£100,000,000,000....... it's a bliddy phone number!
But when someone says the cash machines will be empty tomorrow or your not getting your social security check / DSS payment on Thursday then all of a sudden its panic among the voters until a politico says they have the answer.
Whether you can rationalise it or not, the fact remains our wrong lol! The US debt madness aint scaremongering, it needs cash to pay things, it didnt have enough and therefore some would need to fall by the wayside. Simples really.
Was just hearing that Spain and Italy are perhaps in some trouble.....thoughts?
weezer 316
03-Aug-11, 15:42
Spending beyond their means! But still, we shouldnt cut our cloth accordingly apparently.
Is all these probs going to affect the UK., and if so wo what extent??......I realize the belt tightening/ we are also doing it being so close to the US.
weezer 316
03-Aug-11, 16:25
Of course it will effect us. About 50% of our exports go to the EU, it will afect out ability to export there, and also investment from those countries here. I remember hearing on the bbc a few years ago that EU investment sustained 2.8 million jobs in this country, although I havent been able verify that figure anywhere so it may well have changed.
oldmarine
03-Aug-11, 19:34
By lending money to people which they (the people) could not afford to repay, these people were so used to buying things which they could not afford that they kept borrowing more and more, then they defaulted on these loans and the banks which should have refused the loans in the first place managed to get the government to bail them out (with our i.e. taxpayers money).
So yes the banks played their part but the real problem was the people wanting things which they couldn't afford
In addition to what was posted above people went too far into debt with credit cards with balances too large to pay off. When my children were going to a university I had to monitor their credit card spending. Believe me it was a difficult thing to day for them and for me. But we all learned and survived. I can't speak for GB but I am aware of what goes on in the USA.
NickInTheNorth
05-Aug-11, 10:20
and it looks like there is worse to come, markets collapsing around the world, governments without money to bail us all out, so doubtless central banks will be cranking up the printing presses and we'll have even higher inflation...
weee're doomed captain Mainwaring, we're doomed...
Neil Howie
05-Aug-11, 21:55
Hey John
it sounds like you need some big economic questions put in the medium of hip hop :D
Keynes vs Hayek (round 2)
on (where else?) youtube (http://www.youtube.com/watch?v=GTQnarzmTOc&feature=related)
(it only gets going after the security guard bit at the start).
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