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#303109 - 10/08/08 05:09 PM Bank bailout  
Joined: Aug 2008
Posts: 3,046
Peter Jones Offline
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Peter Jones  Offline
Following the horror over the $700bn bailout in the US, a nation with 300m people, it's interesting that the UK has just announced a similar bailout. But the UK only has 61m people, and the bailout is GBP500bn, which at exchange rates that existed before this all started is around $1trillion.

Nonetheless, many learned pundits are saying that both in the US and in the UK it's too late, and the freefall will continue. It might have worked if it had been done quickly, but the "democratic process" prevented that. Similarly, the worldwide coordinated reduction in base rates is being described as tentative and too little, and will almost certainly have no beneficial effect. In the UK rates were reduced from 5% to 4.5%, whereas they should probably have gone to 3% or less. Some pundits are suggesting it should have gone straight to nil. One does wonder what our political and banking masters are on!

The banking and money system is all about confidence. The present activities of governments suggest that no-one has grasped the reality of what is happening, and that does nothing to boost confidence. Commentators are now saying that many more businesses all over the world will go under, people will lose what they thought were secure jobs, houses will be repossessed (unless the lenders are prevented by law from so doing, as should happen), and we'll be back in 1929.

Prepare for a bumpy ride.

#303111 - 10/08/08 05:12 PM Re: Bank bailout [Re: Peter Jones]  
Joined: Apr 2000
Posts: 8,868
SP Daily Offline
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SP Daily  Offline
Are you the author of this?
If not, then who?

#303114 - 10/08/08 05:29 PM Re: Bank bailout [Re: SP Daily]  
Joined: Aug 2008
Posts: 3,046
Peter Jones Offline
.
Peter Jones  Offline
Am I the author of what?

#303115 - 10/08/08 05:34 PM Re: Bank bailout [Re: Peter Jones]  
Joined: Feb 2002
Posts: 5,255
sweetjane Offline
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sweetjane  Offline
i know it is not to the point of the your post, but i believe i heard there is one difference between what the US did and what the UK did. my (feeble) understanding is that the US bought up debt, and the UK bought up assets. in essence, i believe, the UK gov't now owns the banks.

did i get this right?


#303118 - 10/08/08 05:45 PM Re: Bank bailout [Re: sweetjane]  
Joined: Aug 2008
Posts: 3,046
Peter Jones Offline
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Peter Jones  Offline
To an extent yes, in the UK the government is taking shares in some of the banks. But that is in addition to the main part of the deal, that the gov't will guarantee debts (under some circumstances) so that no one institution will feel too exposed, and that is common to the UK, US and most other countries. How the US gov't will protect its interests isn't clear to me.

I think the difference is at the level of detail - what matters is re-establishing confidence across the board so institutions can/will lend to each other, and according to the pundits it is that that hasn't succeeded.

#303175 - 10/09/08 08:01 AM Re: Bank bailout [Re: Peter Jones]  
Joined: May 2000
Posts: 3,280
Barbara K Offline
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Barbara K  Offline
Too bad Gordon Brown sold off all the UK's gold when he was finance minister at about $350 USD/oz....

#303176 - 10/09/08 08:10 AM Re: Bank bailout [Re: Barbara K]  
Joined: May 2005
Posts: 3,936
Otteralum Offline
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Otteralum  Offline
Breaking U.S. news this morning

1) The U.S. government is considering the idea to hold interest in U.S. banks a la Britain

2) The U.S. national debt clock in Times Square just ran out of digits (no joke) at over $10 trillion


I will have a Belikin -- put it on klcman's tab.
#303177 - 10/09/08 08:15 AM Re: Bank bailout [Re: Otteralum]  
Joined: Feb 2003
Posts: 2,429
dogmatic prevaricator Offline
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dogmatic prevaricator  Offline
I'm curious when the national debt bubble is going to pop.


If you must choose between two evils, pick the one you've never tried before.
#303195 - 10/09/08 09:52 AM Re: Bank bailout [Re: dogmatic prevaricator]  
Joined: Aug 2008
Posts: 3,046
Peter Jones Offline
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Peter Jones  Offline
Tony Blair & Gordon Brown are largely responsible for the precarious state Britain is in now, as ever since they took power they have "sold off the family silver" (gold in this case)to fund their extravagant and mindless lifestyle. Now Britain is projected to fall further and faster than any other western nation.

Many individuals and local authorities have deposits with Icelandic banks, as well run as any bank can possibly be, yet all those banks have now gone bust. Some guarantees have been put in place by both governments, but it still looks as if people are going to lose 2 billion dollars' worth of deposits.

Just imagine being careful and prudent in your lifestyle, never spending all your income and putting money aside for "a rainy day", then waking up one morning to find all of your share portfolio worthless, all the money you had on deposit in banks gone, your job gone, all your household expenses risen massively, your mortgage payments doubled just at a time you have no money with the probable consequence that you lose your house. Perhaps your children are at fee-paying schools - they will lose their places.

Some people here have dismissed what is happening as just, implying it only penalises people who didn't look after their affairs and prepare for tomorrow. Someone even said rather smugly that he had never bought new cars and toys, but had carefully looked after his money and saved. I'm afraid that hasn't helped, and those people who were the most careful and who saved or invested the most are the very people who are now losing the most.

This is far from over and governments MUST find a way to solve it, by concerted international action. Ideally reverse it, but at least stop it getting worse. The only way people can be sheltered from the draconian effects of this global collapse is by government or community effort, commonly termed socialism.

#303202 - 10/09/08 10:19 AM Re: Bank bailout [Re: Peter Jones]  
Joined: Nov 2006
Posts: 1,094
Danny2 Offline
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Danny2  Offline

There should be an immediate freeze on all foreclosures.

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