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RE: "The banks must be made to feel pain" - Apr. 27 2008 21:20:37
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Puzzle
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What's annoyed me is that the government has said that it will stop people's houses being reposesssed. Inflated house prices need a correction and an increased supply of houses would correct prices, but now people who rent and people who haven't borrowed too much are going to be bailing out some home owners. It's not been spelt out how the government will do this but it is going to cost, assuming it's not an empty promise, which is possible. Rising house prices is one of the biggest factors in social inequality but repossessions are politically more difficult than intangible equality.
There's no moral hazard for the banks; they've always known they would be bailed out for fear of there being a run on the bank, which would be disaster in a country with so much money invested in so few banks.
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RE: "The banks must be made to feel pain" - Apr. 27 2008 21:49:10
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Roger Mellie
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I seen a documentary on this a few weeks back and it was essentially free money for those selling sub prime loans. I forget how it worked to be honest, but these people are dubious crooks who are allowed to get away with irresponsible trading.
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RE: "The banks must be made to feel pain" - Apr. 27 2008 21:57:38
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Max Power
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I wish I owned a business where all my losses were covered by the government
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RE: "The banks must be made to feel pain" - Apr. 27 2008 22:00:24
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muscleman2008
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The banks loses are covered by the government because the banks money is our money! If the bank goes bust you have no savings. The governement is doing what it is doing to secure the consumers money from the problems caused to the global economy by the American credit crunch.
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RE: "The banks must be made to feel pain" - Apr. 27 2008 22:13:33
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tuc biscuit
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can't be arsed reading that to be honest from the second post in thsi thread
a press blackout has been imposed on which banks are getting financial help and how much though
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RE: "The banks must be made to feel pain" - Apr. 27 2008 22:28:19
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Roger Mellie
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quote:
ORIGINAL: muscleman2008
The banks loses are covered by the government because the banks money is our money!
The issue I have with that is that the banks money (our money) went to private individuals who are living the high life now. All because of flawed economics and trading that was bound to fail in the long run. In addition to that shareholders of the banks would seem to have an unfair advantage in that their risks are reduced where they should have lost out more severely, and taxpayers money appears to be paying for it all.
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RE: "The banks must be made to feel pain" - Apr. 27 2008 22:29:51
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muscleman2008
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what we are seeing at the minute is pretty much all down to the credit crunch and is just a global reaction, there isn't much blame that can be put on to the shoulders of the British banks apart from their links and borrowing from the US.
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RE: "The banks must be made to feel pain" - Apr. 28 2008 1:05:30
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Mouser
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quote:
ORIGINAL: muscleman2008
what we are seeing at the minute is pretty much all down to the credit crunch and is just a global reaction, there isn't much blame that can be put on to the shoulders of the British banks apart from their links and borrowing from the US.
Not quite true, our own home grown banks lent on some real howlers, CDO^2s and such were always going to result in abuse. PE firms making buyouts on ever larger multiples with less and less financial due diligence and more creative accounting such as normalised EBITDA. I could go on, but the reality is very complex and the value of the assets you have depends enormously on the value of other, completely unrelated assets; as well as the actions of the state and regulators.
In future I'd like to see banks limited to a range of investments which they can undertake in order to operate as a bank, for this to be limited, and for sensible financial basics to be specified including limiting of reinsurance and the like. Anything which adds loops and complexity in a system such as this is asking for trouble.
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RE: "The banks must be made to feel pain" - Apr. 28 2008 8:25:05
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elbowsandknees
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Everyone's 100% retrospectively.
British banks lent on heavy sub-prime (such as to 'unlimited' rated customers), but they had the demmand of the property market for security of their loan. They did not however loan to no income, no job, no assets borrowers like the US did while also having little demmand for property, which was ridiculous.
Just a couple of points...
The Government is not GIVING this money to the banks.
Not one British bank is actually losing massive amounts of money from these loans (quite the opposite)
< Message edited by elbowsandknees -- Apr. 28 2008 8:27:07 >
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RE: "The banks must be made to feel pain" - Apr. 28 2008 10:17:59
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Skrewdriver
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quote:
ORIGINAL: muscleman2008
If the bank goes bust you have no savings.
That is incorrect, up to £35,000 of your savings, with each bank (who is registered, which is most) is covered.
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