Economy is worse under us, says Cable

[spanna]

Of course it was New Labour who bailed the banks out - but heck why not blame the Tories for it

[mertle]

Anybody seen the university of zurich study about would economy owned by just 147 super companies this the real power.

The world debt in my opinion is rousse to crush global governments power to such degree that they will go begging to the companies for there help eradicate it. Obviously they will have turn blind eye to thes super companies actions. Ultimately these companies will take control of governments if they aint already got puppets in there already.

http://www.dailymail.co.uk/sciencete...l-economy.html

[Ignitionnet]

Originally Posted by spanna

Of course it was New Labour who bailed the banks out - but heck why not blame the Tories for it

The Tories are the ones carrying on the trend, and telling us that the various pro-bank policies and BoE's low interest rates and further QE that are ramming inflation up our backsides are a good thing.

I blame the Tories because they, not Labour, are in government now. They've had over a year now which is more than enough to amend things, as it is they've stalled structural separation of banks and continued to act as the City of London's bitches.

New Labour started the trend, doesn't mean it had to be carried on by Blue Labour. Rather than making the City suffer for what it did, prosecuting fraudster bankers, etc, they've allowed the FSA to keep the conduct at RBS secret, done nothing to push a bank we own the majority of to get its act together, and are about as potent as a man with irradiated testes.

http://blogs.telegraph.co.uk/finance...a-and-ireland/
http://blogs.telegraph.co.uk/finance...about-the-fsa/
http://blogs.telegraph.co.uk/finance...unt-over-atms/

RBS - £45bln in direct cash support, £100bln in loans and insurance, over 10% of the entire national debt, and they are giving RBS yet more created money to try and 'encourage' it to lend to businesses. Stuff that, we own them, they do as they are told.

[nomadking]

One thing that keeps being overlooked is that Labour's excessive borrowing and spending made the economy look better that it actually was. So any comparisons are misleading. Just as an individual can appear to have a fantastic standard of living as long as they can keep borrowing money.

[Ignitionnet]

Originally Posted by nomadking

One thing that keeps being overlooked is that Labour's excessive borrowing and spending made the economy look better that it actually was. So any comparisons are misleading. Just as an individual can appear to have a fantastic standard of living as long as they can keep borrowing money.

Without a doubt, doesn't change that the same bubbles that fuelled this are being kept up by the current government as much as possible.

The recession is apparently over because the economy is growing, I would speculate that many would disagree with the GDP figures as they increasingly feel the pinch.

The government has made a conscious decision to bail out borrowers and to inflate away debt. They didn't have to choose this course, and it's frankly immoral that they have chosen the most insidious of tax rises, inflation.

Our current national debt is £977 billion according to http://www.debtbombshell.com/ - the BoE owns £177 billion of that and could tear it up tomorrow - https://mninews.deutsche-boerse.com/...ing-free-float - and will own more as that is again what it's planning to purchase.

It's kinda amusing when you think about it, not only are we allowing inflation to reduce the real value of our national debt, we're printing money to buy it back too.

[Chrysalis]

Originally Posted by Ignitionnet

The Tories are the ones carrying on the trend, and telling us that the various pro-bank policies and BoE's low interest rates and further QE that are ramming inflation up our backsides are a good thing.

I blame the Tories because they, not Labour, are in government now. They've had over a year now which is more than enough to amend things, as it is they've stalled structural separation of banks and continued to act as the City of London's bitches.

New Labour started the trend, doesn't mean it had to be carried on by Blue Labour. Rather than making the City suffer for what it did, prosecuting fraudster bankers, etc, they've allowed the FSA to keep the conduct at RBS secret, done nothing to push a bank we own the majority of to get its act together, and are about as potent as a man with irradiated testes.

http://blogs.telegraph.co.uk/finance...a-and-ireland/
http://blogs.telegraph.co.uk/finance...about-the-fsa/
http://blogs.telegraph.co.uk/finance...unt-over-atms/

RBS - £45bln in direct cash support, £100bln in loans and insurance, over 10% of the entire national debt, and they are giving RBS yet more created money to try and 'encourage' it to lend to businesses. Stuff that, we own them, they do as they are told.

I will say it again ,take the banks out the picture.

Government wants money lent to business to stimulate economy.
Normally they want banks to do it and bank makes profit from interest.
Banks refuse to give out enough loans to keep government happy.
Soltion tell banks they no longer allowed to lend money to anyone as they been too picky, government directly lends to businesses or the BOE does and they do so at base interest rates or interest free even, take profit out of it.
Banks cry and cry, tough luck just go back to securing deposits.

That 100+billion welfare handout to the banks would have gave a far bigger stimulas if going direct to the population however I do respect it also probably would have pushed up inflation but thats going up anyway regardless.

[Traduk]

Originally Posted by Chrysalis

I will say it again ,take the banks out the picture.

Government wants money lent to business to stimulate economy.
Normally they want banks to do it and bank makes profit from interest.
Banks refuse to give out enough loans to keep government happy.
Soltion tell banks they no longer allowed to lend money to anyone as they been too picky, government directly lends to businesses or the BOE does and they do so at base interest rates or interest free even, take profit out of it.
Banks cry and cry, tough luck just go back to securing deposits.

That 100+billion welfare handout to the banks would have gave a far bigger stimulas if going direct to the population however I do respect it also probably would have pushed up inflation but thats going up anyway regardless.

If you Google and read the copious amount of information on QE UK style it will slowly become apparent that the hope was that some of the QE money would emerge as cash into the economy and stimulate growth. The fact that it hasn't achieved the objective before does not hold out much hope that it will do it irrespective of the failed prior attempts. Without any other ideas try, try and try again appears to be the the way forward or backwards depending on your viewpoint.

I rather subscribe to the view that nobody who is worthy of borrowing money wants to do so and those that are of dubious worthiness would be rejected by the banks anyway.

Businesses tend only to borrow when they have a reasonable expectation of using such borrowings for growth above and beyond interest costs. Borrowed money has to earn way beyond its cost and in the current environment it obviously cannot so there is no demand.

The public are generally reported as battening down the hatches, paying off debt with any surplus and cutting on spending which is reflected in business reluctance to invest in growth.

The Treasury nor the government has any method of judging credit worthiness of businesses as that area is entirely in the domain of retail banking. I feel sure that if some hair brained idea came about to bypass banks, there would be a queue miles long to borrow money but equally I feel sure that most of the money would vanish into the pockets of Ltd. companies who are no stranger to bankruptcy procedures.

If it were directed to the public it would give some people a fillip but a heck of a lot would vanish into banks as debt repayment or savings.

The nature of the problem is mass psychology. I think it was either Cameron or King who referred to a crisis of confidence in the Eurozone. It may be with the leaders over there but it stalks every household and company over here and possibly in Europe. Cameron and co. cannot preach the virtues of prudence and the people who may or may not listen to them hearing or reading of daily references to an ongoing recession without morale slipping into the abyss.

Too much damage has been done and if anything is to be re-inflated it is a monumental task which needs to be built off mission accomplished which of course is obviously nowhere near the case.

We are between a rock and a very hard place and appear to have a crop of politicians both here and in Europe who are bereft of ideas.

[Chrysalis]

of course. confidence is the be all and end all.

If the banks were allowed to go bust and a new era started, then I think we would at this time be on the road to recovery.

But instead the government(s) patched up the current system and the population has lost faith in that system. Most notably as ignition said they sacrificing growth and wealth so those in debt can inflate away their debts which is mainly homeowners and the government itself. This country is too addicted to the property market and it needs to let go and let a property crash (correction) happen. Problem is too many influential people in both the media and government, as well as probably corporate have vested interests in property.

[Traduk]

Originally Posted by Chrysalis

of course. confidence is the be all and end all.

If the banks were allowed to go bust and a new era started, then I think we would at this time be on the road to recovery.

But instead the government(s) patched up the current system and the population has lost faith in that system. Most notably as ignition said they sacrificing growth and wealth so those in debt can inflate away their debts which is mainly homeowners and the government itself. This country is too addicted to the property market and it needs to let go and let a property crash (correction) happen. Problem is too many influential people in both the media and government, as well as probably corporate have vested interests in property.

The banks cannot be allowed to go bust under any circumstances.

There was a secondary banking collapse back in the 79\80's. The secondary banks were primarily involved with businesses and specialised in loans and dealing with non mainstream type deals. Their demise caused quite a few major businesses to go to the wall.

Collapses in the primary banking system would see thousands and potentially hundreds of thousands of ordinary people and many mainstream businesses going bankrupt overnight. Banks are the arterial flow of the lifeblood of the country and are trusted to hold in safety and facilitate transactions on behalf of everybody in the country. With them going bust we not only go back centuries in transaction capabilities but would become a third world impoverished country in the blink of an eye.

The problem that led to the banking crisis was the removal of protections in the mainstream banking sector which had been long seen to be a problem in brokers dealing with private traders accounts. Brokerages were able in the past to use client funds for in house trading and if they went seriously wrong could lose their money plus that placed with them by private individuals. One private trader could also rack up losses beyond what they could pay and take down the accounts of everybody else plus the broker.

Segregation was brought in as an option to place client funds where the broker could never touch the clients money and safety nets were also put in place to protect clients against the actions of other clients.

Having explained what I witnessed and on occasion was involved (innocently) with in the brokerage business, compare and contrast what the high street banks did when Labour facilitated America's desire for change.

In the past all the high street banks could do with clients money was retail banking plus parking surplus in government money at Libor rates. 100% safe .
In 1999 the USA repealed (discarded) the Glass-Steagall act which had ensured banking separation of funds into private and tradable since 1933. It had been created to protect the public post the carnage of the USA collapse into financial horror and depression in the 30's and they took the protection away and we followed suit.

Labour didn't stop to think that what had been seen as a cause for financial catastrophe may lead to another but as sure as night follows day it did.

Ironic that the government is now calling for laws to separate banking activities when time tested laws were in place for 66 years but were thrown away by Labour (at the desire of the USA).

We have to get back to banking segregation where they can no longer see client funds as a cash cow other than via Libor but unfortunately the almighty mess that they have managed to get themselves into will have to be bailed out if anybody ever works out who owes who what.

The Leeson affair was a drop in the ocean compared with the fiasco the banks are in. You may wish to see housing prices go down but I can assure you with total certainty that if the full extent of the problems were unleashed in a major banking collapse, owning a house would not be priority. Surviving the aftermath would prove to be much more of a priority as the country would be rather more than ruined. We have no choice but to pay the gambling losses of probably the biggest bunch of losers the world has ever known.

[Chrysalis]

I never said all banks go bust, some were in a healthy state and would be there to take the customers who need a new bank, so we would still have a banking system. I hope you realise the problem in having a profit making machine that knows it cannot be allowed to go bust, having the garuantuee of been bailed out.

[Traduk]

Originally Posted by Chrysalis

I never said all banks go bust, some were in a healthy state and would be there to take the customers who need a new bank, so we would still have a banking system. I hope you realise the problem in having a profit making machine that knows it cannot be allowed to go bust, having the garuantuee of been bailed out.

The banks are so interlinked that if one or more of the big ones goes under so do most of the rest.

There is little isolation in the banking network on either a countrywide basis or internationally. There is still an unknown sized elephant in the room called CDS (credit default swaps) which are highly leveraged traded instruments which are guestimated to insure the potential of sovereign debt failure for trillions. The sweat over the Greece situation is how to stop the triggering of those globally interlinked deals which are what has been described as weapons of mass financial destruction. The banks are into these instruments up to their eyeballs and beyond. They do not even know how big their risks are and would only know when the pass the parcel started with telephone number sized claims swirling around.

I like your idea that the few banks that would remain would be able to facilitate those who were in a bank that went bust. Not a lot of need for a bank if all your money has vanished into the ether.

Of course I know the problems of having a profit making machine that cannot go bust and thought that I had more than covered that in my post. You may not like and I do not either but the reality is that unless we (the government) bails out the losers we have a choice of lose a lot or lose it all.

You may wish to think the implications through a little more before assuming that all will be well if banks are allowed to go under. Savvy people have spread their money to take advantage of the government's assurance scheme for underwriting bank risk of failure to individuals. I haven't checked recently but I think its 90% up to £85K person per institution. Billions paid by you and I would go to those people if there was a collapse. There is no way out but to grin, bear it and hope that somebody sorts out the mess.

[Dai]

Originally Posted by Traduk

The banks are so interlinked that if one or more of the big ones goes under so do most of the rest.

Just thought I'd say thanks for your detailed and informative posts. The perspective and experience that you add to these financial threads is appreciated.

[Traduk]

Originally Posted by DaiNasty

Just thought I'd say thanks for your detailed and informative posts. The perspective and experience that you add to these financial threads is appreciated.

Thank you.

The problem with keeping abreast of macro financial developments is that it not only makes one highly cynical but it expands laterally into an understanding of the why and wherefores of who does what and why on the global stage.

There are a couple of threads that I have chosen not to respond to because those who know also know when to leave the keyboard untouched

[Russ]

I'm often reminded of a conversation I overheard a year or two back on a train by two city banker types, one saying to the other that the people who hoard and save their money are the selfish ones as apparently (according to these two) what people ought to be doing is "spend spend spend" to get the economy moving.

Idiots.

Yeah, because when we own all that stuff we'll have found true happiness.

Bankers.