Bailing Out Banks
 

All this bailing out banks you hear about on the news.

Why are we bailing them out? what is the reason for the govement loans?

can someone explain.

Re: Bailing Out Banks
 

There used to be a balance between how much a bank had in its coffers, and how much it was lending. It would not lend more than it had. Sounds like common sense right? Over the last decade however, the gap between what they have, and what they're lending, grew from practically nothing, to £700 billion. Now we have a situation where the banks won't lend to each other, because they have no idea how much 'bad debt', each other has, so they won't risk losing their money.

Once the banks stop lending to each other, and business, and people, it causes a huge amount of problems. Business works on credit, if they can't get credit, even profitable businesses can go to the wall, leaving vast amounts of unemployment.

The government think that by injecting, huge amounts to the banks, it will kick start them into lending again. The trouble is, will this work, or will it simply increase our government, public, countries, debt to sky rocketing heights?

Re: Bailing Out Banks
 

Well it sure as hell ain't made much difference yet, whether it will or not we can only wait and see. If it we get the same outcome as the useless cut in VAT then we're in for a very grim future to say the least. The only thing that is sure about the whole sorry mess is that what ever happens my Grandchildren's Children will be paying the debt off long after I've gone.

Re: Bailing Out Banks
 

Cheers, thats what I though.

Wonder why I cant get a loan then, Faultless credit history, feels to me more like this loan is to help themselves not the public.:(

Unless of corse your happy paying 25% APR.

Re: Bailing Out Banks
 

Dont know why the taxpayer should bail em out, when all they do is screw us with charges!!, the cheeky gits!

Re: Bailing Out Banks
 

Without a boost to their coffers from the govenment there is a chance they will go to the wall the same as any business. Unfortunately if a bank goes bust then it will drag down more than just its self. As Mr B says without lending everything goes belly up so the banks need a pot of real money to get back to business. It will take time as its like "once bitten twice shy" so to speak. As they were running on "phantom" money it was to me no different than a pyramid scheme the way they ran their business.

Re: Bailing Out Banks
 

Just be clear that not all the UK banks have gone cap in hand to UK.GOV. Barclays has maintained its independance and has taken nothing from yours or my pockets and will not do so due to its own private finance initiatives.

Re: Bailing Out Banks
 

Seems like what you guys need is a properly regulated banking system ... if unregulated and irresponsible banks can screw up an economy .... if fact, like the US banks a lot of economies, they should be subject to govt. regulation and scrutiny. And that scrutiny should be rigourous and constant. Canadian banks are rock solid; and this is one of the reasons that we will probably avoid the worst of this economic crisis. We have been running budget surpluses for a few years now; and the projected deficit for this year is only around $24 billion .... and most of this is for govt. funded projects to offset what is still only an economic "downturn".

Re: Bailing Out Banks
 

Couldn't agree more Eric. Here's a picture of the FTSE 100 stock market levels over 30 years. Note the enormous booms, and busts, after the Bank of England's regulatory powers were removed in 1998.

http://img340.imageshack.us/img340/2363/boombustgj8.jpg

Re: Bailing Out Banks
 

That is a wonderful representation Andrew.... but it is very difficult to educate pork.,:rolleyes:

Re: Bailing Out Banks
 

How odd.

Apparently that illustration mirrors exactly a similar graph of the nation's libido, and subsequent birthrate.

Re: Bailing Out Banks
 

Seems odd that even though good old Gorden keeps blaming everybody but himself for Britain's Ills, he has been found out for what he really is, very economical with the truth. The IMF have stated that Britain is the worst place economy of the advance nations to weather the rescission with projected negative growth of 2.8% in 2009. The IMF have also stated that the Government needs to increase taxation by £20 billion or cut spending by the same amount to put Britain plc back on track, but even then it will take until 2030 to get us back to the position we were in in 2007. The sooner Brown and Darling are put out to grass the better, before they irreparable damage this countries long term future:(

Re: Bailing Out Banks
 

"Owners of capital will stimulate working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and State will have to take the road which will eventually lead to communism."

Karletto Marx, Das Capital, 1867

Re: Bailing Out Banks
 

Are you agreeing that a capitalist system will inevitably lead us to Marx's idea of communist Utopia?

Are you doing a Blazey, and exchanging your blue rosette for a red one?:rolleyes:

:D

Re: Bailing Out Banks
 

No such thing as communist Utopia, or a socialist one either for that matter as ably portrayed in the song The Working class can kiss my ass I've got the bosses job at last, very well portrayed by messieurs Blair Brown Straw, and all the other Muppet's:D

Re: Bailing Out Banks
 

I'm not necessarily disagreeing with you, but that does seem the inevitable consequence of capitalism according to the quote from Karl Marx, that was posted by Andrewb Engels.

:D

Re: Bailing Out Banks
 

You're right, though it has indirectly benefited from public funding, at least according to the T.U.C. in this B.B.C. news story.

'The government owns a stake in Lloyds and RBS and the union said both HSBC and Barclays have benefitted from the extra liquidity the Bank of England has pumped into the banking sector.'

BBC NEWS | Business | TUC calls on banks to come clean

Re: Bailing Out Banks
 

so the Goverment stave off some of the irresponsible banks and Barclays is deemed to be some how at fault because the new liquidity in the market?

Come on G you are rather pushing the boundaries there mate. The article is asking why the banks that have taken tax payers money pay tax abroad( at a lower rate no doubt). Barclays haven't taken any money so why should they explain themselves? They owe nothing to UK.GOV and are obviously running a tight ship to still be about to announce ~ £6 BILLION profit in teh worst banking period in recent history. Why do British people seem so intent on slagging off the successful? Look how hated MUFC, Chelsea, Arsenal etc are for being successful in football, Barclays gets it in Banking, Shell, BP etc in Oil. As soon as someone is slightly successful we look to bring them down. take even something like Diana Vickers. as soon as she is about to win stuff the press and public start clamouring for blood.

Sometimes I'm ashamed to say I'm british in the way we act.

why can't we actually be PROUD of success, with Banks the world over in trouble why aren't you shouting that we actually have a bank that is successful, that hasn't needed to go cap in hand to the GOV, that employs thousands of people the world over, that has huge community and charitable impact.

Re: Bailing Out Banks
 

I blame our weather for the reaction the British public have shown over this business.

A million people took to the streets of France today, to protest over President Sarkozy's handling of the banking crisis in France, which resulted later in the evening in riots on the streets of Paris.

We see the newly part-nationalised banks still paying massive bonuses to it's fat cat bosses, weeks after being shored up with public money, and we just tut and have a bit of a grumble.

Perhaps with global warming we'll also have hotter tempers, and will be more prepared to revolt, when we continue to have the proverbal took out of us by the finance and banking industries, all aided and abetted by the government.

Re: Bailing Out Banks
 

I must confess, I may not have been telling the whole truth about my quote by 'Karletto Marx'. ;)

Re: Bailing Out Banks
 

Just as the government are announcing more fiscal stimulus like the VAT decrease, and the cash injection to the banks, Japan has gone into recession. Japan spent more than a decade in recession in the 90's, the government then acted by having 10 fiscal stimulus, totalling some 100 trillion yen. They have only just come out of the recession after all that money was pumped in, with massive amounts of public debt, and here they are again.. is cash injection fiscal stimulus really the way?

Re: Bailing Out Banks
 

Sadly not the way we do things being the polite nation we are with a stiff upper lip and patiance to match.