Northern Rock
- Thread starter Aldaniti
- Start date
If only they'd have confined their damage to the Northern Rock.
This has got 1929/30 written all over it again. I'd expect us to have one last go and start printing money in the next 6 months as it slowly dawns on the Treasury that the banks either don't know, or aren't prepared to disclose just how much they've lost. Any attempt to refloat the economy using private sector banks is only likely to see the money pumped in, disappear into one gigantic vacuum cleaner as the banks look to make good their loses and keep it for themselves. Ultimately we'll be forced into the Euro I suspect as we could even face the nightmare prospect in the medium term of rising inflation and rising unemployment. This sceanrio was theoretically impossible of course (the Phillips Curve) until such time as Maggie Thatcher disproved it and managed to achieve both at the same time.
Incidentally, Will Hutton was suggesting that the combined losses could be as high as £3 trillion, and Robert Peston is currently predicting that the lastest insurance scheme wll fail and that RBS and Lloyds will be 100% publicly owned by the end of 2009.
This has got 1929/30 written all over it again. I'd expect us to have one last go and start printing money in the next 6 months as it slowly dawns on the Treasury that the banks either don't know, or aren't prepared to disclose just how much they've lost. Any attempt to refloat the economy using private sector banks is only likely to see the money pumped in, disappear into one gigantic vacuum cleaner as the banks look to make good their loses and keep it for themselves. Ultimately we'll be forced into the Euro I suspect as we could even face the nightmare prospect in the medium term of rising inflation and rising unemployment. This sceanrio was theoretically impossible of course (the Phillips Curve) until such time as Maggie Thatcher disproved it and managed to achieve both at the same time.
Incidentally, Will Hutton was suggesting that the combined losses could be as high as £3 trillion, and Robert Peston is currently predicting that the lastest insurance scheme wll fail and that RBS and Lloyds will be 100% publicly owned by the end of 2009.
montyracing2
At the Start
Having read Robert Peston's blog site, I'm not sure if nationalisation of LLoyds is for certain.
Also, the BBC programme 'The city Uncovered' gives a great insight into issues I could only guess at.
One interesting fact is that Lehmanns and Northern Rock were established in the same year (1850).
Hope everyone is coping in this downturn - MR2
Also, the BBC programme 'The city Uncovered' gives a great insight into issues I could only guess at.
One interesting fact is that Lehmanns and Northern Rock were established in the same year (1850).
Hope everyone is coping in this downturn - MR2
Clive, wrong on this one.
You may know everything but banking is probably one field that you are showing your shortcomings.
A bank needs to generate income. Fact. It is now a retail business.
Income is from performance. Northern Rock "staff" are not accountable for the disasters of directors etc. who have taken them to the brink.
"staff" just do their job and if they have managed to cope with the shit that came their way and still managed to perform and raise income for the bank as virtually all High st banks have done- And I mean the retail Banking part-Not the senior level who have squandered billions on bad deals, then the are entitled to their loyalty pay off.
If top performers desert the banks then how is the Govt going to recoup their losses.
As I have said before the High St Banks are not to Blame it is the Investment parts of the groups who have messed it all up
You may know everything but banking is probably one field that you are showing your shortcomings.
A bank needs to generate income. Fact. It is now a retail business.
Income is from performance. Northern Rock "staff" are not accountable for the disasters of directors etc. who have taken them to the brink.
"staff" just do their job and if they have managed to cope with the shit that came their way and still managed to perform and raise income for the bank as virtually all High st banks have done- And I mean the retail Banking part-Not the senior level who have squandered billions on bad deals, then the are entitled to their loyalty pay off.
If top performers desert the banks then how is the Govt going to recoup their losses.
As I have said before the High St Banks are not to Blame it is the Investment parts of the groups who have messed it all up
I'll give you the benefit of not being a silly numerolist (apologies for spelling)
I do however think Peston is worth discussing? In the same way as Hutton made his name in the early nineties with "The State we're in" Pestons having the same influence through a different media. I personally interpreted the blog to suggest that, which bit do you disagree with? I'll try and bring up his supposed seminal blog.
But I also feel it's interesting that these days you don't to pontificate and write a seminal book (aka Will Hutton) blogsaphere is intersting, and when you get the likes of Applegarth saying he knew he was doomed whem Peston published his blog....... hey, this is serious stuff, and a serious change of dynamics
The Irish Government is planning to recapitalise (absolutely not nationalise - dirty word) Bank Of Ireland and AIB to the tune of €3 billion each. These banks have a market valuation varying around the €500m mark recently, which effectively means the Government should own in excess of 80% of the companies. I realise they may take preference rather than ordinary shares which seems like a huge burden on the firms "going forward" to me.
This being the case, what is the arguement against nationalising, given that following the intended course of action will cause a legal restriction from imposing Government policy on the Banks due to the minority shareholding.
This being the case, what is the arguement against nationalising, given that following the intended course of action will cause a legal restriction from imposing Government policy on the Banks due to the minority shareholding.
Tout Seul
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A simplistic answer as to why nationalisation is not taking place is that it would mean that a balance sheet would have to be drawn up. This would be a snapshot and would crystallise any losses. Both of the Irish banks mentioned have very high exposure to a) Property Loans and b) Leverage- buyout - lending.
The property loans contain a large proportion of development funding, an area where the distressed market discounts by up to 70%. In leverage the discount is on average around 50-60%. The numbers involved if these loans are crystallised is much, much more than those being discussed in terms of support.
The situation in the UK is not dissimilar. If the various measures to boost the economy work then these discounts would shrink dramatically.
Thinking laterally it might be an idea to nationalise the banks if things pick upa bit. Still would not have to pay for them but then the governments would have the ability to create a new model for the sector. Certainly worth considering.
The property loans contain a large proportion of development funding, an area where the distressed market discounts by up to 70%. In leverage the discount is on average around 50-60%. The numbers involved if these loans are crystallised is much, much more than those being discussed in terms of support.
The situation in the UK is not dissimilar. If the various measures to boost the economy work then these discounts would shrink dramatically.
Thinking laterally it might be an idea to nationalise the banks if things pick upa bit. Still would not have to pay for them but then the governments would have the ability to create a new model for the sector. Certainly worth considering.
Sorry, Tout Seul, not simplistic enough for my little brain I'm afraid.
Are you saying that if the banks are nationalised, the scale of the mess they are in will need to be made public, thus accelerating their demise, or requiring the Govt. to stump up even more to keep them afloat?
Whereas if they merely pump €6 billion into recapitalising them, it can all be kept a secret?
Are you saying that if the banks are nationalised, the scale of the mess they are in will need to be made public, thus accelerating their demise, or requiring the Govt. to stump up even more to keep them afloat?
Whereas if they merely pump €6 billion into recapitalising them, it can all be kept a secret?
Yep
I think that's exactly what he's saying, which means the only thing keeping them afloat is their lies and denials. Worrying stuff really, the whole lot teeters on the brink and coming clean would tip it over the edge. Mind you, there's always a chance the banks don't actually know how much they've lost aka Barings where the black hole just kept getting blacker
I think that's exactly what he's saying, which means the only thing keeping them afloat is their lies and denials. Worrying stuff really, the whole lot teeters on the brink and coming clean would tip it over the edge. Mind you, there's always a chance the banks don't actually know how much they've lost aka Barings where the black hole just kept getting blacker
Tout Seul
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Sorry! I'm not trying to be opaque. Mel.
Your interpretation is correct. It certainly is worrying. But let's think positively, remembering that all these measures are effectively trying to boost confidence in one way or another.
If you are a houseowner in negative equity the one thing you try to avoid is crstallising your loss. If you can keep paying your mortgage there is hopefully a good chance that in due course the situation will improve one way or another.
Imagine the bank is like a house in negative equity. If the economy can start to pick up it will earn money, it's potential losses will reduce( the comment about discounts applies), there will be new money for investment in equities which will replace bank debt, and so on with luck in a virtuous spiral.
.
The alternative is recognise the losses ,government steps in and has to borrow. The amount that would be needed will be such as to create increased doubt as to whether the governments can afford to repay. Thus govt. would have to pay higher interest ( and for the UK see sterling fall even further). This would create inflation and really put us in the mire. The UK would suffer most because the fall in sterling would greatly increase costs of servicing debt and raise the cost of necessary imports. Doubleplus notgood.
Warbler. Words like lies and denial don't help if one is trying to create confidence and putting it bluntly what point is there in being negative. By all means we should be aware of the risks but this is definitely one of the situations where it is in everyone's interest that the various measures succeed. The Governments are not lying, they are trying to build the scenario to get us out of this. If we were in the midst of a war for survival would you be negative even if the outlook was pretty bleak. In my mind the depth of crisis we could get into is unfathomable and thepossible impact on the life of us all and our children not far different from losing a major war. I am serious
Your interpretation is correct. It certainly is worrying. But let's think positively, remembering that all these measures are effectively trying to boost confidence in one way or another.
If you are a houseowner in negative equity the one thing you try to avoid is crstallising your loss. If you can keep paying your mortgage there is hopefully a good chance that in due course the situation will improve one way or another.
Imagine the bank is like a house in negative equity. If the economy can start to pick up it will earn money, it's potential losses will reduce( the comment about discounts applies), there will be new money for investment in equities which will replace bank debt, and so on with luck in a virtuous spiral.
.
The alternative is recognise the losses ,government steps in and has to borrow. The amount that would be needed will be such as to create increased doubt as to whether the governments can afford to repay. Thus govt. would have to pay higher interest ( and for the UK see sterling fall even further). This would create inflation and really put us in the mire. The UK would suffer most because the fall in sterling would greatly increase costs of servicing debt and raise the cost of necessary imports. Doubleplus notgood.
Warbler. Words like lies and denial don't help if one is trying to create confidence and putting it bluntly what point is there in being negative. By all means we should be aware of the risks but this is definitely one of the situations where it is in everyone's interest that the various measures succeed. The Governments are not lying, they are trying to build the scenario to get us out of this. If we were in the midst of a war for survival would you be negative even if the outlook was pretty bleak. In my mind the depth of crisis we could get into is unfathomable and thepossible impact on the life of us all and our children not far different from losing a major war. I am serious
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Talking of lies and denial, there's a lovely headline on The Irish Times website ...
"Ireland has thriving economy, insists Lenihan"
In fairness to our Minister of Finance, the point he was trying to make was that we aren't as bad as Iceland.
"Ireland has thriving economy, insists Lenihan"
In fairness to our Minister of Finance, the point he was trying to make was that we aren't as bad as Iceland.
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Well I have to say, the days that comrade Warbler can under mine confidence from the podium of a 'chit chat' section of a horse racing forum worries me!!!! Things must be bad. I should also say that I've frequented the Marxist position (and have made no secret of that) Watching capitialism consume itself is but inevitable (even though I suspect it will re-invent itself somehow).
I hope it isn't going to involve a war this time, but as the pillars of society collapse and a vacuum of leadership develops....... who knows.
I'll tell you one thing for certain, people who used to laugh at me, don't any longer. I've been frankly amazed by the number of people who've heard me sounding off, who are now privately coming up to me and asking whats going on
Tout Seul
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Dear Comrade Warblerski.If my words indicate that I feel you to be undermining society then it is due to my lack of ability rather than my intent.
As I see it the overnments have acted too slowly and should have put the latest measures in place much earlier and also made the support for the banks on much more stringent terms. That said there is little point if any of being negative at the current time and billions have been spent (of our money) in trying to restore confidence. If we all respond negatively then that money is lost forever and we will have printing money (or more lilely its equivalent) as a last resort. If that fails then the current woes will seem as a mere ripple on a pond. That is a situation that benefits noone other than those who would wish to see a collapse in society in order to try and bring about a new version of society accordin with their beliefs, be they communist ,fascist or whatever. I don't wish to see these islands becoming another Wiemar Republic particularly as there would be no overseas source of funds to bail us out.
Such is my strength of feeling that I have turned down the opportunity of a well-paid sinecure in order to seek to make a more positive contribution and am finalising arrangements that will give me a chance of not only saving a number of jobs but also creating employment . A challenge I am more than ready for.
As I see it the overnments have acted too slowly and should have put the latest measures in place much earlier and also made the support for the banks on much more stringent terms. That said there is little point if any of being negative at the current time and billions have been spent (of our money) in trying to restore confidence. If we all respond negatively then that money is lost forever and we will have printing money (or more lilely its equivalent) as a last resort. If that fails then the current woes will seem as a mere ripple on a pond. That is a situation that benefits noone other than those who would wish to see a collapse in society in order to try and bring about a new version of society accordin with their beliefs, be they communist ,fascist or whatever. I don't wish to see these islands becoming another Wiemar Republic particularly as there would be no overseas source of funds to bail us out.
Such is my strength of feeling that I have turned down the opportunity of a well-paid sinecure in order to seek to make a more positive contribution and am finalising arrangements that will give me a chance of not only saving a number of jobs but also creating employment . A challenge I am more than ready for.
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Grasshopper
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I had to laugh last night (not in a good way).
I was watching the head of the FSA (that's the regulatory body of Financial Services in the UK, in case anyone was unaware), speaking on Newsnight. Yer man said - with a straight face - that most of the problems we were now seeing, were due to a lack of regulation.
I can report that there was not a trace of irony in his voice as he said this - indeed, he seemed as blissfully unaware of how incompetent this made him sound, as his organisation were about the rather large black-hole that has been forming in our economy over the last several years.
What a fucking dipshit.
I was watching the head of the FSA (that's the regulatory body of Financial Services in the UK, in case anyone was unaware), speaking on Newsnight. Yer man said - with a straight face - that most of the problems we were now seeing, were due to a lack of regulation.
I can report that there was not a trace of irony in his voice as he said this - indeed, he seemed as blissfully unaware of how incompetent this made him sound, as his organisation were about the rather large black-hole that has been forming in our economy over the last several years.
What a fucking dipshit.
Sheikh
At the Start
Very enlightening stuff, thanks guys.
I can't remember which car manufacturer it was, but there was one radio ad doing the rounds, which I heard at the start of the month, the basic message of which was that everything was included in the price - metallic paint, cd player, airbags, steering wheel, doors, the lot.
Followed by the rushed verbal "Delivery and related charges extra".
Oh how I laughed!
Followed by the rushed verbal "Delivery and related charges extra".
Oh how I laughed!