Am I missing something here? I was under the impression that we as a nation are in such massive debt because one of the main things Labour spent our money on over the last couple of years was bank bail-outs, costing billions of tax pounds. Is the new Con-Lib government going to make the banks pay any of this back? Wouldn't this help with the forthcoming cuts, job losses, tax rises and so on? Won't it ease at least some of the pain ahead? Surely if a fair chunk of the crisis we are now in happened because we forked out to keep f*****g bankers warm and cosy in their big bonus hand-outs then surely we should now start seeing this as the rip-off that it really was rather than an essential action to rescue the economy. I hope the new government has the balls to squeeze cash out of the banks - not just new taxes and strict rules, but get back all our tax quids instead of letting them continue to wallow in their own fatcat litter trays while we struggle to do the most basic things like pay an electric bill.
I believe a better strategy would have been to give the British public that bail-out money. Seriously - the amount they poured into banks was staggering. If they'd given it to us instead, we could have all paid off or reduced our mortgages with it, which means the banks would have still been given a huge cash boost, plus we'd all have had more to spend in the economy thanks to reduced mortgages which would have made the economy a lot more lively. The government could then have reclaimed that money through taxes and less serious cuts, but everyone (and the economy) would at least be better off.
But anyway, to the banks - WE WANT OUR MONEY BACK!
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Rick
Love it and it makes sense.I think that the govy are using the 'economic crisis' as cloud cover and an excuse to adopt draconian cuts that will cause rising unemployment and put thousands on to benefits but it will safeguard their 'chums' jobs in the city.
Marek
I think therefore I am (not a Tory supporter)
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Rick - the bank bail-out has added to the overall national debt and will, eventually, be repaid through the sale of the shares at the right time. The government is suggesting that we, the public, might be offered them at a discount.
This part of the huge national debt is therefore not a problem.
Do not mix the national debt with the deficit, something easy to do.
The deficit is the amount being spent ny the government over and above tax receipts.
This is £156bn per annum, after the £6.2bn savings being made this year. To put that into perspective, that is 4 times what is spent of defence.
We must cut public spending to a level whereby the deficit can be eliminated by economic growth within a few years and then this massive debt (approx £770bn - rising to £1.4trillion by 2014) can start to be repaid.
This debt will cost £70bn in interest by 2015 per annum, nearly double the defence budget. If the deficit is not cut then we will lose our AAA rating and interest rates paid by the government will shoot up and the value on the bonds issued will drop. if that happens then the level of public spending cuts needed will be a lot bigger.
The last government spoke about deficit and debt in a way that was interchangable and confusing, when they talked about cutting the deficit by half most people though debt... not the same.
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
BarryW
But surely the deficit and national debt are entwined?Had we not lent so much to the banks to bail them out then the national debt and deficit would not be as high as it is.If not where TF*** did the Govt get the money from to 'buy ' the bank 'shares' ?
Secondly why can't the banks repay the tax payer without us relinquishing our share interests in them?
Marek
I think therefore I am (not a Tory supporter)
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
banks should pay back with intrest charged at 19.5% annualy like they charge us.no ifs or buts or maybes.
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,699
Marek they are
We should get the bank bail out money back as the government sells shares in the market/receives dividends
As I said on another thread cutting quangos entirely would wipe out 2/3rds of the deficit immediately
http://www.guardian.co.uk/news/datablog/2009/jul/07/public-finance-regulators"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Ross
Thanks for the link. That list of Quango's and their total cost to the country is flabbergasting!! I'm going to have to sit down and gather my thoughts....and to think the Tories want to add to it!.
Marek
I think therefore I am (not a Tory supporter)
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Marek - The bail-out is in the form of shares and as I and Ross have said that is not a problem and will be repaid, hopefully with a profit, once the shares are sold.
The deficit is intertwined with the national debt only in so far as the overspend on the current account (the deficit) is being funded by more borrowing increasing the national debt further.
The deficit remember is the amount the government spends over and above its income. It is that which needs addressing with urgency. Some will be dealt with by increased tax revenues from economic growth but there is what is called a 'structural deficit', that is the deficit that wont be dealt with by growth.
The economy works in cycles and there is a slowdown/recession every 8/9 years or so. We are hit so badly in this recession because we had a structural deficit before the recesssion so we are piling more debt upon debt and more deficit upon deficit.
The urgency is to get the deficit down and into surplus to repay debt before the next slowdown/recession.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Ross - just noticed your comment regarding quangoes. Actually the Conservatives want to get rid of them and have made a start in doing so. Michael Gove alone has already got rid of 4 in the education sector, more will go, a lot more.
Guest 693- Registered: 12 Nov 2009
- Posts: 1,266
In the week that a French trader working for Société Générale has gone on trial for nearly doing a Nick Leeson in bringing his employers down, perhaps we should take a look at our banks and reflect how greed and profiteering nearly destroyed the entire economy. I'm all for laissez-faire economics, but it is morally wrong and political suicide to allow banks anything like the autonomy and power they have hitherto enjoyed seemingly unchecked. I say 'seemingly' because in theory the Bank of England should have had control over this; clearly they did not and one must question what the Bank of England exists for if not to control our banks.
The banks have shown no remorse nor displayed any commitment to put their houses in order, in fact the culture of corporate greed emanating from the City has shown no signs of diminishing. Before a single penny is paid in bonuses (I know, too late!) they should repay every penny HMG forked out to rescue them. Only when the entire rescue package has been repaid should they then look to further lining their own pockets and those of their shareholders, and even then the highly questionable practices used by the dealers outlawed.
True friends stab you in the front.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Andy - it is easy to overplay this problem.
The reason this occurred was entirely down to the changes brought in by Brown in 1997.
Until then the Bank of England had oversight of the banks in a very tough regime. A friend of mine was a bank chief exec back then and is appalled at what has happened since he retired. He told me that he had to go to the Bank of England prior to 1997 every three months with his top management team to spend a day being grilled about every aspect of his banking operations. If the BoE did not like what they were doing they had the powers to stop them. That stopped after 1997.
All that changed thanks to reforms brought in by Brown in 1997. He established the FSA, gave the BoE control over interest rates but removed from them their oversight functions of the banks, that was handed over to the FSA 'super-regulator'. They introduced 'light touch' regulation of the banks, on the personal urging and encouragement of Brown (Mansion House speech.... being one famous instance). These quarterly meeting were stopped and the banks were free to act commercially, the problem is that commercial freedom bit them as soon as the boom times slowed down.
As for the Leeson type chappie - sadly there is always a risk of a rogue dealer. It is difficult to stop that though investment companies did have to tighten up their oversight as a result of Leeson.
The problem we had was a systematic failure of regulation - not some rogue let loose (unless you regard Brown as that rogue, I do...)
Dont forget as well that not all banks got involved in the dodgy dealing though most did get caught up in the backlash. Lloyds TSB only needed bail-out cash because they had taken over HBOS on Brown's urging. Barclays did not seek taxpayer bail-out and HSBC did not get too entangled in the problems at all. RBS were the big culprits, along with HBOS and N.Rock (though the latter were a different kind of problem). The RBS boss was the new dynamic banking boss who despised the 'safe' approach taken by the Lloyds and HSBC chiefs....so much for Fred the Shred, who was at the forefront of encouraging Brown's lack of foresight.
Even Mrs T refused to let the banks off the leash.
Standard Chartered also kept out of trouble.
Guest 693- Registered: 12 Nov 2009
- Posts: 1,266
Thanks Barry. More than the actual mechanics of how our banking system works - and I'm grateful for your info on that - what really hacked me off was that so many blind eyes were turned to what proved extremely shady practices, all under the perceived umbrella of money making for the nation's good. For starters, let us not kid ourselves that the banks weren't acting entirely out of greedy self-interest - this pretence that the banks earn a fortune for the country out of the goodness of their hearts is just plain nonsense.
And, from what I can see, nobody has been held to book for all this. The banks continue on their merry way and the directors pay themselves whopping bonuses without giving a shit as to the mess their greed landed us in. I understand and accept that the banking crisis is only a contributory factor to the national debt crisis, but I'm deeply angered by overt capitalist greed that is so damnably selfish. Most of the country cannot make ends meet whilst the remainder earn a fortune from bankrupting the country. Truly, I'm outraged by the injustice of it all and the system that allows it to happen. All in the name of banking!
True friends stab you in the front.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
They should never have been given free reign, I say that as a free marketeer....
This is a complex matter and an excessive amount of capital was committed to excessive risk exposure by RBS and HBOS while Northern Rock''s business model was vulnerable to the US debt crisis thatb was itself rooted in Clinton's silly reforms. It was a convergence of a range of factors that brought the whole house down.
Most of the activities that these banks indulged in that caused the problem are quite legitimate and reasonable in themselves. The problem occurred due to excessive exposure and a failure of US banks to properly rate packages of debt for risk. Some of the activities were close to criminal and indeed charges/criminal investigations in the US are ongoing. There were also some problems in the UK over lending criteria being too loose and this really is where the UK banks in question have a lot to answer for, but as I said, not all banks were culpable. Brokers knew which institutions would take 'bad cases' and sadly some brokers were themselves culpable.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
Barry, I also thought at the time that the money should have gone to the British People, as the people would have automatically invested it in the economy and thus the money would have circulated through the banks! Well done there!
Also, I fully agree with you that these nasty city-bankers have no right to ram millions of pounds in their wallets as personal pay and bonus1
Let's propose they do a spell in a Shire Regiment: send 'em to work in factories and on farms for two years, and every day 5 miles cross country running!
Barry W,
you would'nt be a tory by any chance????????
What a pile of rubbish gets spoken about the banking system and banks/bankers in this country.
Not ONE person complained while they were making billions for UK Plc. And so it always will be, we shout and postulate when it goes wrong, but don't give a fig otherwise. It 's the same for urban foxes. Not ONE person complained about them until they mauled two young babies. Now we get advocates of mass slaughter on our screens in the press.
The same is true of the media witch-hunt on the Cumbrian Police Force asking why they failed to stop the shootist earlier. They miss the obvious question they raise, "do we want an armed police force?". If they carry the media blitz much further that's what we may end up with. The press and media will then be the first to moan about that!
Drives me to distraction sometimes.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Jimmy economic and historical fact remains historical fact regardless of your politics.
Brown screwed up badly. In his years as Chancellor that man made just one right decision - keeping us out of the Euro.
The most incompetent Chancellor in British history. I could give you a long list of his errors, some I mentioned above regarding bank regulation. He also got wrong the inflation brief for the BoE - another contributing factor to the depth and length of the recession, the sale of gold and much, much more.
Mr 'I ended boom and bust' was a disaster zone for this country - the man was actually stupid enough to believe his rhetoric, that is the only explanation for his insane fiscal policies.
And yes, I am not speaking in retrospect, I did warn of the impending disaster on this forum over the years.
Well, I am issuing this official statement to all banks:
Your bank is at risk if you do not keep up repayments on it. Terms and conditions apply. Always read the label.
BarryW, I am with you entirely about GB and his approach with banking: the controls and measures he allowed to go were needed, clearly! It was the beginning of the end. However, we need to keep in sight the fact that the current economic crisis is global and not, in fact, caused by GB! That does not absolve him, just getting it in perspective. We would be in a better position now if he had not meddled.
