Seems like voices in the city are tentatively suggesting so. Going off previous form, I’d say that makes it an absolute dead cert then!

You really are taking the piss now!

So we’re going to chucking more of our cash at RBS. Requiring yet more austerity for the rest of us, no doubt. Bailing out aloss-making organisation that paid out £1.3 billion in bonuses last year, failed to meet any of its pitifull lending targets and her successfully lobbied for business as usual.

what the **** is it going to take before we get the pitchforks out for a bit of ‘direct action’ against these ****ing parasites!

I’ve never quite understood what woudl happen to depositors money and borrowers debts if we just let it slide gently beneath the waves?

OK. so don’t support the banks.

Why worry George and dave have a plan and looking at the growth figures and the debt only a lefty would think it was not working.
Now where should I go skiing this year?

I tend to agree with what Billy Bragg said on Question time about all the money going to too few people and should be given to the employees in the form of higher rewards. Capitalism as we know it is broken, I’m not saying it is wrong, simply that the current system has gone too far and needs to be pegged back.
Wqually there was an interesting comment from an American financial dude about the Wall Street protests where he was surprised at the level of protesting, saying that in the 1960s there would have been more and the current effort was really quite pathetic.
Time to hit the streets brother…. Time to send a warning out to the banks, time to close your RBS current account and move to another bank and keep doing so until they learn.

Binners – sadly this is probably correct. As unpalatable as this seems, there is probably little alternative and most Eu governments know this. Hence the battles between Sarkozy and Merkel right now.

Leaving aside the banker bashing for one moment – there is an obvious elephant in the room. The European banking system is not working. Whether you/me/we like it or not, this is a problem that has to be solved before a recovery can really take place. Banks are an essential part of the transmission mechanism that is currently shut off. So QE (apart from the benefit of weakening £ and helping X’s) is ineffective because the money is not filtering down to where it is needed. The reasons are many but that is not the point.

The EU banking system is paralysed. Banks cannot raise liquidity because it is well known that there remain significant skeletons in the cupboard that will become painfully clear when/if Greece defaults. The French are particularly exposed to this which is why NS is doing he best to squirm out of facing up to the truth – French tax payers will have to stump up for a major recap on their major banks at some stage.

We are now approaching the denoument of the crisis – by the time of the G20 meeting in November action needs to have been started. This will sadly involve bank recapitalisation.

Perhaps the next question is the conditions that must come with it – including the senior exec’s that are running these banks.

Having read the article in the link, it would appear that RBS are actually in the clear?

But don simon – the real worry is exactly if people do what you say. If you start taking your money out of RBS and others this will really cause a major problem.

Househoulds/banks/countries are now completely integrated into a very complex problem. Picking on one section in isolation will not lead to a recovery.

I thought Bragg was 50% intelligence and 50% BS last night. Ditto Baroness whats-her-name. And poor ole you-know-who still looked pickled. His eyes and blotchy skin were a bit of a give away.

For a later date, the really interesting question in the “capitalism is dead” debate is to ask have we really had a capitalist society at all. OK we have not had a planned economy, but equally this has been far from a free market despite the political rhetoric. There has been massive state intervention in many markets including the financial markets. The fact that governments and Central Banks intervened in free markets by keeping IR artificially low after the tech bubble burst is a major reason why we are currently in the mess that we are in.

But you will not get a politician or central banker to admit that!!

Speaking to Sky News after the Bank authorised the injection of a further £75bn into the economy through quantitative easing (QE), King said: “This is the most serious financial crisis we have seen at least since the 1930s, if not ever.”

Sounds bad, but what if instaed they just gave everyone £1250. I’d be happy, at least.

I think what is most galling is knowing that those at the top will be skimming small percentages off all this cash, small percentages that will equal big wads of lovely bonus.

It worked so well last time…

Some learn by their mistakes, others just repeat them.

Just raise taxes in Scotland to pay for it

They want independence, here it is 🙂

Here’s something else to read… it hints that the Gov’t aren’t thinking of bailing out banks… but then they’ve yet to think of a Plan B…

I think Peston is being a tad optimistic here.

The simplest thing is too look at what the banks are actually doing. Ok, these guys know what is going on in their own institutions and it isn’t pretty. Given what they know about themselves and what they don’t know about each other (except that others have the same skeletons), they simply do not lend to each other. This is the most telling observations that we need to focus on.

The same thing happened in 2008.

This time we have to bite the bullet and let the corrupt lot of them go, then reset the economy.

The fact that governments and Central Banks intervened in free markets by keeping IR artificially low after the tech bubble burst is a major reason why we are currently in the mess that we are in.

Almost no one supports pure capitalism as an equilibrium has no morality and people just wont put up with it. I doubt there has ever been , or that there ever will be, a pure capitalist system.
I find it an odd argument as you seem to suggest if we did everything would be just fine. However above you seem to suggest there is no alternative to bailing them out….see no one is actually a pure capitalist it is just a question of how much you want to intervene to curb the excesses of the market.

But don simon – the real worry is exactly if people do what you say. If you start taking your money out of RBS and others this will really cause a major problem.

Aware of this, but it’s a nice theory to redress the balance of power.

I thought Bragg was 50% intelligence and 50% BS last night. Ditto Baroness whats-her-name. And poor ole you-know-who still looked pickled. His eyes and blotchy skin were a bit of a give away.

And I would put the salary increase element into the intelligent 50%.

JY – you are misunderstanding my point/I am not explaining myself clearly!!

Two points:

1. In all probability, there will need to be further recapitalisation of major European banks. Markets are unlikely to support this. Governements (ie you and me) will have to step in.

2. Of course we have a mixed economy – I understand that. What makes me smile is the fact that there is a lot of current comment that capitalism/free markets failed. When we haven’t really had capitalism or free markets at all. Indeed the point I was trying (!!) to make is that many problems have been caused by intervention into free markets – eg, keeping IR artificially low before and now, the Euro (ie intervention at the most extreme in the FX market) led to a massive level of (1) debt build up and (2) uncompetitiveness among certain European economies.

This is not saying that FM solve all problems (they don’t obviously).

But the real debate about this will not happen because it is politically expedient to wrap these debates into superficial classications – free markets vs governments, Tories vs Labour etc.

Did anyone see this http://www.youtube.com/watch?v=aC19fEqR5bA from the other day? And we still wanna bail them out… 😯

I am not sure opening up QT to a wider panel has worked. It was very funny when Ian Hislop was passed the hot potato of answering the first economics question when there were two trained economists on the panel and as he admits he doesn’t understand economics!! Bragg was insightful to start with but then slipped to easily into populist but poorly thought trough comments. He should be a politician!!

Equally Newsnight is starting to shift down the quality spectrum. Some of the recent debates have been school-playground in style!! Peter Osborne from the DT was embarrassing a few days ago. And the Tory MP who spent “20 year on the trading floor” is also becoming tiresome. Although it was fun watching him make Kirsty Walk squirm on an unprepared comment last night.

ART – that guy is not a banker. He is a self-publicist who is full of …..the Beeb were taken in by him particularly Robert “Weeeellllll Hugh” Peston.

My problem is that these banks are businesses, the same as any other. But they are treated differently from any other. We are essentially their under-writers. And they have behaved accordingly.

TO get themselves in this situation takes some shockingly bad management over a lengthy timescale. RBS is loss-making because there were clearly a massive amount of appalling business decisions made, year on year, with no oversight or regulation. This situation hasn’t changed.

If we do bail them out again – and it looks like we will – do you think those responsible for these atrocious business decisions will be forfeiting their obscene bonuses?

Will they ****!!

And will we be here again two years down the line? Of course we will. We’re handing them another blank cheque

“A government official told the paper”

Right so its Chinese Whispers with no credible source named.

2. Of course we have a mixed economy – I understand that. What makes me smile is the fact that there is a lot of current comment that capitalism/free markets failed. When we haven’t really had capitalism or free markets at all.

So what we actually need is less regulation of the financial industry? You don’t half talk some shite.

Hora – I doubt they were discussing it on last nights Newsnight if it were Chinese Whispers. It was the Bank of England that let this one slip.

Grum – your are letting your perceptions reach the wrong conclusions. Where have I said that we need less regulation? All I have pointed out that two of many factors that have led to the current crisis have actually come from two elements of market intervention – one, by central banks intervening to hold IR artificially low and the other by fixing an exchange rate. Neither are examples of free-markets.

Given the importance of financial services in any economy, regulation is obviously required, But that is not the same as saying that intervention is always a good thing.

So please do not put words into my mouth….that really is shite.

Markets are unlikely to support this. Governements (ie you and me) will have to step in.

So you accpet that markets wont do everything and somethimes th econsequences are bad and we should step in to avoid this but you still seem to suggest “pure” capitalism is best.
It is ridiculous to suggest that the problems are caused by government intervention/regulation and if we had just left those nice bankers alone everything would have turned out fine. Most people think the problem was a lack of regulation not an excess. Lending money to people who could not afford it and when housing went pop they were over exposed to the risk.. I dont really see how you can suggest Governments/regulations made them do this tbh.
We wont ever have pure capitalism as it is an amoral pursuit of greed/money. Look at social housing 4 million on the waiting lists and we still have to legislate to get them to build “affordable” housing in projects let alone get the market to build houses for the masses to rent.
We are stuck in mixed economy whatever either you or I think
EDIT; I had not read the above post when I posted this but cant be bothered to rewrite it

Let the failing banks fail. There wouldnt be the doomsday scenario they like to scare people with. This is business and the banks that are solvent (here or abroad) would move in and take over instead, should have happened last time and then maybe we’d have a healthy banking sector instead of a tax payer supported system.

Binners, what direct action?

Well personally, seeing as Gideon’s Project Merlin has failed to sort the banks out, I’d like to see us try a Project Mayhem style approach…..

😉

Damn, I knew I was supposed to watch something the other week and report back 🙂

As it may be. [edit note to self, need to spend more time googling and less time posting, ha ha!] .. it ain’t none of it right now is it … [chuckles at binners] 😉

Did anyone see this http://www.youtube.com/watch?v=aC19fEqR5bA from the other day? And we still wanna bail them out…

http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html

Come on uplink. Sort it out fella! It genuinely is a ‘must see’ film!

So you accept that markets wont do everything and somethimes th econsequences are bad and we should step in to avoid this

Yes – but not saying that bailing out banks is good (per se) just that in current climate it will be inevitable

but you still seem to suggest “pure” capitalism is best.

Where? Again ditto comments to Grum.

It is ridiculous to suggest that the problems are caused by government intervention/regulation and if we had just left those nice bankers alone everything would have turned out fine.

Ditto – but equally the crisis was caused by multiple factors – individuals, banks, governments, regulators all played apart in the failure.

Most people think the problem was a lack of regulation not an excess.

I would prefer – poor regulatory design and enforcement.

Lending money to people who could not afford it and when housing went pop they were over exposed to the risk.. I dont really see how you can suggest Governments/regulations made them do this tbh.

Failure of markets, regulators and governments – markets (oversupply, incorrect pricing, dubious selling), regulators (role of shadow banking system, risk weightings, failure to understand off balance sheet leverage…), governments (pressure to extend credit into sub prime, interest rates kept artificially low leading to desparate and mis-guided hunt for yield by investors and banks)

We wont ever have pure capitalism…

True but for other objective reasons rather than the subjective conclusion that…

as it is an amoral pursuit of greed/money.

And we agree that..

We are stuck in mixed economy whatever either you or I think[/quote]

Phew, time for a ride!!

JY – let me give you a specific example of why I think the argument is far more than free market capitalism vs planned economies, Tories versus labour, its all and only the banks fault.

Government and Central Bank policy have placed a heavy influence on monetary policy. Both Tories and Labour gave the BoE independence and mandated them to focus on one main objective – inflation. They took away the role of supervision and regulation and then reversed this decision recently.

But, and it is a BIG BUT, these guys used the wrong tools. They intervened (via normal policy) on the basis of models that linked Interest Rates to the level of consumer prices. (Perhaps with the benefit of hindsight…), history has shown that this was an error. IR should be linked to nominal GDP growth not consumer prices. When IR are set < nominal growth (as they have done for prolonged periods), this can result in bubbles in asset prices and credit becoming too attractive.

In my opinion, the wrong tools led governments and central banks to make consistent policy errors – 2003-2007 US interest rate were kept too low and conversely in 2000, 2008 and 2011 the Europeans raised IRs at the wrong time.

So where do markets come in? They respond to these factors (often rapidly and sometimes by overshooting) and banks (because of their natural leverage that comes from their roles and their massively over-leveraged balance sheets – a regulatory error – and human error/greed) magnify the impact of these decisions.

So whilst markets and banks clearly failed it is far too simplistic to stop there. They were fundamental errors in government intervention and in regulation and these errors were magnified by the banking system and financial markets.

So we do indeed live in mixed economies and the weaknesses of both sides have been exposed by the current crisis. Its a fallacy to blame the finger solely on one of the players in this process.

Personally I think the crisis has rather more to do with the costs of waging protracted wars in Iraq, Afghanistan and now Libya than anything else. At a conservative estimate we have spent £20 billion over the last 10 years, while the yanks have done about £4 trillion. I suspect that the impact of that on the world economy is more than marginally significant.