[Closed] Bank bailouts and banker bashing

🙂

We've had both since 2008

They did, less than 37% is what the Tories got. The majority of the electorate voted for alternatives to the Tories.

To be fair, the majority of the electorate voted for either the tories or 'even more extreme right wing' capitalist parties

It's a significant fact that the bailout has been profitable as well as delivering stability
We've already established that this is nonsense, why do you keep saying it?

Because it isn't nonsense to be fair to jambas. It was fundamentally important to restore stability into the financial markets and to avoid genuine market concerns about the impact on debt levels on our sovereign risk. Both have direct economic impacts on the rest if the economy.

This is one reason why they soft peddled on banker bashing. Why? Because it is foolish to do that int he middle of the crisis when you need the transmission mechanism to be working. As we exit that period, this is the time when they should be ratcheting up reforms and regulation but they will most likely succumb to banker lobbying instead. Plus the main instrument of policy (QE) requires banks to fulfil their transmission role effectively. At the moment, they are not which is why the policy is only mildly effective.

I hadn't spoken of tax/spending here though, ernie you raised it.

Of course you hadn't of course I did 🙂

Bankers have been bashed, rightly so, but there has to be a time for that to stop as it becomes counterproductive

They should have had their heads paraded through the streets on spikes for what they've done. Instead the 'banker bashing' has actually amounted to them receiving some not very favourable comments, and a bloke had to give his knighthood back, but not his enormous pension

The banking industry in this country is still completely unreformed, utterly dysfunctional, self-interested to the point of being psychopathic, and operates without giving a flying **** about the wider economic picture in the rest of the country. It still doesn't get the damage it did to peoples real lives through its limitless greed, corruption, and immorality. It doesn't show a shred of remorse! And why should it? There have been no real consequences whatsoever.

I think Will Hutton has it nailed by describing the entire industry as 'just money talking to itself'

The only people who defend it are people who work in the industry, and politicians looking to their future highly paid directorships on bank boards.

Well odd Binners that many SMEs are saying exalt the opposite and are desperate for banks to return to providing access to financing - working cap and investment. Why would this be happening if banking was just money talking to itself.

It has been reformed quite obviously and there have been major job losses. The former has not gone far enough, true, but the latter is on-going

ninfan - Member

To be fair, the majority of the electorate voted for either the tories or 'even more extreme right wing' capitalist parties

If you are including UKIP's 12% of the vote as I assume you are it makes jambalaya's point even less valid.

I'll remind you what his point was : [i]"whatever you say about Tory hypocrisy the electorate found them to be more trustworthy and competent than the alternatives"[/i]

As you quite rightly point out even right-wingers voted for an alternative to the Tories, which hardly inspires confidence in the competence of the Tory Party.

Btw most of the electorate did not [i]"vote for the tories or 'even more extreme right wing' capitalist parties"[/i] as you falsely claim. One third of the electorate didn't bother voting at all.

Well odd Binners that many SMEs are saying exalt the opposite and are desperate for banks to return to providing access to financing - working cap and investment. Why would this be happening if banking was just money talking to itself.

Well you've sort of answered your own question there. All the money pumped into the banks was supposed to do exactly that. Provide capital to SME's. All those (our) billions. Except none of those tens of billions made it there, did they? They fuelled another housing boom, and supplied more cheap credit to consumers instead.

So they've changed their behaviour how exactly? Its all got an awfully familiar ring to it, hasn't it? Ignoring the actual needs of the economy, and pursuing its own short term interests instead, without a second thought for the long term consequences. Because for them there have been no consequences, have there? Unlike the rest of us. Who have paid for their greed and moral ambiguity in spades!

What could possibly go wrong eh? 🙄

You are missing the causal link - the authorities coincidently introduced regulations that meant that the banks couldn't extend this credit. They are being forced (correctly) to shrink their balance sheets. You can't focus all the blame not he banks either for the crisis or after. They are part of the transmission mechanism. Their actions reflect the activities of governments, central banks and regulators. All are flawed.

Couldn't agree more THM. It's human nature to push as far as you can legally get away with. The FSA want stringing up for the casual abdication of their responsibilities. The politicians want stringing up for their total failure to eatablish an even remotely effective regulatory framework, and for being so cheaply duped.

But what staggers me in both instances is the lack of curiosity as to what was actually going on. Vince Cable stood out as a tiny amount of voices pointing out that the Suns just didn't add up.

You forgot the * after the word regulators.

* the word is used figuratively in this instance, and does not imply any actual regulation or oversight.

It's human nature to push as far as you can legally get away with.

From all the recent fines, it seems the bankers were well past that point. It does seem they really thought that nothing / no one could stop them and anything, which made them richer, was OK. Way worse than just a bit greedy, completely immoral behaviour. They have collectively earnt a lifetime of bashing.

Yeah.... It does amuse me the terminology used... 'Mis-selling', 'wrong-doing' 'rate rigging' etc etc.

Can we not just refer to it as what it actually is? Systemic, institutionalised, Industrial scale fraud?

Mind you.... If you did that then you might have to start arresting people. And we can't have that now, can we?

Can we not just refer to it as what it actually is? Systemic, institutionalised, Industrial scale fraud?
Mind you.... If you did that then you might have to start arresting people. And we can't have that now, can we?

Or Spain or even USA.
[url= http://www.channel4.com/news/parliamentary-banking-commission-bankers-jailed-financial-cr ]Fraudsters behind bars[/url]

Re levels of personal debt. This is scary...
It suggests no real rises in income, rising cost of living and an inability to deal with our addiction to shiny things/learn the lesson of 2008...
If there's one thing you need to do in a crisis, it's to stop doing the things that got you into the crisis in the first place...

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Anecdotally, everyone I talk to who I think is a 'critical/independent' thinker - whether a Brit, Polish, French person is pretty negative about the future... deeply aware the problems have not been fixed and the massive levels of debt built and building up and the asset bubbles growing are just the preface to another crisis - except this time Central Banks will have no room for manoeuvre...
Just spend a bit of time on FT and Economist websites and read the comments in any story about the global economy and you'll see what I mean. Any 'recovery' is an illusion... the fundamental weaknesses remain
Psychologically the shock of this one to the population as a whole is likely to be worse than 2008 - too many people ill-informed or putting their heads in the sand and buying shiny things and going 'oh I'm loaded, my house went up £10k last month' 😯

Just spend a bit of time on FT and Economist websites and read the comments in any story about the global economy and you'll see what I mean. Any 'recovery' is an illusion... the fundamental weaknesses remain

Agreed, yet share prices are on a right roll at the moment. My ISAs have made >20% in the last year, some over 30%.

Interesting analysis of economic policy of the last 30+ years

In a wide-ranging analysis of Britain’s performance in the decades before and after 1979, economists at the University of Cambridge say the liberal economic policies pioneered by Thatcher have been accompanied by higher unemployment and inequality. At the same time, contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades.

http://www.theguardian.com/business/economics-blog/2015/jun/10/growth-what-growth-thatcherism-fails-to-produce-the-goods

Anecdotally, everyone I talk to who I think is a 'critical/independent' thinker - whether a Brit, Polish, French person is pretty negative about the future... deeply aware the problems have not been fixed and the massive levels of debt built and building up and the asset bubbles growing are just the preface to another crisis - except this time Central Banks will have no room for manoeuvre...

That is the problem. The vast majority are not critical/independent thinkers and instead are sheep. Believing what they read in the papers on see on the news.

I think pretty much everything is overvalued at the moment. When it does eventually break it's not going to be pretty. I can't see the housing market breaking for a while, but the financial markets on the other hand........

At some point I'm going to try and persuade my parents to go to cash with some of their portfolio. 20% gains for years is just not realistic for any market.

FF. The Guradian piece is brilliant in its awfulness. Completely misses the causes of current issues and mistakes what Thatcher actually did - what were people saying about problems at the Guardia today on a different thread!

But there should be surprise about asset pricing. It's a deliberate outcome of current unorthodox policy - here and in China. Interest rates are being grossly distorted and mispriced (openly) in order to encourage more risk taking. This should have created a wealth effect (pass) and more bank lending (fail).

Crazy, crazy times. Which will be more painful the correction in bonds or Chinese equities. I am only long the latter but am exiting now.

At the same time, contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades.

I thought it was a well-known fact that growth in the UK economy during the 1980s when Thatcher was PM was exactly the same as for the 1970s? Just like isn't it a well-known fact that the UK tax burden and government spending went up, not down, during Thatcher's premiership? Perhaps not.

...the liberal economic policies pioneered by Thatcher have been accompanied by higher unemployment and inequality.

Seriously, does anyone really need to be told that? ffs

I'm assuming you trade your own account THM? Reading your posts you seem to have that sort of mindset.

FF. The Guradian piece is brilliant in its awfulness. Completely misses the causes of current issues and mistakes what Thatcher actually did - what were people saying about problems at the Guardia today on a different thread!

They're only quoting the source, which was the Judge Institute (MBA deviant breeding school), so it's a bit unfair blaming the Guardian.....

Have you seen this, guys?

kudos100 - Member
I'm assuming you trade your own account THM? Reading your posts you seem to have that sort of mindset.

Yes but not too frequently - only big conviction trades and no ST stuff.

(It was a full time job quite a few years ago! 😉 )

Binners the money lent to banks in the crises was to allow them to maintain their lending commitments to SMEs etc, it wasn't extra money to lend more. Banks lent too much, the correct response to the crises is to lend less and the regulatory changes have made it tougher and more expensive to lend. This is then set against businesses asking for more loans. It's business reality that SMEs run on their overdrafts, not healthy. There are lots of calls to lend money to small business but it's very risky, highly labour intensive (ie inefficient) and in many cases not very appealing. It's why so much SME lending is really mortgages secured on the founders home, one of the things that really wouldn't work with the "positive money" idea is no one would lend money to SMEs, if the avg guy in the street looked at the business they'd say no thanks. Getting involved in bank loan portfolios inc SMEs is what I do for a living, the new regulations are making it very tough for banks an inevitable consequence of the chosen regulatory / government response to "this mustn't happen again"

@gofatster, I clicked in that but it's nearly 2 hours so won't be watching it. A quick summary from you or a link to a review ?

@brooes I agree once more with a lot of that post, I think the extrapolated graph of personal debt beyond 2015 is overdone however.

Their actions reflect the activities of governments, central banks and regulators. All are flawed.

Though presumably you're not suggesting the banks are passive partners in this relationship? Government, central banks and regulators are all directed by external influence too.

Not passive, no, but they are part of the transmission mechanism which is what it sounds.

The fundamental cause of the crisis was central banks flooding the world with liquidity at a time if artificially low interest rates. The other factors exacerbated the impact of this - including down (in cases) to the behaviour of individuals. But they are more symptoms than causes.

Good job we are not flooding the markets with liquidity and a time of artificially low interest rates again, isn't it!?! 😉

@jambalaya et al:

You should.

So you're prepared to talk about something for 5 pages over several days and not to watch an investigation or discussion of the merits or otherwise of the system and mindset that encompasses it....

That sure says a lot.

You should.

That sure says a lot.

Trade for ourselves ? Pretty much impossible as it's against our terms of employment contracts (conflict of interests / distracted etc) , we can make longer term investments and do asset allocation in our pension etc but not actively trade.

Well the ultimate bailout may be coming to a country near you soon - nationalisation and capital controls a la greque

The debt burden on Greece is completely unsustainable, so the sooner they just get on and default the better (for them in the long term).

Have you somehow forgotten how the Euro and the EU works? Germany says kick the can down the road - yet again - until we get to Greek Exit/Euro crisis part 974, a few months down the line.

It'll look exactly the same as now, with exactly the same people having exactly the same Mexican Stand Offs. But whats the alternative? We can't have anyone doing anything as daft as actually addressing the fundamental structural problems of an unsustainable single currency model now, can we?

Currently it's the IMF playing hardball, so it doesn't really matter what Germany think.

I have my own pitchfork, which bankers are we bashing? 😈

here's the TLDR for the film

https://en.wikipedia.org/wiki/Four_Horsemen_(film)

Currently it's the IMF playing hardball, so it doesn't really matter what Germany think.

Yes and no. They are also saying the EZ need to face up to more debt restructuring, which is Germany's "red line".

Currently it's the IMF playing hardball, so it doesn't really matter what Germany think.

Slovakian ministers speaking up again - I paraphrase "why should I ask the citizens of Slovakia who earn wages of euro 400-600 pm (800-900 min wage in Greece) and have pensions of 250-400 (500-700 in Greece) to give the Greeks euro 1bn when they are not prepared to take a cut in their wages or pensions"

debt restructuring, which is Germany's "red line".

This sums up my view, from Anatole Kaletsky who used to write for The Times, published last week [url= http://www.project-syndicate.org/commentary/greek-default-political-suicide-by-anatole-kaletsky-2015-06 ]From Farce to Irrelevance[/url]

First and last paragraphs

[i]The good news is that a Greek default, which has become more likely after Prime Minister Alexis Tsipras’ provocative rejection of what he described as the “absurd” bailout offer by Greece’s creditors, no longer poses a serious threat to the rest of Europe. The bad news is that Tsipras does not seem to understand this. To judge by Tsipras’ belligerence, he firmly believes that Europe needs Greece as desperately as Greece needs Europe. This is the true “absurdity” in the present negotiations, and Tsipras’ misapprehension of his bargaining power now risks catastrophe for his country, humiliation for his Syriza party, or both.

.....

The latest Greek negotiating strategy is to demand a ransom to desist threatening suicide. Such blackmail might work for a suicide bomber. But Greece is just holding a gun to its own head—and Europe does not need to care very much if it pulls the trigger[/i]

Not to get into this discussion again, but that view is not shared universally. The fact is that nobody knows what effect a Grexit will/would have. However, as time goes by more and more big hitters are lining up behind the Greek view, including the IMF chief economist, and this morning's FT
http://www.ft.com/cms/s/0/5e38f1be-1116-11e5-9bf8-00144feabdc0.html?siteedition=uk#axzz3d6QgTokm

@ed thanks for that link. @gofaster I'll skip the movie as total sh1te - fractional reserve baking is a nonsense theory and as for the war on terror being a scheme to increase debt to banks that's even further out there. I couldn't last 5 minutes never mind 100

@DrJ yes agreed we don't need to go through all that again and I do appreciate there are different views on the best outcome for Greece and we mustn't forget what's best for the broader EU which may be a debt forgiveness deal for Greece (but that's very troublesome if Greece is not propeapred to undertake the very necessary reform and they've showed no sign they would) or it may be cutting Greece free thus allowing them to leave the euro as a lesson to other members that you must honour agreements and not break the rules.

Ha, oh man, that's the last time I bother trying to get you to take your head out of its bubble. Neither of those things are in the first 5 minutes of the film, so you didn't even try to watch it, you looked it up and let other people tell you what you wanted to hear.

Also, Fractional Reserve Banking isn't mentioned by name in the film, but if you mean the method in which banks accumulate and 'generate' money which is described as normal in the film and which is what Wikipedia seems to describe the same way then how can you say it's a nonsense theory?

As for wars being ways to make money for those in command, they're usually nothing else. It's not a conspiricy theory when your government is filled with defence and banking lobbyists....

I might bother typing the actual content of the film up, buy I'm not sure if there's any point...

Sometimes I wonder if we will just destroy ourselves.

I've think I've asked this before Jam, but clearly as you don't believe that money=debt, and that there is the same in deposits in banks as there are loans (if you think that fractional reserve is a fiction) why did banks need bailing out by us?

you understand that they asked for money from Govts because they couldn't service their debt..? Right?

Nick, I do not think anyone believes that money and debt are synonymous and I know that jambalaya is well aware that the volume of loans do not equal the volume of deposits - far from it in many cases.

The reason for bank bailouts was varied but essentially a combination of liquidity and/or capital shortages.

Fractional Reserve Banking is clearly the dominant system in the banking world. However, many incorrectly assume the fact that the system can create money "out of nothing" means that an individual bank can create money out of thin air. Anyone who has ever had to fund a transaction knows that this is very far from the reality.

I'm no expert in the field, but these guys seem to know what they're on about:

This suggests similar:

[url= http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity ]The truth is out: money is just an IOU, and the banks are rolling in it [/url]