Bank bailouts?

[JamieLeather]

Right, i'm sure that the issue of Bank bailouts is highly controversial here, but what i'm asking is if we were to continue to bail out the huge sinking frigate that is our economy with nothing more than a wooden bucket... should we be making them accept harsher terms like, investing in Green technology when times are good and others things?

[Paul]

The UK government doesn't believe in subsidising the energy industry (certainly not in nuclear, and I've seen no evidence to the contrary in green energy) - this would fly in the face of that policy.

[Gotlieb Alexander]

I'd rather they pay back the money when times are good

[Liam Hannan]

really?

I quite like the government having a stake in the banks. It gives us a chance to twist their arms regarding the repayment of PFI/PPP initiatives and save local governments a lot of money that can be invested in services...

[Gotlieb Alexander]

really?

I quite like the government having a stake in the banks. It gives us a chance to twist their arms regarding the repayment of PFI/PPP initiatives and save local governments a lot of money that can be invested in services...

I don't trust Gordon Brown to run a bath let alone a bank

[liberati]

I don't see bank-bailouts as being either effective at repairing the economic damage or as morally sound. Bailing out the banks has not returned borrowing levels to where the Government wants them to be and more will not help.

I say, by-pass the banks and lend money directly from the state to businesses rather than using it to shore up balence sheets full of toxic debts. This, coupled with direct state investment is, as I see it, the best way out in the short-term

[jake.B]

Yes but what we have to remember sadly, is that if the banks go down so will the countries.

They are the things keeping the country floating. And its true, think of where every one gets there loans from.

Shops, business, people's homes, loads more, can not run without these loans from banks our days.

I think its wrong that a bank has complete control over the world economy, because moments like this when many have to suffer over a few people's mistakes.

And I also think that the Government should have a stake in every bank. Infact I think the Government should have all the banks in this country, so the tax payer has control of the banking system (in theory).

And the profits can go to the NHS and others Government run systems, instead of the greedy owners and mangers etc.

[Gotlieb Alexander]

And the profits can go to the NHS and others Government run systems, instead of the greedy owners and mangers etc.

If the government ran the banks there wouldn't be any profits, the system would be politicised and the banks would collapse faster than a house of tissue-paper cards in a tornado.

Banks have to do unpopular things to stay in business (not lend to the unemployed, charge poor people higher interest rates than rich people, repossess houses when people lose their jobs and so on) and a political bank would never take such measures

[Daniel Frost]

What if it was like the BBC?

[Gotlieb Alexander]

What if it was like the BBC?

In what sense?

[Daniel Frost]

As in if it was largely independent but with government support. I don't think people blame the government when the BBC does something unpopular.

[Gotlieb Alexander]

As in if it was largely independent but with government support. I don't think people blame the government when the BBC does something unpopular.

Gordon said he was going to do that with the banks (Appoint a board of directors but allow them to run the banks without interference) but within a few weeks several government ministers and a treasury select committee were trying to alter pension arrangements for a single person.

The government will not be able to refrain from micromanagement if they have a chance to do it. At least businessmen can be trusted to try to make a profit, and 30% of something (corporation tax) is better than 100% of nothing.

I'm not going to let our banking industry go the same way as our motorcar industry (nationalised -> unionised -> uesless -> bankrupt)

[liberati]

Yes but what we have to remember sadly, is that if the banks go down so will the countries.

Not necessarily, that depends on the size of the bank relative to the economic power of the country, if the banks cannot be supported such as to work, it is not worthwhile


They are the things keeping the country floating. And its true, think of where every one gets there loans from.
Shops, business, people's homes, loads more, can not run without these loans from banks our days.
The country is not floating, it is slowly sinking (or as I prefer to think of it, a slow-motion train crash). The banks are not lending, that is the problem. Existing banks are not the only source of loans, new banks can form/be created to provide leanding.


I think its wrong that a bank has complete control over the world economy, because moments like this when many have to suffer over a few people's mistakes.

They do not have complete control of the world economy, merely their faliure has consequences for others.
Besides, bank bail-outs will not solve this, greater regulation is required


If the government ran the banks there wouldn't be any profits, the system would be politicised and the banks would collapse faster than a house of tissue-paper cards in a tornado.

Banks have to do unpopular things to stay in business (not lend to the unemployed, charge poor people higher interest rates than rich people, repossess houses when people lose their jobs and so on) and a political bank would never take such measures

I agree, putting banks under direct state control would have disasterous consequences, all the more so for being politicised
However, using the BoE to provide direct lending to businesses is something I see as viable and necessary in the short term.
Also state-ownership does not necessarily mean state-control, they could be run by a detached trust,

[Gotlieb Alexander]

Not necessarily, that depends on the size of the bank relative to the economic power of the country

If a bank goes bust with money inside it then the people with their money inside it lose it, they lose faith in banking and never use it again, meaning less money flows in the economy, the businesses with their money in it go bust, economic production stalls

[liberati]

Gordon said he was going to do that with the banks (Appoint a board of directors but allow them to run the banks without interference) but within a few weeks several government ministers and a treasury select committee were trying to alter pension arrangements for a single person.

The government will not be able to refrain from micromanagement if they have a chance to do it. At least businessmen can be trusted to try to make a profit, and 30% of something (corporation tax) is better than 100% of nothing.

I'm not going to let our banking industry go the same way as our motorcar industry (nationalised -> unionised -> uesless -> bankrupt)

State-owned banks are something that is potentially viable but politically unlikely.
The case of Fred Goodwin was something of an exception, the government were responding to public outrage and it's not directly related to state ownership of RBS
Not sure businessmen can be trusted to always succeed in making a profit though, while a state system would be more stable. I'm still not in favour of state-owned banks in the long term, the free-market (with sufficient regulation) is more effective at running such a thing.
Banking and automobiles have many inherent differences, banking is largely carried out by a white-collar workforce, and is not unionised. Besides, the power of the unions is much less than it was. I wouldn't put nationalisation as the main reason for a failing UK car industry, it would have been on a downward slope anyway

[liberati]

If a bank goes bust with money inside it then the people with their money inside it lose it, they lose faith in banking and never use it again, meaning less money flows in the economy, the businesses with their money in it go bust, economic production stalls

But if a bank fails, the county's economy does not automatically collapse (besides, deposits are guaranteed)

[Gotlieb Alexander]

But if a bank fails, the county's economy does not automatically collapse (besides, deposits are guaranteed)

Deposits are only guaranteed if the government has the money (which they don't if banks collapse on a large scale)

And if they have to guarantee the deposits doesn't it make better financial sense to save the bank?

[liberati]

Deposits are only guaranteed if the government has the money (which they don't if banks collapse on a large scale)

And if they have to guarantee the deposits doesn't it make better financial sense to save the bank?

Hence my comment on the size of economy/GNP relative to the bank, a large country can afford to repay depositors, wheras a small country (such as Iceland) cannot.

That depends on the relative costs of each, and whether pouring more money in is necessary. I agree with the initial wave of bail-outs, I question whether more are required to keep the banks (if more is, who is to say whether more is not required after that).
In the long-term the best way to save the banks is by restoring economic stability, I see the money as being put to better ends to achieve this.

[jake.B]

[QUOTE=liberati;114339]Not necessarily, that depends on the size of the bank relative to the economic power of the country, if the banks cannot be supported such as to work, it is not worthwhile


The country is not floating, it is slowly sinking (or as I prefer to think of it, a slow-motion train crash). The banks are not lending, that is the problem. Existing banks are not the only source of loans, new banks can form/be created to provide leanding.


They do not have complete control of the world economy, merely their faliure has consequences for others.
Besides, bank bail-outs will not solve this, greater regulation is required


Yes but all the banks are having problems, so if they are all failing then every one will suffer. So we need to stop them before they are gone.

If the banks where gone, may I ask how the country would run?

And I don't think a political bank would fail since it would act on the countries best interests (in theory, as depending on who is in charge)

P.S. I like the train crashing in slow motion :p :D

[liberati]

Yes but all the banks are having problems, so if they are all failing then every one will suffer. So we need to stop them before they are gone.


Some banks are considerably worse of than others compare RBS to Barclays or HSBC, all are suffering but those better-run banks are doing better. Preventing banks from going under does not necessarily equate to current bailout plans, should a bank which cannot survive independently be allowed to continue.


If the banks where gone, may I ask how the country would run?


The banks will not all be gone, besides I have advocated direct state lending via the Bank of England as an alternative (in the short term).


And I don't think a political bank would fail since it would act on the countries best interests (in theory, as depending on who is in charge)


A bank under political control will always do what to voters want and so it will be impossible for it to take unpopular actions (such as repossessions) which are necessary for it to function. It will not be able to funciton efficiently.
GA said something along these lines


P.S. I like the train crashing in slow motion :p :D

Thanks,

[jake.B]

Some banks are considerably worse of than others compare RBS to Barclays or HSBC, all are suffering but those better-run banks are doing better. Preventing banks from going under does not necessarily equate to current bailout plans, should a bank which cannot survive independently be allowed to continue.

Yes but a lot of banks are not doing so good. And so a lot of of the public are suffering due to this.



The banks will not all be gone, besides I have advocated direct state lending via the Bank of England as an alternative (in the short term).

The bank of England is out of money remember? They are now printing money for the sake of printing it (quantitative easing)




A bank under political control will always do what to voters want and so it will be impossible for it to take unpopular actions (such as repossessions) which are necessary for it to function. It will not be able to funciton efficiently.
GA said something along these lines

Sorry didn't notice. Well maybe the bank of England should be the only bank in the country. It is better to have one big bank that runs good, than loads and a few doing good and other bad.

[liberati]

Yes but a lot of banks are not doing so good. And so a lot of of the public are suffering due to this.

Bail-outs do not help with this, the money can be better spent on helping the public through other means.



The bank of England is out of money remember? They are now printing money for the sake of printing it (quantitative easing)

So where is the money for the bailouts comming from? - that self same quantitiative easing. I advocate the use of this money, for BoE lending (what is happening at present is that the BoE is lending/giving money to banks)
The BoE can never be 'out of money' on account of having a technically infinite quantity (it has the right to create money). Quantitiatve easing is not quite printing money, besides it is a necessary step in order to either bail-out or lend



Sorry didn't notice. Well maybe the bank of England should be the only bank in the country. It is better to have one big bank that runs good, than loads and a few doing good and other bad.

But competition between a number of banks leads to better deals for consumers, a monopoly is an inherently bad idea as it allows the monopoliser to act with impunity.

[jake.B]

Bail-outs do not help with this, the money can be better spent on helping the public through other means.

But the banks are helping the public by loans for their mortgages, etc. So the public would still lose out because their bank is gone and there money. And the BoE wouldn't want to be printing that much money out because there would just be a chance of super inflation due to covering loads of bank collapses, there would be super inflation, and thats another big problem.



But competition between a number of banks leads to better deals for consumers, a monopoly is an inherently bad idea as it allows the monopoliser to act with impunity.

No because my idea of the system would allow the public to control the bank as well to a certain extent.

I have to go now any way, but I get the feeling we could talk about this all night, haha :D Bye

[liberati]

But the banks are helping the public by loans for their mortgages, etc. So the public would still lose out because their bank is gone and there money. And the BoE wouldn't want to be printing that much money out because there would just be a chance of super inflation due to covering loads of bank collapses, there would be super inflation, and thats another big problem.


The banks will not collapse if there are no more bailouts. In any case, bank collapses do not necessarily result in people's money disappearing, nor does a bank collapse mean that there will be no sources for mortgages (which are nigh-impossible to get anyway for most people now).

The BoE must create money in order to bail out banks
Hyperinflation would be a major problem but is very unlikely as long as the BoE controls the quantitiative easing process


No because my idea of the system would allow the public to control the bank as well to a certain extent.


But a publically controlled bank will only do what the public want not what the bank needs to do, banks need to be able to take unpopular action, a a bank controlled by the public would not be able to do this.