US bail out for banks

No, we shouldn't.

quote:

Originally posted by Simon Perry:
Amazing! The US tax payer funds banks losses but does not get to share in their gains.

Don't confuse a tourniquet with long-term patient care. If they don't stop the bleeding quickly, all the enlightened fiscal policy in the world won't save the system.

Good to see short selling being restricted. I would ban it! ATB from George

quote:

Originally posted by GFFJ:
Good to see short selling being restricted. I would ban it! ATB from George

I thought you enjoyed a vodka or two, George!

"What is the robbing of a bank compared to the founding of a bank?"
Berthold Brecht

Here's an interesting perspective by Ron Paul on how we got into this mess.

our PBS.org had news and interviews all last Friday, if you have time to sit thru them they are on web casts. Go to Bill Moyers, and Washington Week in Review. Fascination discussion.

I have heard that if the Gov't spends tax money to bail them out, part of their future profits will be tied to paying it all back. I hope so, and some major regulation. I think a home mortgage, or any lending, you have to prove that you make that income, and NO adjustable rates or interest only loans. That's just gambling on what you don't have.

glenn

quote:

Originally posted by jayd:

quote:

Originally posted by Simon Perry:
Amazing! The US tax payer funds banks losses but does not get to share in their gains.

Don't confuse a tourniquet with long-term patient care. If they don't stop the bleeding quickly, all the enlightened fiscal policy in the world won't save the system.

Jayd,

Who told you that they are bleeding (they made billions in the last five years, where is all their money and their good assets?)? The banks themselves? the Feds? the Treasury this administartion?

The same guys who caused this calamity are going to be in charge now of solving the problem? Can we really trust them?

Instead of handing out billions of tax payers money, how about just lending it to the banks at a very low rate so they can continue to do business (and prosper) without being limited by their bad assets which they can unload later, when the economy recovers for a much better price.

Haim

quote:

I have heard that if the Gov't spends tax money to bail them out, part of their future profits will be tied to paying it all back. I hope so, and some major regulation.

quote:

Instead of handing out billions of tax payers money, how about just lending it to the banks at a very low rate so they can continue to do business (and prosper) without being limited by their bad assets which they can unload later, when the economy recovers for a much better price.

That's roughly what was done in the Swedish bank crisis of the early 1990's. It worked. Yes, I was as pissed of as anyone when it happened, particulary as I never borrow any money, but it was the least bad way out of it.

JohanR

quote:

Originally posted by JohanR:
That's roughly what was done in the Swedish bank crisis of the early 1990's. It worked. Yes, I was as pissed of as anyone when it happened, particulary as I never borrow any money, but it was the least bad way out of it.
JohanR

JohanR,

What caused the banking crisis in Sweden?

Haim

In the mid 1980's the government lifted the previous regulations on how and what amount the banks could lend out. This started a lending circus quite like the current US one. Banks had competitions on wich local office lended out the most money, old hat's that tried to moderate it was forced into retirement, etc, etc. I remember receiving letters more or less every week where I was offered to borrow amounts equal to a new car with no sequrity needed, just "my good name"!

It ended with a big bang!!!

JohanR

quote:

Originally posted by JohanR:
In the mid 1980's the government lifted the previous regulations on how and what amount the banks could lend out. This started a lending circus quite like the current US one. Banks had competitions on wich local office lended out the most money, old hat's that tried to moderate it was forced into retirement, etc, etc. I remember receiving letters more or less every week where I was offered to borrow amounts equal to a new car with no sequrity needed, just "my good name"!

It ended with a big bang!!!

JohanR

JohanR,

Thanks for the info.

Unfortunately, it seems like the US Government is not thinking in terms of loans to the banks which could easily increase liquidity in the markets and enable them to renegotiate lower loan interests with strapped borrowers.
Instead, they are locked on the concept of buying those bad assets from the financial institution with tax payers money ('Cash for Trash') and using scare tactics ('Markets melt down' 'Depression') to convince the public to accept those drastic steps which mean of course huge rewards to Wall Street.

Regards
Haim

They should all be left to go bust. They deserve nothing!

I'm all up for a deep recession so long as these banks don't get bailed out. I don't owe any money because i don't borrow, unfortunately i'm forced to use these dreadful idustries as a means of getting paid.

Steve

quote:

Originally posted by Stephen Tate:
They should all be left to go bust. They deserve nothing!

I'm all up for a deep recession so long as these banks don't get bailed out. I don't owe any money because i don't borrow, unfortunately i'm forced to use these dreadful idustries as a means of getting paid.

Steve

I am afraid that you got it wrong. It is you that they want to save, not the banks.

quote:

Originally posted by John G.:
Here's an interesting perspective by Ron Paul on how we got into this mess.

Well, a right-wing Republican perspective. "The governments are to blame for the mess due to too much regulation."

Very funny. This is a view with vanishing sympathy over here, at least. The governments on both sides - including your dead duck President - are doing their best to solve the shambles created by the greedy fast-buck lunatics who've run the banking sector since the 1980s without a care for the rest of us.

As you will find out.

US bail out for banks

Oh no they won't!
BBC News

The Bill has been bounced and the markets are going to "correct" themselves now.

Jono

I'm as annoyed as anybody that these overpaid twits have led us into this mess and are now being baled out by the taxpayer but this explanation of the way 'the City' works struck me as the best I have ever seen - guaranteed to amuse but I suspect rather closer to the truth than we'd like! http://www.youtube.com/watch?v=UC31Oudc5Bg&feature=related

What I find incredibly frustrating is that the salaries these people have been paying themselves for years are so disproportionate to the level of knowledge, skill and training required for the job and as a taxpayer of modest means I'm being asked to pay for their party.

Thatcher has a lot to answer for if one looks back 20 years. Since then we've run our heavy industry into the ground and only now are beginning to see what a terrible error of judgement that was.


Jonathan

my concern with the "bail out package" is precisely the fact that its a "bail out". this has the connotation of a "one-off" action that will suddenly evaporate the dark clouds. i am simply not convinced that this will solve the "problem" despite all the scare-mongering from poulson and his peers.

the origin of sub-prime is a mixture of factors, key of which i believe the (investment) banks desire to look for more trading returns which were becomes razor thin in the "traditional" (and to them "boring" markets) of vanilla bonds and other such simpler instruments. the reason for all the over-leverage (CDS, CDOs, Tranches etc) is to generate the highest return in the least possible time. All legitimate capitalist activities, you could say.

The problem is when this process over extends itself -- and this is where some form of healthy regulation was required, not to stiffle mkt activity, but to make sure it doesnt get sucked into some irrational singularity. Unfortunately the players took much higher risk than their capital was able to support. And folks took on debt that the couldnt afford toservice in harder times. normally, the capitalist system would normally just say "tough cheese"

however, the process was allowed to go too far. as soon as you have too many defaults on debt of whatever type (morgages, car loans, hifi loans etc) the value of that debt plummets. what i am having difficulty coming to terms with as far as the "bail out package" is concerned is that i cannot see the govt paying more for this toxic debt than it is worth (in fact its difficult to know how much it is worth), but there is no doubt that it is much lower than its purchase price -- hence the banks are facing a very high write-down, which implies absorbing a huge loss on their books. will they survise this write-down whether the bgvt buys it or not??? so the package has to do more than simply buy the assets, which has been the focus. but what is that? i suppose after the write down, the weaker banks could be allowed to die? or simply be taken over?? what happens to folks who are defaulting on their loans, whatever the reason is?? what is the incentive for sometime who can afford to pay to continue to do so??? (given the likelihood of bail out if i default). i know there are some genuine difficulties out there, but my god its now trickier than ever to separate these out...

i am deeply involved in this, so my job is also on the line...

i am extremely disappointed that the "package" on the table seems to be somewhat short term... probably because of the "more haste less speed" style that has been adopted.

tricky times...

enjoy?
ken

quote:

Originally posted by imperialline:
I am afraid that you got it wrong. It is you that they want to save, not the banks.

Working in the consruction industry we are/were already in it way before this, the writing was on the wall along time ago.

Like i said - i don't owe any money or have anything tied up.
Hard to see how they will save me.

Regards, Steve

quote:

Originally posted by Jonathan Gorse:
Thatcher has a lot to answer for if one looks back 20 years. Since then we've run our heavy industry into the ground and only now are beginning to see what a terrible error of judgement that was.
Jonathan

Including demutualising the Building Societies. Only the still mutual ones now appear safe. What a farce. Thanks Margaret.

This account guarantee thing -- i know it covers personal accounts, but what about business accounts?

quote:

This account guarantee thing -- i know it covers personal accounts, but what about business accounts?

I checked this morning - small business accounts are covered. The definition of a small business is meeting two of the following three criteria: t/o <£5.6m, balance sheet <£2.8m, employees <15 (or was it 50 - I didn't care as I am the only person in my company). And no, I'm not in any danger of exceeding the other two marks, either.

thanks for that

Chaps

Blaming the American bankers for this mess is ludicrous.

The blame lies squarely with the intellectually challenged morons who borrowed on sub prime mortgages. Only a total fool with the IQ of a poodle would over borrow against an asset that was bound to devalue.

They are truly thick and they are not just a menace to themselves but to the world in general. Thanks to these dimwits, we now risk a world recession. Possibly there is a case for passing an IQ test before being allowed to open a bank account.

The American banks merely lent in order to generate a profit and successfully sold the debts onto foreign banks who acted injudiciously in taking them on.

Get real and blame the dumb dickheads who borrowed money without reading the contract before signing it. They should not be allowed to walk the streets.

Regards

Mick

Dear Mick,

I made exactly that point a few minutes ago on the phone to a friend in the Civil Engineering business.

It takes two to tango ...

ATB from George