What am I missing here, everywhere you read there's dire news about how much this banking bailout is going to cost us, latest figures were about £3000 per person, although this is disputed by the Treasury.
I can't work that out though, how is it going to cost us that? Considering the state has nationalised some and part nationalised others, that's just really playing the stock market. There's no doubt in my mind that this cycle will eventually perpetuate and banking shares will go back up and by then the government paying 45p for every RBS share then goes onto sell them at 245p years later (just an example). Considering these are preferential shares, the governments getting 12% return on those anyway until they sell up. Look at Northern Rock, that's almost back in the black already.
Moving onto the 'toxic debt' argument how is it toxic? This is secured against property. Property prices will eventually go back up some time this decade and out of all those mortgages on the governments books, how many of them as a percentage are in negative equity? Commercial property prices will eventually go up as well as the cycle of boom and bust returns then when you realise that part of the conditions of the bailout were that if the government makes a loss when it liquidates these assets, the banking sector has to cover those losses.
Until any government actually puts tax up, I don't see how it's costing us any extra money. From what I can see, this is getting funded by expenditure cuts, trying to extract more tax using existing legislation and by quantitative easing which as I understand it, this magically appearing money is just like a loan from the state to be paid back in the future when inflation rockets, but again I would imagine this being 'paid back' when the sector has recovered and the government has offloaded everything.
This is of course me not being cynical by thinking that any future government will raise taxes and also keep the money from selling everything off. That's not like them at all is it?
Where am I going wrong?
I can't work that out though, how is it going to cost us that? Considering the state has nationalised some and part nationalised others, that's just really playing the stock market. There's no doubt in my mind that this cycle will eventually perpetuate and banking shares will go back up and by then the government paying 45p for every RBS share then goes onto sell them at 245p years later (just an example). Considering these are preferential shares, the governments getting 12% return on those anyway until they sell up. Look at Northern Rock, that's almost back in the black already.
Moving onto the 'toxic debt' argument how is it toxic? This is secured against property. Property prices will eventually go back up some time this decade and out of all those mortgages on the governments books, how many of them as a percentage are in negative equity? Commercial property prices will eventually go up as well as the cycle of boom and bust returns then when you realise that part of the conditions of the bailout were that if the government makes a loss when it liquidates these assets, the banking sector has to cover those losses.
Until any government actually puts tax up, I don't see how it's costing us any extra money. From what I can see, this is getting funded by expenditure cuts, trying to extract more tax using existing legislation and by quantitative easing which as I understand it, this magically appearing money is just like a loan from the state to be paid back in the future when inflation rockets, but again I would imagine this being 'paid back' when the sector has recovered and the government has offloaded everything.
This is of course me not being cynical by thinking that any future government will raise taxes and also keep the money from selling everything off. That's not like them at all is it?
Where am I going wrong?
Comment