Originally posted by BrilloPad
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Previously on "Forex traders have been shocked into behaving themselves but it might not last..."
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Originally posted by centurian View Post...Yep - and it's still a considerably better outcome than if they had failed completely - depressing isn't it.
In the US they sacked and imprisoned criminal bankers wholesale, and recovered from the crunch quicker than anybody else. Here, it took us years to decide that perhaps old Fred shouldn't be a knight of the realm after all. The amazong thing is that British bankers must have known about the credit crunch years in advance - even they know how to recognise a basic pyramid scheme - but steered into it anyway, rather than changing course in time. Presumably the bad bankers dominated the good ones, and just made plans to have their own stash secure when the ship went over Niagra.
Since our bad bankers are still at the keyboard, maybe they are steering towards a storm drain right now...
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Originally posted by unixman View PostThe banks describing their loans as "assets" is a part of the problem.
Originally posted by unixman View PostIt allows the banks to make any risk appear as no risk. I could loan you 50k to invest in Siberian pasta mines (extreme risk), then put it as an "asset" on my balance sheet. Preposterous. And lethal.
Originally posted by unixman View Post"too big to fail" is also nonsense. They would say that, wouldn't they? By bailing them out, we also bailed out the bad behaviour, ingrained self-delusion, dishonesty, criminality and plain stupidity (see above) that led the banks to navigate themselves down a toilet in 2006. All of these bank behaviour patterns are still with us, as a weekly glance at any newspaper confirms.
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Originally posted by unixman View PostThe banks describing their loans as "assets" is a part of the problem. It allows the banks to make any risk appear as no risk. I could loan you 50k to invest in Siberian pasta mines (extreme risk), then put it as an "asset" on my balance sheet. Preposterous. And lethal.
"too big to fail" is also nonsense. They would say that, wouldn't they? By bailing them out, we also bailed out the bad behaviour, ingrained self-delusion, dishonesty, criminality and plain stupidity (see above) that led the banks to navigate themselves down a toilet in 2006. All of these bank behaviour patterns are still with us, as a weekly glance at any newspaper confirms.Search Results
DEFINITION of 'Fractional Reserve Banking' A banking system in which only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties.
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Originally posted by unixman View Post"too big to fail" is also nonsense. They would say that, wouldn't they? By bailing them out, we also bailed out the bad behaviour, ingrained self-delusion, dishonesty, criminality and plain stupidity (see above) that led the banks to navigate themselves down a toilet in 2006. All of these bank behaviour patterns are still with us, as a weekly glance at any newspaper confirms.
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Originally posted by centurian View PostLiquidation involves turning the assets into cash to pay off the creditors (depositors). Back then, there was no liquidity. Their assets (mortgages, loans) could not be sold - at any price - because no-one would buy them.
HMG simply didn't have enough cash to pay all of the depositors - it still doesn't - they are still too big to fail.
"too big to fail" is also nonsense. They would say that, wouldn't they? By bailing them out, we also bailed out the bad behaviour, ingrained self-delusion, dishonesty, criminality and plain stupidity (see above) that led the banks to navigate themselves down a toilet in 2006. All of these bank behaviour patterns are still with us, as a weekly glance at any newspaper confirms.
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I am VERY glad that there are still banks that are too big to fail and long may it continue. Why? Because Govt guaranteed limit of £75k for depositors is piss poor low, and businesses might not even get that. Sadly way too many have more debts than their own money, so they don't give it second thought, but those who do should be eternally grateful to wonderful UK Govt for keeping the system the way it was designed - too big to fail.
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Originally posted by unixman View PostLiquidate the banks and use the bailout money instead to pay back creditors directly. Bail out the creditors rather than the banks. And strip the banks assets (buildings, land), liquidate those and use that money too. Sounds harsh but that is business.
In this way, the market adjusts to remove stupidly risky behaviour and the bank failures become rare events.
But it will never happen.
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Originally posted by unixman View PostThe banks were not insolvent after we gave them a cheque for £108,000,000,000.
Liquidation involves turning the assets into cash to pay off the creditors (depositors). Back then, there was no liquidity. Their assets (mortgages, loans) could not be sold - at any price - because no-one would buy them.
HMG simply didn't have enough cash to pay all of the depositors - it still doesn't - they are still too big to fail.
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Originally posted by unixman View PostThe banks were not insolvent after we gave them a cheque for £108,000,000,000..
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Originally posted by AtW View PostTo liquidate would have meant to fix loss and take on even more because banks were insolvent - there was no money to return all savers, it was much cheaper for Govt to recapitalise and pretend those new shares worth the money they put in.
Now putting directors in jail would have been OK, but then it would also require putting regulators in jail too, and politicians ...
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Originally posted by unixman View PostLiquidate the banks and use the bailout money instead to pay back creditors directly. Bail out the creditors rather than the banks. And strip the banks assets (buildings, land), liquidate those and use that money too. Sounds harsh but that is business.
Now putting directors in jail would have been OK, but then it would also require putting regulators in jail too, and politicians ...
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