Bad debt banks 'should go bankrupt'

[minestrone]

My brother advocated this 'so eveyone would get their houses for free'.

Commie social worker.

[BrilloPad]

If banks were marked to market (like hedge funds are) not one bank in Europe would be solvent.

[Scoobos]

WHS - Although bank runs are frightful, if we're going to deregulate the way we are and expose everything to market forces then you've got to let failing business fail. *cough* and then regulate again *cough*

[KentPhilip]

Fine - I respect that position - in fact I think there are some merits in it - but it's odd that he neglects to mention the end-line consequences of that argument.

If a major bank goes bankrupt, then bondholders don't get paid at all (most of whom are pension funds), but also depositors may lose their money.

So if he wants to turn around to pensioners and savers and say "sorry, but a good chunk of your savings and retirements earnings will vanish - tough titty", then he's following through on his argument

But he presents his argument as if there are zero negative consequences - that all of these bondholders are billionaires who can afford to lose the money.

Then it is more fool them for investing in a bank that has been up to no good.

The effect of all this would be deflation.
Not all banks would go bust. Those that remain would find their customer's cash and bond investments effectively rising in value due to the deflation, neatly offsetting the losses to the failing banks.

Resulting in the sensible rich getting richer, and the foolish rich staying rich no more.

[centurian]

Fine - I respect that position - in fact I think there are some merits in it - but it's odd that he neglects to mention the end-line consequences of that argument.

If a major bank goes bankrupt, then bondholders don't get paid at all (most of whom are pension funds), but also depositors may lose their money.

So if he wants to turn around to pensioners and savers and say "sorry, but a good chunk of your savings and retirements earnings will vanish - tough titty", then he's following through on his argument

But he presents his argument as if there are zero negative consequences - that all of these bondholders are billionaires who can afford to lose the money.

[Doggy Styles]

"Mr Coughlan said it would be “absurd” for Irish voters to vote in favour of the fiscal referendum on Thursday given that the ESM would not be set up until July." - 28 May 2012.

"Ireland votes in favour of EU fiscal pact" - BBC News - Ireland votes in favour of EU fiscal pact - 1 Jun 2012.

HTH

More EU please!

[AtW]

"Mr Coughlan said it would be “absurd” for Irish voters to vote in favour of the fiscal referendum on Thursday given that the ESM would not be set up until July." - 28 May 2012.

"Ireland votes in favour of EU fiscal pact" - BBC News - Ireland votes in favour of EU fiscal pact - 1 Jun 2012.

HTH

[petergriffin]

Bad debt banks 'should go bankrupt' - The Irish Times - Mon, May 28, 2012

If they are capitalists they should obey the rules of capitalism; if you make a bad debt and screw up then you’ve got to pay the consequences. You can’t go to the government and get a bailout . . . that’s not capitalism, that’s not even socialism, that’s crapitalism

Go on Max, crash them all!