Family & Relationships6 mins ago
A question of priorities
Who should the government give priority to? Should it be the many workers who are already being laid off. Or should they continue what they are doing and bail out the financial institutions?
The workers many of them houseowners cannot pay their mortgages. If too many find themselves like this the banks collapse because of defaulted mortgages which is where we get the sub prime fiasco.
If the workers held their jobs, mortgages would be paid and the banks would remain healthy.
So why are we only helping the banks?
The workers many of them houseowners cannot pay their mortgages. If too many find themselves like this the banks collapse because of defaulted mortgages which is where we get the sub prime fiasco.
If the workers held their jobs, mortgages would be paid and the banks would remain healthy.
So why are we only helping the banks?
Answers
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The reason the banks are collapsing is not because of the bad debt so much as nobody knows how much bad debt a particular bank has.
They're all too afraid to lend money between each other in case the bank fails.
Banks fail because they can't borrow the money.
It's simple fear and it's a self-fulfilling prophesy .
If that fundamental problem isn't addressed more financial institutions will fail and then non-financial organisations who sell to them etc. etc.
If the banking system can't be stabilised we're all stuffed. It's the top priority.
They're all too afraid to lend money between each other in case the bank fails.
Banks fail because they can't borrow the money.
It's simple fear and it's a self-fulfilling prophesy .
If that fundamental problem isn't addressed more financial institutions will fail and then non-financial organisations who sell to them etc. etc.
If the banking system can't be stabilised we're all stuffed. It's the top priority.
-- answer removed --
Surely it depends on the loans/savings balance?
If I had loaned out �80M and was holding �20M in savings and died, taking the details of my numbered Swiss bank account with me, then the people who owed me money would be better off while those whose money I had secreted would be out of pocket.
Anyone know how much the average bank is owed compared to how much it is holding for its clients?
If I had loaned out �80M and was holding �20M in savings and died, taking the details of my numbered Swiss bank account with me, then the people who owed me money would be better off while those whose money I had secreted would be out of pocket.
Anyone know how much the average bank is owed compared to how much it is holding for its clients?
No that's the whole point people don't know what everybody's exposure is!
it's not to do with numbers it's to do with confidence.
Would you invest in a bank right now? No? Nor would many other people - that's why their stocks are taking such a battering.
If nobody wants the shares they can go down despite in actuality having a pretty good portfollio.
it's not to do with numbers it's to do with confidence.
Would you invest in a bank right now? No? Nor would many other people - that's why their stocks are taking such a battering.
If nobody wants the shares they can go down despite in actuality having a pretty good portfollio.
People are losing their jobs right now because businesses are losing income (some because they're not getting investment as part of the effect of the credit crunch, some because of high inflation, and plenty because of both). If the government forces businesses to keep people, it will keep unemployment down in the short-run but it'll also severely harm small businesses and force them to either make cutbacks elsewhere or raise their prices even more.
Bailing out the banks is a really murky situation. On the one hand, there's a clear moral problem with bailing out some of the people who are responsible for the situation in the first place (it's hard to tell who's responsible and who is a victim though), but on the other hand if the banks go down it'll cause an even worse economic storm - and when things go really sour economically, everyone suffers.
So you can justify rescuing banks (though the govt. are a bit too keen), but artificially keeping employment up is disastrous in the long run. Both the Conservatives and Labour learned that the hard way in the 70s (though it's invariably Thatcher that gets blamed for it...)
Bailing out the banks is a really murky situation. On the one hand, there's a clear moral problem with bailing out some of the people who are responsible for the situation in the first place (it's hard to tell who's responsible and who is a victim though), but on the other hand if the banks go down it'll cause an even worse economic storm - and when things go really sour economically, everyone suffers.
So you can justify rescuing banks (though the govt. are a bit too keen), but artificially keeping employment up is disastrous in the long run. Both the Conservatives and Labour learned that the hard way in the 70s (though it's invariably Thatcher that gets blamed for it...)
I can't believe how many numpties miss the point here. If a high st bank collapses and the savings are lost, that's it! Game over. We all rush to the other banks to get our money so we can put it under the bed, the banks ain't got it people! in fact on good day they ain't got 5% of it! Wholesale banking collapse, we are back in caves. Forget the �35K guarentee, the government would have to declare a state of emergency, troops on the streets to manage our decline into collapse. This cannot be overstated if the people do not have confidence in the where their money is, end of. That's why no governement will allow a bank that takes deposits of the masses to go t1ts up, too dangerous, worse than a nuclear bomb, far worse.
We're not bailing out the banks, we're bailing out ourselves. The fat cat bankers and financial traders have already pocketed their bonuses - they're happy. The only people that now stand to suffer if we don't prop up the banks are ordinary people.
If the financial system collapses, we're all up sh1t creek.
If the financial system collapses, we're all up sh1t creek.
Why dont people read the posts on here?
Its not the so called 'fat cat' bankers of whom there are very few. The reality is many bank workers or bankers are paid a modest or even a poor salary.
The problem here is trust as Jake has pointed out. No one knows the extent to which the other person is exposed to bad debt. This is why the US Government is offering to buy the debt. The theory is that if the Government had the perceived bad debt then trust will return and the Financial institutions will lend to each other again.
Brown also is correct in picking up the UK problems. It will restore trust.
It is also worth pointing out that the sums being stated are not necessarily lost. Indeed they could well be turned into a profit for tax payers in the years to come. TRue some debt will not get paid but there are often assets to offset some of this.
Supporting the workers is fatal. We need to promote growth and contribute to the GDP. This is why the Governments army of civil servants is a bad idea. They contribute nothing to growth in fact they have the opposite effect. The only think it does is reduce your unemployment figures. The country pays dearly for this 'figure' though
Its not the so called 'fat cat' bankers of whom there are very few. The reality is many bank workers or bankers are paid a modest or even a poor salary.
The problem here is trust as Jake has pointed out. No one knows the extent to which the other person is exposed to bad debt. This is why the US Government is offering to buy the debt. The theory is that if the Government had the perceived bad debt then trust will return and the Financial institutions will lend to each other again.
Brown also is correct in picking up the UK problems. It will restore trust.
It is also worth pointing out that the sums being stated are not necessarily lost. Indeed they could well be turned into a profit for tax payers in the years to come. TRue some debt will not get paid but there are often assets to offset some of this.
Supporting the workers is fatal. We need to promote growth and contribute to the GDP. This is why the Governments army of civil servants is a bad idea. They contribute nothing to growth in fact they have the opposite effect. The only think it does is reduce your unemployment figures. The country pays dearly for this 'figure' though
The problem seemed to have escalated. The original problem was the sub prime mortgages in the USA which were not being repaid by the house owner. They tried to sell their properties but because of the falling prices ended up with negative equity so the banks could not be reaid.
In this country people were offered mortgages 6 times salary or even 120% mortgages which are now proved to be unsustainable. The banks own problems seemed to start from this.
By bailing out the banks the original problem is still there and yet to be resolved. Should we not be concentrating on this to a greater extent or will we find this leads to deflation, high unemployment and more house repossessions?
I feel the worst is yet to come!
In this country people were offered mortgages 6 times salary or even 120% mortgages which are now proved to be unsustainable. The banks own problems seemed to start from this.
By bailing out the banks the original problem is still there and yet to be resolved. Should we not be concentrating on this to a greater extent or will we find this leads to deflation, high unemployment and more house repossessions?
I feel the worst is yet to come!
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