Comments on: When will the banks work again?

By: Amanda

Amanda — Mon, 10 Nov 2008 11:32:46 +0000

John

My MP is Labour who cares nothing for 'the likes of me', he'd much rather serve his 'public'. I am helping my local conservative PPC, and I write comments on blogs all the time and constantly complain about the BBC. But the media, in the main, are corrupt as far as I can see.

I also take every opportunity to discuss politics with people I meet, even now in business which would have been a definite faux pas in days gone by.

And I take time out to help and encourage young people to upskill, be self reliant, and get out of the country if they can.

However, none of this seems to help very much.

Reply: Even in this damaged democracy of ours public opinion does matter and we need to keep wooing it.

By: Amanda

Amanda — Mon, 10 Nov 2008 10:47:25 +0000

This is one of my main sources of economic analysis, so thank you for providing it.

I am with Lola, I am more worried than I have ever been. The more I look at what Brown and Co are doing the more I can see it is the wrong thing to be doing. Re-election is the only think they care about – but for what purpose when the country will be 'fit for nothing', one can only wonder. Maybe a complete sell out to the EU and a place on the gravy train!!

However, if we are to stop this, what can we do? What actions do I, as a family woman and small business owner, do to help my country? Apart from not voting Labour – but then I never have. The Conservatives offer me no hope and I, like I'm sure many others, feel very alone and angry.

Reply: Changing government will be necessary. In the mentime let your MP and the media know of your worries.

By: anonymous

anonymous — Sat, 08 Nov 2008 03:29:27 +0000

I believe you and your comrades in Westminster recently received copies of a certain dystopian novel for your reading pleasure.

May I ask you opinion of that?

Reply: Need more detail to be able to answer.

By: mikestallard

mikestallard — Fri, 07 Nov 2008 17:59:12 +0000

ERRATA:
line 2: the government OR the Bank of England.
line 8: pair of hands.
Sorry!

By: mikestallard

mikestallard — Fri, 07 Nov 2008 17:56:21 +0000

I am in total agreement with all that you say except for just one thing. In 2 and 3 above, is it to be the government of the Bank of England which does the sorting out?
This government is motivated by just one thing: re election. North British banks – the ones that have the most government now in their internal workings – are affecting the votes. They are affecting the voters who have mortgages and who need money for their businesses. The government is, therefore, very willing to intervene here. Yvette Cooper has made appearances on TV already. Glenrothes was important to the Prime Minister for a number of reasons. He likes, apparently, to be seen as a reliable paid of hands – it gets votes.
The Bank of England, on the other hand, is motivated by money. This demands expert knowledge, instant reaction to change, sufficient tools to deal with crises and a free hand to deal with whatever is thrown at it. The Bank has been around for centuries and, unlike this government, has a wealth of experience to draw on in finance.
That is why I should like the Bank manager to be – the Bank Manager! Instead, of course, we get the politicians and the FSA taking the decisions and all falling over each other.
I very much enjoyed your lucid exposition of a hugely difficult subject: thank you!

By: David Belchamber

David Belchamber — Fri, 07 Nov 2008 17:40:13 +0000

The example of Spanish banks must surely point the way forward for the regulatory system that will eventually emerge from our present mess. I believe that dodgy things like SIVs and CDOs are not permitted but the example of Santander surely demonstrates that prudent, tradtional banking does not inhibit expansion.
Do you think that pre-1997 when the BoE had total oversight over the banking system, failures such as Northern Rock, Bradford & Bingley etc would still have occurred or do you think that an alert BoE would have nipped them in the bud without media publicity and also great cost to the taxpayer?

Reply: Receiving £18 billion cash from British taxpayers has also helped Santander! The pace of their acquisitions is breathtaking and they need to consolidate them.

By: m wood

m wood — Fri, 07 Nov 2008 15:00:06 +0000

Very much agree with your analysis and solutions 2 or 3. It has occurred to me that most people have overlooked the fundemental reasons for this financial crash. For years people have been collectively 'inventing' money by overvalueing assets such as houses, loans etc. There comes a time when someone says, the emperor has no clothes, in this case, there isn't enough real money to match debts. The result is a random process that destroys the 'make-believe' money, either by writing off loans or devaluing currencies (another name for inflation). Many people/businesses get hurt in this process of adjustment that the market has to make, who it is is not a logical choice, the market system is too complex for Governments to control

The real culprites are not the Banks, – they are just mechanics in the system – but those that failed to regulate the invention of make-believe money – mostly Brown and Clinton.

By: figurewizard

figurewizard — Fri, 07 Nov 2008 13:45:01 +0000

At last someone is suggesting that weak banks should be allowed to go bust. Administration followed by receivership would give the relatively strong banks to become stronger still, which; despite the widespread scorn with which they are currently regarded remains the essential point. This after all is what happened in 1866 when Overend Gurney collapsed after the Bank of England refused to lend support. A small but well run bank by the name of Barclays picked up the pieces then. Given Barclays recent debt free takeover of the US operations of Lehman Bros, it seems that history really could repeat itself if only the governments allowed it to.

By: Bazman

Bazman — Fri, 07 Nov 2008 13:07:57 +0000

I would not be surprised if they announced record profits.

By: Kit

Kit — Fri, 07 Nov 2008 12:38:57 +0000

"The experience with Lehmans has spooked both markets and authorities, leading most of us to rule out this approach."

Yes, nobody knows which banks would be bailed-out or forced into bankruptcy. The authorities are leaping from one knee-jerk reaction to another without consideration to the consequences. (150bp – I wouldn't be surprised if a provider of tracker mortgages gets into trouble.)

The authorities seem determined to spook the market. And if the authorities are spooked it is by their own actions.