Comments on: What’s the point of a nationalised bank? http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/ Incisive and topical campaigns and commentary on today's issues and tomorrow's problems Thu, 09 Feb 2012 20:05:58 +0000 hourly 1 By: DBC Reed http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8235 DBC Reed Sat, 22 Nov 2008 20:40:02 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8235 As a Socialist, I support bank nationalisation and was suggesting it on this site in August (as an extreme case,never expecting it would happen and under a Republican presidency in the U.S as well) But there is certainly a case for saying, as Mr Redwood does, that the government is paying too much for bank shares. Patrick Hoskings in The Times is saying today that all British High St banks are,in fact, bust.This being the case, you would n't expect to pay more than the pound or so they are asking to take on the whole of the stricken Woolworths. In my view the Gov should announce it is going to introduce a Land value Tax as soon as land values start going up again.This would cause the property market to bottom out,as people hanging onto property in hopes of an upswing would realise the game is up and sell, allowing the banks to resume lending into a property market at very much lower average house prices,making their reserves stretch further and avoiding the nightmare of another house bubble forming,then collapsing, destroying the banks' investments and wealth generally.Advances to businesses would also be cheaper and more plentiful minus the element of inflated property prices,although rates on empty commercial property have done LVT's job for it in this regard ,though not as thoroughly , as LVT would stop property owners knocking down buildings to avoid business rates. As a Socialist, I support bank nationalisation and was suggesting it on this site in August (as an extreme case,never expecting it would happen and under a Republican presidency in the U.S as well)
But there is certainly a case for saying, as Mr Redwood does, that the government is paying too much for bank shares. Patrick Hoskings in The Times is saying today that all British High St banks are,in fact, bust.This being the case, you would n't expect to pay more than the pound or so they are asking to take on the whole of the stricken Woolworths.
In my view the Gov should announce it is going to introduce a Land value Tax as soon as land values start going up again.This would cause the property market to bottom out,as people hanging onto property in hopes of an upswing would realise the game is up and sell, allowing the banks to resume lending into a property market at very much lower average house prices,making their reserves stretch further and avoiding the nightmare of another house bubble forming,then collapsing, destroying the banks' investments and wealth generally.Advances to businesses would also be cheaper and more plentiful minus the element of inflated property prices,although rates on empty commercial property have done LVT's job for it in this regard ,though not as thoroughly , as LVT would stop property owners knocking down buildings to avoid business rates.

]]> By: APL http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8234 APL Sat, 22 Nov 2008 18:07:15 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8234 LFAT: "Alistair Darling is sounding more and more like a socialist with every day that passes .." That would be because he is a socialist. The odd think is there are apparently Tories around that thought he was something other. LFAT: "Alistair Darling is sounding more and more like a socialist with every day that passes .."

That would be because he is a socialist. The odd think is there are apparently Tories around that thought he was something other.

]]> By: Acorn http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8233 Acorn Fri, 21 Nov 2008 20:24:07 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8233 Stuart, I spotted this one as well and the Credit Default Swaps (CDS) market saw it coming. You will see on the following link that the premium for insuring holders of our sovereign debt has gone up this week. It now costs about twice as much to insure Gordo & Co than it does Germany or Japan. But, we are still cheaper than Italy, whoopee! It will not be long before buying HSBC paper will be more secure than buying UK Treasury paper - IOUs that is. Perhaps we should sub-contract both our Treasury and the Bank of England to HSBC to manage for us. ( bp = basis point = 0.01 percent point) <a href="http://www.markit.com/information/news/commentary/cds.html" rel="nofollow">http://www.markit.com/information/news/commentary...</a> Stuart, I spotted this one as well and the Credit Default Swaps (CDS) market saw it coming. You will see on the following link that the premium for insuring holders of our sovereign debt has gone up this week. It now costs about twice as much to insure Gordo & Co than it does Germany or Japan. But, we are still cheaper than Italy, whoopee!

It will not be long before buying HSBC paper will be more secure than buying UK Treasury paper – IOUs that is.

Perhaps we should sub-contract both our Treasury and the Bank of England to HSBC to manage for us. ( bp = basis point = 0.01 percent point)
http://www.markit.com/information/news/commentary…

]]> By: mikestallard http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8232 mikestallard Fri, 21 Nov 2008 18:28:09 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8232 Thank you for a really succinct summary which even I can understand. Surely, any organisation as deeply divided as you say Labour are over the Banks cannot do a thorough job? Socialists, who want a better society and capitalists, who want to make money to fill the rapidly increasing gap between income and expenditure, cannot agree on how to run their business? What happens when people get thrown out of their homes by Northern Rock? What happens when the "fat cat bankers" cause a rumpus on the front pages of all the papers like they did this week? You are so right! A poor woman from the government was on at lunchtime trying to bridge the gap between reality and her socialism. Meanwhile, full steam ahead for government expenditure! What was is? 50,000 more non-jobs this month according to today's Telegraph? Thank you for a really succinct summary which even I can understand.
Surely, any organisation as deeply divided as you say Labour are over the Banks cannot do a thorough job?
Socialists, who want a better society and capitalists, who want to make money to fill the rapidly increasing gap between income and expenditure, cannot agree on how to run their business?
What happens when people get thrown out of their homes by Northern Rock? What happens when the "fat cat bankers" cause a rumpus on the front pages of all the papers like they did this week?
You are so right! A poor woman from the government was on at lunchtime trying to bridge the gap between reality and her socialism.
Meanwhile, full steam ahead for government expenditure! What was is? 50,000 more non-jobs this month according to today's Telegraph?

]]> By: Stuart Fairney http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8231 Stuart Fairney Fri, 21 Nov 2008 13:49:24 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8231 I understand that Granite, the Rock's vehicle to issue loan notes (i.e. how they raised the money to lend in the first place) has given notice of a "non-asset trigger event" If I cut through the accountant speak, it seems to mean they can't pay the bills, and if they can't pay the money back they themselves borrowed, then clearly no profits can be made for shareholders, namely us. So right now, your prediction that the £3B has gone west, seems as ever, right on the mark. I understand that Granite, the Rock's vehicle to issue loan notes (i.e. how they raised the money to lend in the first place) has given notice of a "non-asset trigger event" If I cut through the accountant speak, it seems to mean they can't pay the bills, and if they can't pay the money back they themselves borrowed, then clearly no profits can be made for shareholders, namely us.

So right now, your prediction that the £3B has gone west, seems as ever, right on the mark.

]]> By: Letters From A Tory http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8230 Letters From A Tory Fri, 21 Nov 2008 12:26:19 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8230 What an almighty mess. Alistair Darling is sounding more and more like a socialist with every day that passes, and I fear that doing the best for the future of banking in this country is rapidly going to make way for short term electoral boosts to set up the possibility of a spring 2009 election. <a href="http://www.lettersfromatory.com" rel="nofollow">www.lettersfromatory.com</a> What an almighty mess. Alistair Darling is sounding more and more like a socialist with every day that passes, and I fear that doing the best for the future of banking in this country is rapidly going to make way for short term electoral boosts to set up the possibility of a spring 2009 election.
http://www.lettersfromatory.com

]]> By: Stuart Mark Turner http://johnredwoodsdiary.com/2008/11/21/whats-the-point-of-a-nationalised-bank/#comment-8229 Stuart Mark Turner Fri, 21 Nov 2008 12:05:13 +0000 http://www.johnredwoodsdiary.com/?p=2141#comment-8229 Today the Chancellor has announced that he will put pressure on banks to lend to small businesses who are struggling with the downturn. Surely with the banks experiencing such difficult financial conditions where raising reserves to comply with new guidelines is hard enough, forcing them to lend more than they can currently sustain is going to put even more pressure on our banking system. Secondly lending to struggling businesses may not be enough to save many of them from going under, this will lead to many more defaults on loan payments further undermining a banks balance sheet. Would you agree that government interference is forcing the banks to do again the very things that caused the problem in the first place? Reply:Yes, that is the danger. Today the Chancellor has announced that he will put pressure on banks to lend to small businesses who are struggling with the downturn.

Surely with the banks experiencing such difficult financial conditions where raising reserves to comply with new guidelines is hard enough, forcing them to lend more than they can currently sustain is going to put even more pressure on our banking system.

Secondly lending to struggling businesses may not be enough to save many of them from going under, this will lead to many more defaults on loan payments further undermining a banks balance sheet.

Would you agree that government interference is forcing the banks to do again the very things that caused the problem in the first place?

Reply:Yes, that is the danger.

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