Comments on: Why don’t the banks work?

By: Sava Zxivanovich

Sava Zxivanovich — Tue, 16 Dec 2008 09:47:41 +0000

If the pyramidal scheme called house bubble is allowed to burst completely, it will affect:
1) All recent buyers as they will have to either pay to the pyramidal scheme player to get out of the deal or to stay at SVR (expensive).
2) The whole UK economy as it is oriented at housing market.
3) With recession/depression will come brain drain that will affect recovery in the future.

Sterling is just a sign how investors perceive the UK economy and because of globalisation caused specialisation weak sterling will not help so much the whole UK economy as the UK doesn’t have a lot to offer. One reason why the UK doesn’t have a lot to offer is a failure of Business Link to help good idea business to grow – it was more service oriented and service supply is not easy to increase fast (needs educated personal, and that needs time and good salaries).

By: Johnny Norfolk

Johnny Norfolk — Tue, 16 Dec 2008 08:59:36 +0000

How can the Labour government expect the banks to lend more when the banks still do not know the extent of write offs.

This tells you all you need to know about Labours understanding of the situation.

As more and more problems emerge the banks will be very careful about future commitments.

Only when they are convinced they they have delt with it all will anything like normal service commence.

Why does the government not understand this.

Q. Why do the government not give loan guarantees to the banks.

A. As just like the banks they do not know yet the full extent of the problem.

So the government is behaving just like the banks.

By: Adrian Peirson

Adrian Peirson — Mon, 15 Dec 2008 21:08:06 +0000

Banks do work, they are doing precisely what fractional reserve banking was designed to do, consolidate the wealth of the world into the hands of a few elites.

http://uk.youtube.com/watch?v=_3__kZScZV4

http://uk.youtube.com/watch?v=AwIncF3yrpQ

By: Stuart Fairney

Stuart Fairney — Mon, 15 Dec 2008 20:40:33 +0000

It must be the time of the month, because the Grand Admiral knows better than this. The MPC these days is no more than a bunch of guys sat in a room having a theoretical talk about what they might like interest rates to be, (just as Donitz and I might and sometimes do enjoy a glass of wine and a discussion of economics). Neither discourse will impact on LIBOR.

By: Lola

Lola — Mon, 15 Dec 2008 14:09:24 +0000

oooops can’t spell ‘weak’. One mark off for Lola

By: Ian Jones

Ian Jones — Mon, 15 Dec 2008 13:22:41 +0000

Everyone seems to be looking for a magic answer, there isnt one! We spent 10 years printing money and putting it into housing so it drip fed the consumer without creating inflation. In addition we gave a load of IOU’s to China in return for ever cheaper goods. The cycle has run its course and now the economy needs to adjust back to reality.

Of course some will respond that this is negative thinking, we need to slash rates to 0%, print money etc etc. In the end it is just another way of bringing the economy back into equilibrium and whichever way you go you will be poorer, its a zero sum game!

Lending will only resume once risk, asset prices and general price levels are back in line! The sooner they get there, the quicker the recovery.

By: Nick

Nick — Mon, 15 Dec 2008 12:08:49 +0000

It needs to find a way to limit taxpayer risk in RBS.

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It’s called less lending, lending to higher quality borrowers, RBS increasing capital which means charging more to borrowers and paying less to savers. The option of more capital injections from the private sector went out the window with the threat to nationalise.