Comments on: The overborrowed drag down the prudent http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/ 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: Sava Zxivanovich http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10744 Sava Zxivanovich Mon, 02 Feb 2009 15:41:34 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10744 Not all the savers were prudent - they invested in non-prudent banks (Northern Rock) and they should not have been saved. Nationalisation and full guaranty for Northern Rock's savings accounts introduced moral hazard on a scale unseen yet. Cost of that bear we all, some more and some less. Drop of sterling is only one part, housing bubble introduced by imprudent savers is another, bubble in banking jobs is third, demise of manufacturing is forth etc Not all the savers were prudent – they invested in non-prudent banks (Northern Rock) and they should not have been saved.

Nationalisation and full guaranty for Northern Rock’s savings accounts introduced moral hazard on a scale unseen yet.

Cost of that bear we all, some more and some less. Drop of sterling is only one part, housing bubble introduced by imprudent savers is another, bubble in banking jobs is third, demise of manufacturing is forth etc

]]> By: anoneumouse http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10743 anoneumouse Sun, 01 Feb 2009 12:16:37 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10743 opps, my last comment has been made on the wrong post opps, my last comment has been made on the wrong post

]]> By: anoneumouse http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10742 anoneumouse Sun, 01 Feb 2009 12:14:42 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10742 Lets have some "more on" Reactionary Pprogressives Lets have some “more on” Reactionary Pprogressives

]]> By: David b http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10741 David b Sun, 01 Feb 2009 08:42:10 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10741 The US would have been forced to confront the deficit if they had not been able to fund the debt. It would appear that the status of world reserve currency is what's allowing them to fund the new debt the US is proposing. In our own country it is only the likely knowledge that they face electoral defeat which is encouraging Baldrick's reckless binge. We will have to face the problem when the buyers of gilts no longer want them or our currency collapses completely or when the new government is finally elected. The Chinese have some responsibility for the current mess by deliberately maintaining an undervalued currency. They are not really victims therefore in my mind. The US would have been forced to confront the deficit if they had not been able to fund the debt. It would appear that the status of world reserve currency is what’s allowing them to fund the new debt the US is proposing. In our own country it is only the likely knowledge that they face electoral defeat which is encouraging Baldrick’s reckless binge. We will have to face the problem when the buyers of gilts no longer want them or our currency collapses completely or when the new government is finally elected.

The Chinese have some responsibility for the current mess by deliberately maintaining an undervalued currency. They are not really victims therefore in my mind.

]]> By: Adrian Peirson http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10740 Adrian Peirson Sun, 01 Feb 2009 02:01:32 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10740 Now he tells us. Now he tells us.

]]> By: Adam Collyer http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10739 Adam Collyer Sun, 01 Feb 2009 00:22:01 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10739 The Chinese wouldn't have been able to buy US Treasury bonds if the bonds weren't issued in the first place! Those bonds were issued because the US government was running a huge deficit. Mr Obama's cunning plan to deal with this is to borrow another $800 billion to "stimulate the economy". I guess he's competing with Gordon to be saviour of the world. The Chinese wouldn’t have been able to buy US Treasury bonds if the bonds weren’t issued in the first place! Those bonds were issued because the US government was running a huge deficit.

Mr Obama’s cunning plan to deal with this is to borrow another $800 billion to “stimulate the economy”. I guess he’s competing with Gordon to be saviour of the world.

]]> By: Ian Jones http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10738 Ian Jones Sun, 01 Feb 2009 00:16:30 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10738 It seems to be a common problem for Governments in this country with policy aimed at fixing symptoms rather than causes leading to moral hazard and ultimately a far worse longer term. Unfortunately once started it seems more and more difficult to go back, this is not only the banks but also taxation, social policies, immigration etc etc. It would be nice to think that the Govt could at least start slashing the massive pay and bonuses in banks, I still cannot believe that a business which is bust is paying bonuses at all!!! Maybe things will change but I doubt it! Is it any wonder that if people think politics has failed they start taking things into their own hands or voting for unpleasant parties! It seems to be a common problem for Governments in this country with policy aimed at fixing symptoms rather than causes leading to moral hazard and ultimately a far worse longer term.

Unfortunately once started it seems more and more difficult to go back, this is not only the banks but also taxation, social policies, immigration etc etc. It would be nice to think that the Govt could at least start slashing the massive pay and bonuses in banks, I still cannot believe that a business which is bust is paying bonuses at all!!!

Maybe things will change but I doubt it! Is it any wonder that if people think politics has failed they start taking things into their own hands or voting for unpleasant parties!

]]> By: Harry Fredericks http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10737 Harry Fredericks Sat, 31 Jan 2009 22:30:44 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10737 Yes that is what is said: That the banks are walking away with the loot. It would be nice to see some evidence of this however. The government is publishing no account of what happens one the loot is handed over. Likewise the banks seem willing to keep the secret. Well the 3rd Qtr report from washington seems to be saying that all this stimulus as a total waste of time. Ok, I am willing to believe that, as the sums shown imply I would be an idiot not to. But then all of our glorious leaders, god bless their little clay feet, must have read this report and so must likewise realise the Billions they they are tossing away in such a cavalier fashion is pure criminal waste and utterly irresponsible. For those who have not read the report, I will post it here. Have a stiff brandy ready for when the shock sets in. http://www.occ.treas.gov/ftp/release/2008-152a.pdf We really could do with you Mr Redwood in the shadow cabinet. My fears for the future now extend to three generations hence. Yes that is what is said: That the banks are walking away with the loot. It would be nice to see some evidence of this however. The government is publishing no account of what happens one the loot is handed over. Likewise the banks seem willing to keep the secret.

Well the 3rd Qtr report from washington seems to be saying that all this stimulus as a total waste of time. Ok, I am willing to believe that, as the sums shown imply I would be an idiot not to. But then all of our glorious leaders, god bless their little clay feet, must have read this report and so must likewise realise the Billions they they are tossing away in such a cavalier fashion is pure criminal waste and utterly irresponsible. For those who have not read the report, I will post it here. Have a stiff brandy ready for when the shock sets in.

http://www.occ.treas.gov/ftp/release/2008-152a.pdf

We really could do with you Mr Redwood in the shadow cabinet. My fears for the future now extend to three generations hence.

]]> By: mikestallard http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10736 mikestallard Sat, 31 Jan 2009 20:43:21 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10736 PS The boss of the company himself took the same wages as his staff and forewent (?) all his perks too, just to keep the company on the road for a year. I do not see MPs, MEPs, Peers and Ministers doing the same thing, do you? Let alone the fat Quangocrats and bankers. PS The boss of the company himself took the same wages as his staff and forewent (?) all his perks too, just to keep the company on the road for a year.
I do not see MPs, MEPs, Peers and Ministers doing the same thing, do you? Let alone the fat Quangocrats and bankers.

]]> By: mikestallard http://johnredwoodsdiary.com/2009/01/31/the-overborrowed-drag-down-the-prudent/#comment-10735 mikestallard Sat, 31 Jan 2009 20:40:13 +0000 http://www.johnredwoodsdiary.com/?p=2791#comment-10735 OK, we all know the Brown government is not only the cause of the terrible debts which the country now faces, but also the cause of the bloated and clumsy government which the country now suffers. He is not going to change: he is not even listening. I have just had someone on the phone who I had always thought had a very secure job. His boss called a meeting last Wednesday in which he announced that the company had enough to pay the firm's wages for three more months only. He then suggested that the firm went onto a four day week, that everyone in the firm was paid exactly the same, whatever their position and that all little extras would be cancelled across the board. In return, he offered that nobody would lose their jobs for a year. Maddeningly they all have a lot of work - quite enough for five days. And the cause of all this? Well two people, currently driving round in large cars, were not paying their bills "because of the current situation". He began running down the government, although I know that he voted Labour consistently. But that isn't the question. The thing that will bring his company back to life, through inflation (see above) and yet more ridiculous and unfair taxation will be the banks. When they start lending again, he will be OK. I assured him that this would happen within a year and I really think it will. Unemployment is not funny when you have three young children and wife. Meanwhile, I am off to see, no doubt for the last time, my daughter in Australia and my son in Thailand. Bummer, innit? OK, we all know the Brown government is not only the cause of the terrible debts which the country now faces, but also the cause of the bloated and clumsy government which the country now suffers. He is not going to change: he is not even listening.
I have just had someone on the phone who I had always thought had a very secure job. His boss called a meeting last Wednesday in which he announced that the company had enough to pay the firm’s wages for three more months only. He then suggested that the firm went onto a four day week, that everyone in the firm was paid exactly the same, whatever their position and that all little extras would be cancelled across the board. In return, he offered that nobody would lose their jobs for a year.
Maddeningly they all have a lot of work – quite enough for five days.
And the cause of all this? Well two people, currently driving round in large cars, were not paying their bills “because of the current situation”.
He began running down the government, although I know that he voted Labour consistently. But that isn’t the question. The thing that will bring his company back to life, through inflation (see above) and yet more ridiculous and unfair taxation will be the banks. When they start lending again, he will be OK.
I assured him that this would happen within a year and I really think it will. Unemployment is not funny when you have three young children and wife.
Meanwhile, I am off to see, no doubt for the last time, my daughter in Australia and my son in Thailand.
Bummer, innit?

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