Where do all these bailout billions keep coming from?

[EDLT]

anonymous said:

[redacted]

"The electorate" being a few Spanish banks in this case? I know blaming bankers for anything will lead to me being branded a commmiepinkoleftyhippy, but if a company racks up a huge amount of debt then surely the only people who are responsible are the people who for that company ie bankers.

[EDLT]

anonymous said:

[redacted]

What has it got to do with "the electorate" (unless companies are allowed to vote in Spain)? The banks lent money to people who couldn't pay it back but this isn't the bank's fault?

[dandarez]

anonymous said:

[redacted]

...and we let one of those joke Banks rise to become the '5th' largest on our own UK High Street.

No matter, only a fool would bank with them.

No fools in the UK.

[EDLT]

anonymous said:

[redacted]

No. It is up to the bank to make sure it is lending money to people who can actually pay it back. That is how loans have always worked.

When anyone on here dares to criticise the banks that were bailed out in the UK, someone is always quick to point out that most of our banks have paid that money back. Is it impossible for the Spanish banks to do the same?

[mattnunn]

I wish someone would write a proper book or essay to get to the bottom of whether the Germans actually planned this or it was, for them, just a happy coincidence.

[The Black Flash]

It's comming from the ESFS, to which Spain was contributing 93 billion dollars. To which Italy is contributing money it borrows at 5.3%, then loaning it to spain at 3.5%.

Rejoice, citizens, 'tis surely a great victory for the Euro.

[Cheib]

Well the markets liked it for all of a coupel fo hours...so pretty awful price action after that. As a research piece I read put it "The half life of an EU bailout has decreased from a three months to two hours in the space of two months". Statements coming out of the EU today predominantly contained the words could and should....they don't even know which vehicle is going to lend money now as the one they wanted to use would result in subordination of all Spain's existing debt. Piss up/brewery.

[Jez m]

Wonga 'Business loans'?!

[NorthernBoy]

EDLT said:

No. It is up to the bank to make sure it is lending money to people who can actually pay it back. That is how loans have always worked.

When anyone on here dares to criticise the banks that were bailed out in the UK, someone is always quick to point out that most of our banks have paid that money back. Is it impossible for the Spanish banks to do the same?

The intention is that they will. In the meanwhile everyone still tends to need their services and so the state wants to tide them over for a while.

The banks have never been bailed out for their own sake, they've been bailed out to help the companies and individuals who've come to rely on them.

[EDLT]

anonymous said:

[redacted]

It isn't the fault of people who waste money that the banks were handing it out just because they asked for it. It is no use trying to deflect blame away from the banks when ultimately it was their money and if they wanted it back they shouldn't have leant it out to people who can't make the payments.

Do you lend your own money out to anyone who asks?

[fido]

EDLT said:

It isn't the fault of people who waste money that the banks were handing it out just because they asked for it. It is no use trying to deflect blame away from the banks when ultimately it was their money and if they wanted it back they shouldn't have leant it out to people who can't make the payments.

Perhaps not but we are partly responsible for the politicians we [collectively] vote in. Northern Rock did not end up doing 125% just for the sheer hell of it. The regulators, him on the Other thread, greedy shareholders and the greedy consumer who wanted stuff they could not ultimately afford were all in it together.

[EDLT]

fido said:

EDLT said:

It isn't the fault of people who waste money that the banks were handing it out just because they asked for it. It is no use trying to deflect blame away from the banks when ultimately it was their money and if they wanted it back they shouldn't have leant it out to people who can't make the payments.

Perhaps not but we are partly responsible for the politicians we [collectively] vote in. Northern Rock did not end up doing 125% just for the sheer hell of it. The regulators, him on the Other thread, greedy shareholders and the greedy consumer who wanted stuff they could not ultimately afford were all in it together.

Did the regulators force them to hand out 125% mortgages to anyone who walks in the door? Just because then can doesn't mean they should.

[AJS-]

EDLT said:

Did the regulators force them to hand out 125% mortgages to anyone who walks in the door? Just because then can doesn't mean they should.

I've had this argument before. Apparently yes, it's all the regulators fault for not telling the banks how to make a sustainable, profitable business...

Of course the regulator was there because of Gordon Brown and Gordon Brown was there because of us, so ultimately it's only right that we shoulder the costs of the damage we wrought on the banking industry, which would have been just fine with the old regulator and no customers.

Where the government is at fault in my view was allowing unlimited credit expansion, and holding interest rates falsely low. It's still up to the banks to keep their own business afloat though.

[princealbert23]

The Hypno-Toad said:

Here's a strange thought. What if they don't even print it, maybe these bailouts are just the idea of money?
You press a governement button and suddenly the other country gets 12 billion in its bank account. What if that money doesn't physically exist? What if they are taking the gamble that know one is ever actually going to see the money and it all just is smoke and mirrors?

Lets face it, when was the last time you held more than £2000 actually in your hand? When I went to my local branch to get £1500 out a couple of years ago I was told I would have to come back after lunch! (seriously!)

What if none of it, really exists????

Twilight Zone music, fade to black..........

I paid my tax bill last year and was told there wasnt enough money in the branch and they would have to transfer it in. That was a once in a lifetime exceptional year though

[andy43]

princealbert23 said:

The Hypno-Toad said:

Here's a strange thought. What if they don't even print it, maybe these bailouts are just the idea of money?
You press a governement button and suddenly the other country gets 12 billion in its bank account. What if that money doesn't physically exist? What if they are taking the gamble that know one is ever actually going to see the money and it all just is smoke and mirrors?

Lets face it, when was the last time you held more than £2000 actually in your hand? When I went to my local branch to get £1500 out a couple of years ago I was told I would have to come back after lunch! (seriously!)

What if none of it, really exists????

Twilight Zone music, fade to black..........

I paid my tax bill last year and was told there wasnt enough money in the branch and they would have to transfer it in. That was a once in a lifetime exceptional year though

Whenever we need a lump of cash - builders, car, whatever, if it's over about a grand they always need 24 hours notice. I overheard the cashiers talking about the Zerox QE machine being slow...


More Twilight Zone music... fade to Howard, sat in a corner, wearing a sombrero, clutching a straw donkey, sobbing...

[CaptainSlow]

EDLT said:

Do you lend your own money out to anyone who asks?

Do you borrow money you can't afford to pay back?

[fido]

EDLT said:

Did the regulators force them to hand out 125% mortgages to anyone who walks in the door? Just because then can doesn't mean they should.

IMO it's a bit naive to assume that companies or individuals don't need to be regulated because they shouldn't do certain things in the first place. As a motoring analogy perhaps we shouldn't have speed limite because people generally don't want to kill themselves or others - but you know it's human nature to go faster, to save time and occasionally do reckless stuff. A quote from a certain film: "they don't mean to f8k up, they just do".

Of course, the big difference is that government can and does promote lending via interest rates and the banking system as a whole - so it's of paramount importance that they regulate the banks properly and the lender of last resort (BoE) is in the best place to do this.

Let's look at the institutions that needed to be bailed out in the UK: 2 x Scottish Banks, Northern Rock and a couple of smaller demutualised building societies. The rest kept to their own self-imposed speed limit.

/spellingn

Edited by fido on Tuesday 12th June 10:16

[mattnunn]

So to those of us who aren't economics academics might be interetsed to listen to this...

http://www.bbc.co.uk/iplayer/episode/b01j5h51/Anal...

[Odie]

Money is just numbers on a computer screen, they just add a few more zero's to solve the problem.

[Dracoro]

mattnunn said:

So to those of us who aren't economics academics might be interetsed to listen to this...

http://www.bbc.co.uk/iplayer/episode/b01j5h51/Anal...

It says in the synopsis that he was one of the "few" to predict the banking crisis. I disagree, I think there were quite a number of those predicting this but they simply weren't being listened to by the government and bankers of the day as would have made transparent the flaky foundations of all the loans and OTT government spending of the day.

Nothing will really change, we'll still have boom (too irresistible to politicians) and bust (unavoidable) as no-one (in power at least as well as half the population) wants to listen to the moderate view (seen as dull/negative). Instead we'll have this swinging backwards and forwards. They'll say "we've learnt the lessons" but when the economy booms again, will they say they'll cut back and contain it or ride the crest of the wave? (rhetorical question really... ).