Bank profits... state ownership... dividends etc..

[NoelWatson]

Ozzie Osmond said:

Savers are getting raped by low interest rates and high inflation while people that took on too much debt (which was majority of the country) are given some breathing space (but won't use it)

Agreed

[Ozzie Osmond]

fido said:

More misinformation from the tabloids and the previous shower in government - the preference shares which formed the 'bailout' pay a 12% rate of interest.

Hey! That's only part of the story! Banks are still borrowing from the Treasury on the basis of 0.5% base rate! And hey presto, what do they do with the money?

Well, in the beginning the government was buying bonds from the banks - you remember, the so-called Quantitative Easing - which effectively gave the banks an interest rate of less then 0%. Because lets face it, you can't in practical terms have negative interest rates.

Banks are still borrowing from the Treasury on the basis of 0.5% base rate and hey presto, what do they do with the money? Buy government bonds yielding - wait for it, wait for it - more than 0.5%. Quite simply they think it's safer lending back to the government than lending to people and businesses.... It's this swift buck on the back of the taxpayer which justifies the government's regular pressure on the banks to get out there lending again.

[NoelWatson]

Ozzie Osmond said:

fido said:

More misinformation from the tabloids and the previous shower in government - the preference shares which formed the 'bailout' pay a 12% rate of interest.

Hey! That's only part of the story! Banks are still borrowing from the Treasury on the basis of 0.5% base rate! And hey presto, what do they do with the money?

Well, in the beginning the government was buying bonds from the banks - you remember, the so-called Quantitative Easing - which effectively gave the banks an interest rate of less then 0%. Because lets face it, you can't in practical terms have negative interest rates.

Banks are still borrowing from the Treasury on the basis of 0.5% base rate and hey presto, what do they do with the money? Buy government bonds yielding - wait for it, wait for it - more than 0.5%. Quite simply they think it's safer lending back to the government than lending to people and businesses.... It's this swift buck on the back of the taxpayer which justifies the government's regular pressure on the banks to get out there lending again.

Have you got a few links please?

[Ozzie Osmond]

http://www.ft.com/cms/s/0/2ca818b4-9fe7-11df-8cc5-...

http://www.ft.com/cms/s/0/9f95b4bc-9f8d-11df-927b-...

http://www.guardian.co.uk/commentisfree/2010/aug/0...

http://www.bbc.co.uk/blogs/thereporters/robertpest...

[NoelWatson]

Ozzie Osmond said:

http://www.ft.com/cms/s/0/2ca818b4-9fe7-11df-8cc5-...

http://www.ft.com/cms/s/0/9f95b4bc-9f8d-11df-927b-...

http://www.guardian.co.uk/commentisfree/2010/aug/0...

http://www.bbc.co.uk/blogs/thereporters/robertpest...

I was looking more for the QE bit, and the banks borrowing at 0.5%

[Ozzie Osmond]

anonymous said:

[redacted]

NW has a point - what rates ARE the banks actually borrowing at? If they don't borrow at base, who does?

Yes, I think you're right on target with the comment above.

[NoelWatson]

Ozzie Osmond said:

anonymous said:

[redacted]

NW has a point - what rates ARE the banks actually borrowing at? If they don't borrow at base, who does?

Yes, I think you're right on target with the comment above.

So you conceded that when you wrote the original statement, you were making most of it up?

[fido]

Ozzie Osmond said:

Hey! That's only part of the story! Banks are still borrowing from the Treasury on the basis of 0.5% base rate! And hey presto, what do they do with the money?

Think about it - why would RBS borrow a couple of billion at a penal interest rate (12%) when they could just magically tap into your so-called 0.5%? In the same way that you have to secure your mortgage loan against a property, banks have to secure their loans against good quality assets to obtain the best rates.
Those good quality assets will invariably consist of the same crappy loans made to feckless borrowers (corporate and residential) and it won't be on a 1:1 basis - they use the 0.5% to bolster their balance sheets.

Edited by fido on Sunday 8th August 11:19

[Ozzie Osmond]

1. Ordinary shares - risk and reward

2. Preference shares - 12% fixed

3. Loan capital

3. Borrowings - the happy land of 0.5% base rate and LIBOR rates which start at that level and currently anticipate a rising trend. Well that's not surprising from an all-time low.

Take, for instance, the example of Lloyds TSB and HM Government is in there at just about every level. IMO the government will eventuaaly sell out at a good headline profit - but with the real cost having already impacted into many parts of the wider economy, including savers who get shafted every which way. Plain fact is that with base rate at 0.5% and RPI at 4% someone somewhere is losing out.

You don't need a mountain of jargon to grasp these issues. "Too clever by half" is where much of the rot began.

[Hungry Freak]

The law states that all corporations must return the most possible return to their shareholders. That means bonuses for the bosses, and maybe something towards our elected misrepresentatives. Even if it is towards the taxpayer's pot, the money will only go back to paying off the national debt. So the banks, or whoever we've borrowed however much money from, win.

I'm a cynic, shoot me...

[Timmy35]

Ozzie Osmond said:

anonymous said:

[redacted]

NW has a point - what rates ARE the banks actually borrowing at? If they don't borrow at base, who does?

No one.

Banks borrow at a spread over the base rate, as do corporates, the idea is that the Base Rate represents the 'risk free rate' because the Goverment would never default ( in theory ), everyone else gets to borrow at progressively higher sperads above that rate according to there perceived credit worthyness.

[Ozzie Osmond]

"The UK base interest rate was cut to 0.5% in March 2009, following which the Bank of England has continued to pursue an artificial banking system by keeping interest rates at an extreme historic low of just 0.5% into the end of 2009 so as to flood the bankrupt banks with liquidity to enable them to rebuild their balance sheets by overcharging customers against the base interest rate and manipulated interbank market rate of 0.66% against rising real market interest rates which have been in a steady climb since March 2009 which increasingly has meant that during 2009 the base interest rate had become irrelevant to the retail market place."

There ya go

http://www.marketoracle.co.uk/Article16450.html

[NoelWatson]

Ozzie Osmond said:

"The UK base interest rate was cut to 0.5% in March 2009, following which the Bank of England has continued to pursue an artificial banking system by keeping interest rates at an extreme historic low of just 0.5% into the end of 2009 so as to flood the bankrupt banks with liquidity to enable them to rebuild their balance sheets by overcharging customers against the base interest rate and manipulated interbank market rate of 0.66% against rising real market interest rates which have been in a steady climb since March 2009 which increasingly has meant that during 2009 the base interest rate had become irrelevant to the retail market place."

There ya go

http://www.marketoracle.co.uk/Article16450.html

?

[heebeegeetee]

Marf said:

Damned if they do damned if they dont.

Criticised 3 years ago for lending too freely, criticised today for not lending enough.

Yeah, you'd think they could get it at the right level, given what they're paid for doing their jobs. "Employee in Request to Perform Well Shock!!".

And if they do do their jobs they get a nice bonus, whereas for the rest of us if we don't do our jobs right we just get pain.

I could weep for 'em.

[Timmy35]

heebeegeetee said:

Marf said:

Damned if they do damned if they dont.

Criticised 3 years ago for lending too freely, criticised today for not lending enough.

Yeah, you'd think they could get it at the right level, given what they're paid for doing their jobs. "Employee in Request to Perform Well Shock!!".

And if they do do their jobs they get a nice bonus, whereas for the rest of us if we don't do our jobs right we just get pain.

I could weep for 'em.

I hope that you don't base your entire life on what you've read in the tabloids.

[fido]

NoelWatson said:

?

read in the style of Daily MashIt's true. Some geezer from HBOS turns up at the BoE with a big holdall, gets to borrow a couple billion at 0.5%, and then lends it out to Mr & Mrs Feckless at 4.5% therefore making an easy 4%. And the £499 arrangement fee on top. Simples.

Though you do wonder why someone else doesn't just setup a bank, turn up to the BoE with a holdall, and lend it out at a sneaky 3.75% thus still making a hefty margin but undercutting those shysters at HBOS. Now if I just text Warren Buffet on his mobile ..

Edited by fido on Monday 9th August 15:54

[Ozzie Osmond]

That's the point you see. Banks have the market rigged so if you turn up with a holdall you'll find, surprise surprise, that you can only get the money from them and that it's gonna cost you 3.75%

[heebeegeetee]

Timmy35 said:

heebeegeetee said:

Marf said:

Damned if they do damned if they dont.

Criticised 3 years ago for lending too freely, criticised today for not lending enough.

Yeah, you'd think they could get it at the right level, given what they're paid for doing their jobs. "Employee in Request to Perform Well Shock!!".

And if they do do their jobs they get a nice bonus, whereas for the rest of us if we don't do our jobs right we just get pain.

I could weep for 'em.

I hope that you don't base your entire life on what you've read in the tabloids.

My wife works in a bank's regional th'ead office. I hear some great stuff.

Did the credit crunch only happen in tabloid land though?

[NoelWatson]

Ozzie Osmond said:

That's the point you see. Banks have the market rigged so if you turn up with a holdall you'll find, surprise surprise, that you can only get the money from them and that it's gonna cost you 3.75%

3.75% for what?

[Timmy35]

heebeegeetee said:

Timmy35 said:

heebeegeetee said:

Marf said:

Damned if they do damned if they dont.

Criticised 3 years ago for lending too freely, criticised today for not lending enough.

Yeah, you'd think they could get it at the right level, given what they're paid for doing their jobs. "Employee in Request to Perform Well Shock!!".

And if they do do their jobs they get a nice bonus, whereas for the rest of us if we don't do our jobs right we just get pain.

I could weep for 'em.

I hope that you don't base your entire life on what you've read in the tabloids.

My wife works in a bank's regional th'ead office. I hear some great stuff.

Did the credit crunch only happen in tabloid land though?

Really. What does she do exactly.