Banks: Lend or else...
Discussion
So, the banks aren't lending because they don't know how exposed they are and what liabilities they might face in the future, so they're filling the coffers just in case. Some would call it sensible, other would call it defensive.
So Darling has told hem to start lending or he'll use legislation to force them to lend. So, Darling does this, Bank AN Other is forced to lend, and then discovers hidden liabilities and goes to the wall or is bailed out. Not really ideal.
So, is Darling right or should we leave the banks to run their business? They're here to make money, one can only assume that once their confidence increases, they'll start lending again.
So Darling has told hem to start lending or he'll use legislation to force them to lend. So, Darling does this, Bank AN Other is forced to lend, and then discovers hidden liabilities and goes to the wall or is bailed out. Not really ideal.
So, is Darling right or should we leave the banks to run their business? They're here to make money, one can only assume that once their confidence increases, they'll start lending again.
The banks are craven, but Brown and Darling don't have the slightest clue what they are doing. They understand even less than the bankers what is on the banks' balance sheets. They have even less ability than the bankers to see the effect of their actions a year or two down the road.
I don't actually mind Darling, its his wingman, the guy who wants to be prime minister and chancellor I cant stand(brown)... I really do not believe that these are darlings policies or at least he has had very little input into them... They are brown policies and if they pull off guess who will take the credit and if they f
k up guess who will get the $hit!!!
whether it is a good idea or not, I do not know, and who actually does... It could be a good thing, it could be a terrible thing... it seems a little strange that the banks are not giving anything back considering they have just got the bail out they needed... It pi$$es me off that when times are good, the banks cash in, the shareholders become richer and the bankers follow suit. When times are hard, the shareholders zip up their pockets and the bankers go to the govt. and basically give them an ultimatum, "help us out or the economy will get worse oh and by the way when you do hep us out, which you will, there can be no stings attached"....
k up guess who will get the $hit!!!whether it is a good idea or not, I do not know, and who actually does... It could be a good thing, it could be a terrible thing... it seems a little strange that the banks are not giving anything back considering they have just got the bail out they needed... It pi$$es me off that when times are good, the banks cash in, the shareholders become richer and the bankers follow suit. When times are hard, the shareholders zip up their pockets and the bankers go to the govt. and basically give them an ultimatum, "help us out or the economy will get worse oh and by the way when you do hep us out, which you will, there can be no stings attached"....
Zod said:
The banks are craven, but Brown and Darling don't have the slightest clue what they are doing. They understand even less than the bankers what is on the banks' balance sheets. They have even less ability than the bankers to see the effect of their actions a year or two down the road.
got to love such an interventionist govtroll on the next 18 months
sleep envy said:
Zod said:
The banks are craven, but Brown and Darling don't have the slightest clue what they are doing. They understand even less than the bankers what is on the banks' balance sheets. They have even less ability than the bankers to see the effect of their actions a year or two down the road.
got to love such an interventionist govtroll on the next 18 months
A tragicomedy that will cost us all a lot of money and pain.
I'm not sure about this myself. Should brown and darling threaten people to spend their money as well. Ban saving and living withing your income and insist you spend more than you can afford to boost the economy.
Excessive lending and people over extending themselves got us into this mess. People need to stop borrowing money and live within their incomes. Recession is a necessary thing to bring a bit of balance. You can't have the good times without the bad.
Excessive lending and people over extending themselves got us into this mess. People need to stop borrowing money and live within their incomes. Recession is a necessary thing to bring a bit of balance. You can't have the good times without the bad.
Legislating that banks must lend? It's completely bloody insane. Banks aren't lending because banks entirely reasonably have no confidence that they will be able to refinance themselves over the medium term. Banks need to have confidence that term lending will be available to them, say, 6 months to a year down the road.
You can provide as much short term lending as you like and it will indeed reassure banks about their immediate funding position. But if you don't tackle their medium term fears, they won't lend money out to their would-be customers.
If you were running a bank, your financing being largely dependent on a emergency liquidity from the Bank of England, perhaps carrying a large chunk of expensive emergency state funding on the balance sheet, while ever more of your existing customers are defaulting on their debt and the assets they have put up as collateral are rapidly devaluing ... and all your usual sources of finance are shut to new business ... and your regulators are requiring you to reduce your gearing ... are you really going to say "Oh, go on. Twist my arm. Let's start lending." Are you bks. You'd be absolutely mad.
Osbourne and the Tories seem to have recognised that the banks' lack of confidence in the availability of medium term funding over the medium term is the central problem in the credit crunch. Their difficulty is that it is not too easy to turn it into a slogan nor explain it to the general public. But at least they are talking sense. Osbourne has been suggesting that the State underwrite bank lending to small corporates. That makes some sense. At least banks would then know that although they wouldn't necessarily be able to roll their funding for those loans in the capital markets, at least the loans themselves could be called in with certainty. It's hardly a panacea, but it's a step in the right direction.
You can provide as much short term lending as you like and it will indeed reassure banks about their immediate funding position. But if you don't tackle their medium term fears, they won't lend money out to their would-be customers.
If you were running a bank, your financing being largely dependent on a emergency liquidity from the Bank of England, perhaps carrying a large chunk of expensive emergency state funding on the balance sheet, while ever more of your existing customers are defaulting on their debt and the assets they have put up as collateral are rapidly devaluing ... and all your usual sources of finance are shut to new business ... and your regulators are requiring you to reduce your gearing ... are you really going to say "Oh, go on. Twist my arm. Let's start lending." Are you b
ks. You'd be absolutely mad.Osbourne and the Tories seem to have recognised that the banks' lack of confidence in the availability of medium term funding over the medium term is the central problem in the credit crunch. Their difficulty is that it is not too easy to turn it into a slogan nor explain it to the general public. But at least they are talking sense. Osbourne has been suggesting that the State underwrite bank lending to small corporates. That makes some sense. At least banks would then know that although they wouldn't necessarily be able to roll their funding for those loans in the capital markets, at least the loans themselves could be called in with certainty. It's hardly a panacea, but it's a step in the right direction.
The problem is that the government wants its (our) funding back in the relatively near term. With that in mind, those banks that have been recapitalised by the Treasury have to plan to repay the billions within a few years and experience shows that lending aggressively at the start of a recession is a very poor way to generate profits and cash flow. If the government wants the banks to do this, it's going to have to accept that its going to take longer to get their (our!) money back.
Ironic when it was bad (or perhpas no) risk assessment that got the banks into this mess in the first place.
Ironic when it was bad (or perhpas no) risk assessment that got the banks into this mess in the first place.
It's lose/lose as far as I can see. Because they're pushing it, I reckon the government is going to be left holding the nightmare when it all sto.....
..........Ahh yes that's already happened.
It's going to be interesting to see what it all comes to.
When you're in a hole Gordon, keep digging.
..........Ahh yes that's already happened.
It's going to be interesting to see what it all comes to.
When you're in a hole Gordon, keep digging.
Steameh said:
A way to kill recession is public spending. So how about brown starts building new roads and resurfacing the old ones.
He's said he'll do that but that and the olympic projects which can move wont even touch the sides of this.We've got companies that are household names teetering on the brink of collapse, a few white lines and a bit of tarmac isnt going to help at all.
ATG said:
Legislating that banks must lend? It's completely bloody insane. Banks aren't lending because banks entirely reasonably have no confidence that they will be able to refinance themselves over the medium term. Banks need to have confidence that term lending will be available to them, say, 6 months to a year down the road.
You can provide as much short term lending as you like and it will indeed reassure banks about their immediate funding position. But if you don't tackle their medium term fears, they won't lend money out to their would-be customers.
If you were running a bank, your financing being largely dependent on a emergency liquidity from the Bank of England, perhaps carrying a large chunk of expensive emergency state funding on the balance sheet, while ever more of your existing customers are defaulting on their debt and the assets they have put up as collateral are rapidly devaluing ... and all your usual sources of finance are shut to new business ... and your regulators are requiring you to reduce your gearing ... are you really going to say "Oh, go on. Twist my arm. Let's start lending." Are you bks. You'd be absolutely mad.
Osbourne and the Tories seem to have recognised that the banks' lack of confidence in the availability of medium term funding over the medium term is the central problem in the credit crunch. Their difficulty is that it is not too easy to turn it into a slogan nor explain it to the general public. But at least they are talking sense. Osbourne has been suggesting that the State underwrite bank lending to small corporates. That makes some sense. At least banks would then know that although they wouldn't necessarily be able to roll their funding for those loans in the capital markets, at least the loans themselves could be called in with certainty. It's hardly a panacea, but it's a step in the right direction.
It's only insane in the mind of a Labour politician, if you admit it. Thing is, if you admit that this is insane, most everything they did was insane.You can provide as much short term lending as you like and it will indeed reassure banks about their immediate funding position. But if you don't tackle their medium term fears, they won't lend money out to their would-be customers.
If you were running a bank, your financing being largely dependent on a emergency liquidity from the Bank of England, perhaps carrying a large chunk of expensive emergency state funding on the balance sheet, while ever more of your existing customers are defaulting on their debt and the assets they have put up as collateral are rapidly devaluing ... and all your usual sources of finance are shut to new business ... and your regulators are requiring you to reduce your gearing ... are you really going to say "Oh, go on. Twist my arm. Let's start lending." Are you b
ks. You'd be absolutely mad.Osbourne and the Tories seem to have recognised that the banks' lack of confidence in the availability of medium term funding over the medium term is the central problem in the credit crunch. Their difficulty is that it is not too easy to turn it into a slogan nor explain it to the general public. But at least they are talking sense. Osbourne has been suggesting that the State underwrite bank lending to small corporates. That makes some sense. At least banks would then know that although they wouldn't necessarily be able to roll their funding for those loans in the capital markets, at least the loans themselves could be called in with certainty. It's hardly a panacea, but it's a step in the right direction.
The trouble is that they're saying that it's one down from a massive asteriod strike, and behaving as if it's going to be over next week.
I don't think they've really got anything. They're confused because if they don't have anything then they know they're purposeless.
What we're witnessing is the reality sinking in for them. For ordinary people the reality is so vivid, there's no problem. The politicians spend their lives developing a thick skin, and when it comes to this sort of stuff, it renders them useless.
I'm unreserverd (I can't use the word happy) to say that I'm pretty frightened by what they're doing. They really are insane.
I'd be much more comfortable in my mind (I can't use happier), if they were beginning to talk about the detail of the economies/savings they were going to impose, but no, it's business as usual, more of the same.
It's like watching someone on PCP being taken out. They've been shot through with a machine gun, and they're still running like a sprinter.
Edited by dilbert on Wednesday 26th November 00:24
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