Saturday, Jan 17, 2009
Disaster recovery weekend
Telegraph: Treasury to burn midnight oil on 'bad bank' scheme
Apparently big problems have been identified if the Treasury feels the need to produce a plan by Monday. Ominous is "What is clear is that the Government is set to become a major stakeover in banks for the next decade or more. " and the suggestion of a possible plan here makes it look like imminent disaster. Basically money printing to buy gilts, then the gilts get given to the banks, with the final flourish that all defaulting debts are purchased by a taxpayer bank at presumably full price. There is so much talk of quantative easing this looks increasingly likely to happen with all the downsides for a recovery (should one ever come). The UK is staring Iceland in the face.
Posted by stillthinking @ 07:53 PM (614 views) Add Comment
7 Comments
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1. denzil said...
I think it has almost been a forgone conclusion for sometime that the banks would become nationalised, at least to a significant extent. The financial wheels that drive western economies has well and truly fallen off. Without intervention it's difficult to see the way forward.
The article mentions the midnight oil will be burned by govt, BoE and the FSA. Wow! That really fills me with confidence. That group have collectively been asleep at the wheel for the last 7 years.
2. braindeed said...
An as a shareholder of 'Bailed Out Scumbags.....I want a new pay structure imposed, wholesale removal of the incompetants in charge, and names named...----no arguments..
3. Crunchy said...
Telegraph: Treasury to burn midnight oil on 'running the press' scheme
4. stillthinking said...
Bank shares dropped 25% on Friday (yesterday). That is a panicky drop. Really does sound as though there will be a major announcement on Monday or next week.
5. new user 2007 said...
Barclays is possibly resisting as it is one of the few non-government banks left. By allowing open valuations of the toxic assets to occur, everyone will find out that they are not worth anything.
As for this new scheme helping to restart lending via wholesale money markets opening again? What underlying assets will be used to create the magic securitised instruments that were bought in markets last time?
Even if investors come back, what instruments will they be buying to provide the funding? Not as if the underlying asset (property) is anymore stable than it was last year. This is just a under-handed way of using tax payers money (again!)!
At least the bankers will be happy...bad debts gone without giving (more) control to the government. Exactly what they wanted to begin with. Perhaps one of them will mention the flaws outlined above while talking to the govt?:)
6. Chris said...
Perhaps it might be a good time to buy then if the governement starts printing money. Inflation will shoot up again!
(Deflation = No money in the economy. Inflation = Too much money in the economy)
With the cost of things going up and value of money going down, it is probably best to take my savings out of the bank (Which is earning sod all) and look for a bargain before it's too late!
7. fjcruiser said...
Setting up a toxic asset super bank is the only way forward to pick this pungent blister and know the true extent of the damage. Then banks will be able to rebuild themselves, although it does not mean they will start lending anytime soon. Is this the end of money as we know it?