Friday, Oct 16, 2009
The Great Awakening.
Daily Mail: We bailed them out. This is how they repay us.
Just a year after the Royal Bank of Scotland came within a few hours of running out of the money to replenish its cash machines, the poor practices and financial greed which brought about the great panic are back with a vengeance.
Posted by devo @ 11:22 PM (1406 views) Add Comment
49 Comments
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1. devo said...
You see, the banking industry, in its greed, failed to carry others with it.
The worm has turned.
2. paul said...
So 'Quantitaive Easing' seems to be working then (i.e. printing money and giving it to bankers) ...
3. devo said...
So Quantitative Easing seems to be working then.
In artificially propping up house prices, yes.
4. mark wadsworth said...
Yup. The Home-Owner-Ists need reckless bankers to prop up the value of their assets. But according to H-O double-think, these grubby little people who play about at computer screens and help themselves to some crumbs from the cake are Not Deserving. Whereas the Home-Owner wails and nashes his or her teeth at the plight of the next generation of FTB's ("the lifeblood of the market") who get turned down when they apply for a reckless loan.
So the hard-working responsible Home-Owner simultaneously looks down on them while needing them.
5. cat and canary said...
loved the article devo, you´ve gotta hand it to the daily mail!
They may not always be the most accurate reporting, but they do tend to call a spade a spade.
..and we need that kind of approach now. We need voices in ´high´ places to ´stir up´public anger, IMO
its become abundantly clear that a large number of banking institutions don´t give a monkeys about the state of the world (no surprises)
im tired of the "bankers contribute to society argument"...yeah, they contribute 9% of GDP according to Boris, but they´ve cost us more than 25% of GDP, why didn´t Boris add that minor detail to his argument?
6. devo said...
We need voices in ´high´ places to ´stir up´public anger, IMO
Not sure how influential AEP is, but it's a start:
Bankers are playing with fire. I don't think they have any idea how close they are to a ferocious popular backlash.
They fail to recognize that they were all implicitly bailed out by zero rates, QE, and massive fiscal stimulus across the West -- in other words by the taxpayer, at crippling long-term social cost.
My view is that they should accept a teacher's salary for a few years until penance is done. Their bonus culture is setting a terrible example and will make it much harder for any government to command broad support for the spending cuts we need.
But then, we have an Apartheid economic culture these days. They live in another world.
ambrose evans-pritchard
on October 16, 2009
at 12:08 PM
http://www.telegraph.co.uk/finance/economics/6339642/Ex-FSA-chief-Sir-Howard-Davies-sees-dramatic-risks-for-Britain.html
7. cat and canary said...
was reading the comments section, my favourite was an old bloke from Wales...
Banking used to be an honourable profession. Before retirement I was a banker (FCIB) and worked throughout the world. I received a good salary and a modest bonus. Now the "dealers" are Las Vegas style gamblers using their shareholders money. They are no better than spivs and Delboys who have brought dishonour to the whole of banking. I cannot understand why they receive (NOT earn) millions in bonuses and why some must have assets of £225Million and more.
- Daffyd, Colwyn Bay, Wales, 15/10/2009 11:23
8. nomad said...
Bizzarely, the most effective route the government has created for the transfer of funds into the real economy, appears to be through bankers' salaries and bonuses. But on the other hand . . .
devo@6. "Bankers are playing with fire. I don't think they have any idea how close they are to a ferocious popular backlash."
Absolutely!
In the case of profits bankers and business executives dip in and help themselves to vast salaries topped up with unearned/undeserved bonuses and expenses, then when it comes to taxes - top civil servants, council executives, MPs do the same. Those who are in control of the purse strings help themselves. It is time they were treated like any club treasurer who dipped into the Xmas fund.
I haven't taken the time to consider the rights and wrongs of the mail dispute - I don't need to, I just look at the big picture and support the foot soldiers.
This could be where it kicks off.
9. crunchy said...
It seems so easy to forget all those toxic assets still lurking on the books.
Deffered till when? That is the question.
10. crunchy said...
Deferred even! A Hangover indeed.
11. shipbuilder said...
There will be no popular backlash because as the economy is now in 'recovery' and house prices are up, the people of the UK don't care. This is how a society based on individulalism works, it is now in our DNA.
Hopes of a mass awakening are sadly just as delusional as the 'sheeple' who can't see the 'truth'. Nothing happens en masse when people only care about themselves.
12. nomad said...
devo@6. "Bankers are playing with fire. I don't think they have any idea how close they are to a ferocious popular backlash."
shipbuilder, foot soldiers (I prefer that to sheeple) cannot help but notice that they are being made to pay for mass fraud. Rebellions have started in Iceland and Latvia - I suspect Ireland and Spain may not be far behind. Why not here?
13. shipbuilder said...
Nomad, for the reasons I just outlined. There will be no mass rebellion in Ireland either. Rebellion requires a connection to other people - in the UK, consumer capitalism via the government, advertising and media has ensured that we fear and loathe each other. We are in constant competition, every person for themselves - it is the very foundation of our economic system and values. Ireland has desperately anglicised and americanized itself in a similar vein over the past decade.
14. shipbuilder said...
Instead, we will look for ways to personally benefit from the crisis. Anyone in doubt of this only need look at any thread on here relating to investment.
15. devo said...
14. shipbuilder said... Instead, we will look for ways to personally benefit from the crisis.
"We" suggests you include yourself in that statement, shipbuilder. Am I right?
16. devo said...
'Hopes of a mass awakening are sadly ...delusional'
Wrong shipbuilder. The mass awakening has started already.
17. happy mondays said...
@ shipbuilder, nothing has happened Yet, to awake the masses, government & bankers, power elite alike have to keep it all going, because when it crumbles, the shackles of our debt based society will fall..
18. shipbuilder said...
Devo - other than getting a house at a reasonable price, no, I have no interest in profiting - I have no investments, hedges or anything else. What interests me is how I can have a good, fun, interesting and honest life. I have no great materialistic needs.
I was told on this site two years and more ago that the mass awakening had started and it hasn't happened yet. People can already see what is happening, it's just that they don't care as long as they are alright. See my points above on individualism.
19. crunchy said...
As long as there are growing numbers of people that are not riding the banks/governments propt up gravy train there is always a possibility
of a backlash. America, Ireland or UK I would not write off. We have not really been tested to the extreme yet, but I'm sure we will in time.
It does not have to be a majority movement, however I am not ruling that one out. There are things happening in America that would
indicate to me that governments are indeed preparing for such future events. Don't hold your breath Shippy!
20. devo said...
The day of reckoning has been repeatedly delayed over the past couple of years due to various monetary tricks.
I think time is now running out. Continuing QE while simultaneously saying the recession is over when it clearly isn't, won't work for much longer.
21. shipbuilder said...
I would love some sort of mass movement to happen, but I know it won't. The self-interest and fear of/competition with everyone has been with us for decades now and will not be extinguished in a short time.
22. crunchy said...
If we truely had "individualism" we would not have wars, worshippers, fans, or teams......
There is nothing quiet like being in the line of an angry righteous mob when the blood starts to pump and there is little left to lose.
The Americans are the ones that are very capable of dealing a bloody nose to it's authorities.
Bush & Obama know it.
23. Charlatan said...
shipbuilder @ 11
In a society based on indivudalism government wouldn't be bailing the buffoons out and thus we would currentyl be expereincing deflation and a much bigger housing crash (if the exuberance had kicked off in the first place). This would be a good thing.
24. devo said...
"The self-interest and fear of/competition with everyone has been with us for decades now and will not be extinguished in a short time."
When people see that this recession isn't ending, in fact is turning into a depression, attitudes will change rapidly.
25. devo said...
A very perceptive post, crunchy@22.
But you already know that.
26. Roomelephant said...
Bankers and financiers are able to pay themselves such enormous commissions for 'creating wealth' which readers of this site see most clearly in the form of unreal (based on what we actually earn now, rather than in the future) house prices.
The simple mathematics behind this are GCSE-level easy. Anyone ever done the old feedback-loop thing with a microphone and speaker. Thought so, and this is hardly recent news vis-a-vis the 'credit crunch'.
Mathematically, changing a fractional reserve banking system from one with a loan to deposit ratio of less than 100%, to a banking system with a loan to deposit ratio above 100% creates an effect which rapidly pushes house prices towards infinity , with commensurate larger commissions all round. This is what is called 'unsustainable'. It is not just in parliament that the speaker is blown
27. crunchy said...
devo
When the "Yankees" inflation is running @ 10/15% we will see. It is currently @ 6%.
Bye bye dollar. People have no idea how far gold and silver will go to, or angry people for that matter.
28. fallingbuzzard said...
The bankers never asked to be bailed out. They were not allowed the option of bankruptcy, which would be available to any other company. So blame the people that made the decision to bail them out rather than let them go bankrupt.
29. charlie brooker said...
For all those savouring the hint of rebellion in the air, remember remember the fifth of November.
Yours,
Charlie V. Brooker.
30. crunchy said...
or remember remember the eleventh of September.
Yours,
The American Patriots.
31. crunchy said...
I pledge allegiance to the flag of the United States of America and to the Republic People for which it stands.
One nation under God, Indivisible with liberty and justice for all.
32. devo said...
"26. fallingbuzzard said... The bankers never asked to be bailed out. They were not allowed the option of bankruptcy, which would be available to any other company."
The banksters had no option and they knew it. They were hours away from oblivion anyway, hence the bailouts and subsequent QE.
33. nomad said...
What have you got planned, Charlie?
34. devo said...
I've got some sparklers left over from last year.
35. happy mondays said...
@ charlie v brooker is that V for Victory...
36. devo said...
27. charlie brooker said... For all those savouring the hint of rebellion in the air, remember remember the fifth of November.
I would hope that the rebellion, when it comes, will be more sophisticated then Guy's misadventure.
A carefully planned and coordinated electronic bank run could be quite effective.
37. charlie brooker said...
The V that I refer to is the V for Vendetta.
Everybody buy a mask and meet up in the City on 5th November.
We all know its the bankers that are running the show now, not the politicians.
38. fallingbuzzard said...
No, devo. The government did not want to give the banks the option of bankruptcy for their own means, not the good of the country. Oblivion would not have occurred in 08 since all normal banking functions would have automatically been supported by the BOE. There would have been Rock-style panic but then that would have been put right within days via the media. Savers with over the liability cap would have had savings converted to equity and some of the bondholders would have been wiped out. Big deal, thats capitalism. Banks make good money in good times and their losses should not be socialised in bad times. As it is, the losses are now officially being socialised. I'm betting on it suddenly becoming a very capitalist process whereby Joe Bloggs in particular has to pay their "fair" share.
39. devo said...
Oblivion would not have occurred in 08 since all normal banking functions would have automatically been supported by the BOE.
@36. fallingbuzzard
You seem to have a narrow, UK-centric, focus.
I'm talking internationally.
Believe me, when US/UK/EURO Quantitative Easing stops, so does the dollar-based money system.
Prove me wrong.
40. fallingbuzzard said...
I won't prove you wrong since I don't disagree but there would not have been oblivion is RBS and HBOS had been allowed to go bankrupt.
41. devo said...
'there would not have been oblivion if RBS and HBOS had been allowed to go bankrupt'
There would. We were talking about systemic failure. In fact we still are.
This site is 'merely' talk.
Look at the actions.
If there is another round of QE, I will say 'I told you so': Money printing to further postpone economic collapse.
If QE is stopped, then watch out for fireworks..
42. fallingbuzzard said...
QE will stop here. Thats certain. Make of that what you will. Oblivion is not what happens when a banking system fails. I presume that you believe, as I do, that the UK banking system is insolvent. I don't believe that the great leader understands this, wants to believe this or wants to be blamed. Cameron will be blamed, or rather Osborne, which is convenient.
43. devo said...
40. fallingbuzzard said... QE will stop here. That's certain.
No it won't.
I'm intrigued as to why you say it will, as you clearly have more 'insider' knowledge than me.
44. fallingbuzzard said...
The Bank's last quarter inflation projection fans as well as the growth ones already look wrong, even by their own admission which makes it very difficult to extend QE in early November if they really believe in the 2% target, asset price targeting aside. But they might try and push through a 3 month extension of £75bn which the bond market will hate and punish the DMO for. The QE extension has also been made a political issue and it is very difficult to convince the voting population that QE is not devaluing the pound in their pocket, more importantly their paypacket. The bond market won't run away if QE continues and the price is right, but the electorate will. Lets see what happens. It would be a brave PM that printed through an election and just after the May 2010 inflation report. Brown needs to prove that we're coming out of recession and he can only do that by stopping QE and pushing up interest rates maybe 0.5%. A notional increase in April. i don't believe in BOE independence, practical or theoretical, and never have done.
45. fallingbuzzard said...
Actaully not April 2010, probably Feb
46. devo said...
43. fallingbuzzard said... Actually not April 2010, probably Feb
Am I alone in finding your correction mildly comical? Probably.
Fallingbuzzard, you are pitching your argument above the heads of most, including myself, and any passing politicians and/or journalists.
My argument can be understood by everyone ( though few actually believe it, at present)...
- The global financial system is insolvent
- Quantitative Easing is providing a temporary stay of execution
As you say, let's see what happens.
47. fallingbuzzard said...
The state of insolvency depends on the value you place on an asset. Yes, lets see.
48. devo said...
'The state of insolvency depends on the value you place on an asset.'
ok.
If all assets were to be sold tomorrow, what percentage of their notional value do you think they would achieve?
Give me a 'ballpark' figure.
49. fallingbuzzard said...
30p in the £