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bobthe~

An Innovative Way To Save The Banks

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I was thinking about the Bush giveaway:

Here have 600 dollars go and spend it.

It was a pointless exercise, because in fact they did spend it and now it's gone and they are not really any better off.

So how about, as an alternative:

Here is x thousand, but you can only have it if you either pay off some debt with it, or save it in the bank for at least 2 years*.

Banks have their balance sheets repaired by the paying down of debt, those in debt are helped and savers also get the benefit of some extra savings.

Obviously the value of x could be anywhere between 1 and 20, but it strikes me that the public don't actually get any benefit from this bailout, other than the system continues to function, and the bankers get to carry on with their bonuses (this could be unfair, but is a common perception I expect).

I haven't thought this through, so any vast holes in the plan, please feel free to point out how stupid I am (other than the obvious one that it won't get people spending money they don't have).

*You could allow access in emergencies such as unemployment or sickness etc.

Edited by bobthe~

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Why include a middleman? Just give the banks x thousand per customer and order them to pay each part of their customers debts off?

Because those without debt would feel left out

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I was thinking about the Bush giveaway:

Here have 600 dollars go and spend it.

It was a pointless exercise, because in fact they did spend it and now it's gone and they are not really any better off.

So how about, as an alternative:

Here is x thousand, but you can only have it if you either pay off some debt with it, or save it in the bank for at least 2 years*.

Banks have their balance sheets repaired by the paying down of debt, those in debt are helped and savers also get the benefit of some extra savings.

Obviously the value of x could be anywhere between 1 and 20, but it strikes me that the public don't actually get any benefit from this bailout, other than the system continues to function, and the bankers get to carry on with their bonuses (this could be unfair, but is a common perception I expect).

I haven't thought this through, so any vast holes in the plan, please feel free to point out how stupid I am (other than the obvious one that it won't get people spending money they don't have).

*You could allow access in emergencies such as unemployment or sickness etc.

paying down a debt at a bank REDUCES its Profit and loss dontchaknow. Saving it there makes the balance sheet worse, unless they lend a bundle on it, which they wont.

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also I don't know enough about banking and so was not sure if this is strengthening the banks' capital base or not.

I said earlier that it wouldn't get people spending again, but I think it probably would to a small degree.

The sooner you pay off your debt, or the earlier you get a pot of cash that makes you feel safe in a recession, the sooner you would go out and spend.

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Because those without debt would feel left out

They just get given a nice lump sum for not being in debt - eg. reward the conscientious, not the feckless.

Everyone else gets their debt paid, but don't see any of the money.

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They just get given a nice lump sum for not being in debt - eg. reward the conscientious, not the feckless.

Everyone else gets their debt paid, but don't see any of the money.

I'd go with that.

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paying down a debt at a bank REDUCES its Profit and loss dontchaknow. Saving it there makes the balance sheet worse, unless they lend a bundle on it, which they wont.

Well this was the bit I wasn't sure of, but I would have thought that in the longer term, banks need to divest themselves of "assets", because they aren't worth what was supposed.

If the underlying loans start to get paid back then they do have capital again, don't they? :unsure:

Whether they actually lend it is another matter of course, but my plan was not to get banks lending at insane multiples*, but save the system and get some benefit to all of us.

Edit to add:

*Or making a profit

Edited by bobthe~

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Well this was the bit I wasn't sure of, but I would have thought that in the longer term, banks need to divest themselves of "assets", because they aren't worth what was supposed.

If the underlying loans start to get paid back then they do have capital again, don't they? :unsure:

Whether they actually lend it is another matter of course, but my plan was not to get banks lending at insane multiples, but save the system and get some benefit to all of us.

Sure, as loans are paid back with ALL the interest due, the profits yet to materialise appear. Pay early, either there is a penalty to the borrower, or the interest future is lost to the bank.

In any case, giving money to tax payers that came from tax payers is a waste of resource. why not just cut tax by the amount they want to give, along with a culling of the top levels of public sector workers, to maker the whole scheme 100% worthwhile.

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Sure, as loans are paid back with ALL the interest due, the profits yet to materialise appear. Pay early, either there is a penalty to the borrower, or the interest future is lost to the bank.

In any case, giving money to tax payers that came from tax payers is a waste of resource. why not just cut tax by the amount they want to give, along with a culling of the top levels of public sector workers, to maker the whole scheme 100% worthwhile.

I don't disagree with that last bit, but they aren't going to do it, they are going to carry on giving money to the banks.

I am sure also that the minutiae of administering my scheme would be quite horrendous, but, hey, look at the CSA and the tax credits system. It could be a nice job creation scheme. :)

I am sure also that if they could find a way of using this system to pay off the debts of those in Labour marginals, by some kinds of means test, it would go straight to the top of the agenda.

Edit to add:

you might have missed my last edit: I don't care about bank profits, and I am sure you don't either. ;)

Edited by bobthe~

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How about save future banks... let the current ones bite the bullet and fall.

A warning to all city workers, ceos and other capitalist types; invest responsibly or fail spectacularly - we don't do socialism for the rich.

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How about save future banks... let the current ones bite the bullet and fall.

A warning to all city workers, ceos and other capitalist types; invest responsibly or fail spectacularly - we don't do socialism for the rich.

I know, but they aren't going to do that. I was hoping that the taxpayers could get something out of it.

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I know, but they aren't going to do that. I was hoping that the taxpayers could get something out of it.

they will, banks will be preserved in Aspic for future generations to fund.

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they will, banks will be preserved in Aspic for future generations to fund.

HA HA

It's funny cos it's true. :ph34r:

Going back to your point about the interest and lost profit, they would still gain profit if they lend it back out (sensibly of course). Or perhaps they could use it to buy out a weaker bank, if they can find any. :lol:

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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