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This thread talked about RBS report that British banks are insolvent.

http:

//www.housepricecrash.co.uk/forum/index.php?showtopic=101170&st=0entry1593170

I posted that wouldnt it be interesting if this got onto the BBC website.

The HPC blog showed:

http://www.independent.co.uk/news/business...nt-1418229.html

But there is no page there any more or any search results for it.

Any smell a D-notice, dont scare the punters?

Did any HPC'rs read the story and/or have it cached? Please post it if you do. Tx.

VMR.

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This thread talked about RBS report that British banks are insolvent.

http:

//www.housepricecrash.co.uk/forum/index.php?showtopic=101170&st=0entry1593170

I posted that wouldnt it be interesting if this got onto the BBC website.

The HPC blog showed:

http://www.independent.co.uk/news/business...nt-1418229.html

But there is no page there any more or any search results for it.

Any smell a D-notice, dont scare the punters?

Did any HPC'rs read the story and/or have it cached? Please post it if you do. Tx.

VMR.

Strange...maybe it was being a tad too open for the general public to digest,and powers to be, fear the potential consequences...

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Just for posterity.

Lots of bad words if you speed read :)

insolvent, turmoil, emergency, technically insolvent, about to go bust, dismal news, government nationalising

VMR.

Britains biggest banks are "technically insolvent", Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions.

Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that "the domestic UK banks are technically insolvent on a fully marked-to-market basis".

The warning does not mean British banks are about to go bust, because the assessment is purely theoretical, and RBS said the position was "not unusual at this stage in the economic cycle".

However, it will add to pressure on the Government to provide more support for the country's banks. Treasury officials are now set to spend this weekend in talks about a fresh round of measures, which could be unveiled as early as next week, to free up lending to households and major corporations hit by the credit crunch.

The value of Barclays fell by a quarter in stock market trading yesterday, amid a series of wild rumours about its finances, although the bank said it saw no need to comment on the drop.

City analysts said the bank had been targeted by traders after regulators lifted a ban yesterday on the short selling of financial stocks. Barclays' share price, along with the value of other British banks, was also hit by dismal news from the international markets, including the announcement on Thursday night that the Irish government was nationalising Allied Irish Banks. In the US, Bank of America announced yesterday that it was taking a $20bn injection of emergency funding from the US government, subsequently revealing that Merrill Lynch, the investment bank it rescued last year, had lost more than £15bn in the final three months of last year.

Citigroup, once the world's largest bank, announced more than $8bn of losses for the final quarter of last year, and revealed plans to split itself in two.

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Yes, well done sir.

Note that the link at the bottom of the page no longer works and a quick search on the Independent site doesnt show it. I wonder if it made the print edition?

D notice, D notice, D notice.

VMR.

I think you could be right.

I've long thought that this government will manipulate and/or withhold information and statistics so as to cover-up the truth of what's really going on and what they are really doing.

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Did a google news search; the dead link to the windy is there but also this Daily Heil link.

Indeed, analysts at the partly-nationalised Royal Bank of Scotland believe that if the British banks were required by the auditors to value all the bad assets on their books at current market values then the whole banking system would in effect be insolvent.

5th paragraph down, just below obligatory irrelevant picture.

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Guest absolutezero
This thread talked about RBS report that British banks are insolvent.

http:

//www.housepricecrash.co.uk/forum/index.php?showtopic=101170&st=0entry1593170

I posted that wouldnt it be interesting if this got onto the BBC website.

The HPC blog showed:

http://www.independent.co.uk/news/business...nt-1418229.html

But there is no page there any more or any search results for it.

Any smell a D-notice, dont scare the punters?

Did any HPC'rs read the story and/or have it cached? Please post it if you do. Tx.

VMR.

You do know that D notices are a voluntary thing?

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wikipedia

In Britain, a DA-Notice (called a D-Notice until 1993) is an official request to news editors not to publish or broadcast items on specified subjects, for reasons of national security.

D-Notices and DA-notices are merely a request and therefore not legally enforceable and consequently news editors can choose to ignore them without (in theory) official repercussions, although they are generally accepted by the media.

The original D-Notice system was introduced in 1912, run as a voluntary system by a joint committee headed by an Assistant Secretary of the War Office and a representative of the Press Association.

STHF on Monday?

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wikipedia

STHF on Monday?

It could be that someone in government has decided that an admission that British banks are technically insolvent could spark multiple bank runs and hence newspapers have been asked to withdraw the articles that mention the quote. However, it's already all over the internet and isn't as easy to withdraw as the government might hope.

Who knows how many people might act/panic on this info and make an early trip to their bank on Monday morning?

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Yes, well done sir.

Note that the link at the bottom of the page no longer works and a quick search on the Independent site doesnt show it. I wonder if it made the print edition?

D notice, D notice, D notice.

VMR.

Yes, there was an article very similar to this in the Indie this morning on page two, next to a picture of Boy George.

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It could be that someone in government has decided that an admission that British banks are technically insolvent could spark multiple bank runs and hence newspapers have been asked to withdraw the articles that mention the quote. However, it's already all over the internet and isn't as easy to withdraw as the government might hope.

Who knows how many people might act/panic on this info and make an early trip to their bank on Monday morning?

I wonder if it made it into the Saturday edition of the Independent?

To be honest I can't see people panicking. The gov already holds stakes in most of the banks. The gov would have to collapse for there to be an issue now.....

Strange that the story has been pulled though.

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I wonder if it made it into the Saturday edition of the Independent?

To be honest I can't see people panicking. The gov already holds stakes in most of the banks. The gov would have to collapse for there to be an issue now.....

Strange that the story has been pulled though.

Well, I have it right here in front of me, in black and white.

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Never attribute to malice what can be explained by incompetence.

The Indy still has this report, but it's been re-jigged to take in some more info (probably from the US after the original was written), and has re-titled it and not thought that any links to the original would through up a no-show. So ta-da:

Independent: Jeremy Warner Final Denouement Approaches As Crisis Enters New Phase

With results for the final quarter of last year to be announced across the banking sector, investors, depositors and regulators are again in a heightened state of nervousness. Front runners in the reporting season show no let-up in the red ink. As for UK domestic banks, Royal Bank of Scotland issued a circular yesterday predicting that rising impairment charges and declining, pre-bad debt profitability would ensure that they all remain loss-making for the year to March 2010.

More scary still, RBS remarks that, on a fully mark-to-market basis, all the UK domestic banks are already technically insolvent. In a bank, insolvency occurs when the liabilities – depositors and wholesale funding – exceed the value of the assets, which are the bank's loan portfolio. Such an event occurs when you get a severe bad-debt experience, impairing the value of the assets, and there is an insufficient capital buffer to make up the difference.

As RBS points out, it is actually not unusual for banks to be insolvent at this stage of the economic cycle. What makes it different this time is that this dire state of affairs is much more transparent than it has ever been in the past. The banking system's greater reliance on wholesale funding also makes it considerably more vulnerable to withdrawal of funds on the liabilities side of the balance sheet.

(extract)

This sounds like the same story to me anyway.

db

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You do know that D notices are a voluntary thing?

Voluntary under nulabour? You do know what that means?

Anyway, it's in the public good not to cause panic and chaos.

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Guest sillybear2

It might not be a D-notice per se, I believe there was some new legislation* that enabled the BoE to operate in secret and be exempt from FOI or the 30 year rule, meaning we will never find how who is being bailed and to what extent. I think there was a gagging order element too, to prevent public panic and runs initiated by media reporting, because, ya know, if Peston had just shut his mouth everything would have been fine, known as the "if wasn't for those pesky kids" clause in the new banking act.

Banking (Special Provisions) Act 2008?

Edited by sillybear2

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Wether they like it or not it's coming out. Barclays kept the illusion going longer than most but shareholders are finally succumbing to reality, HSBC are following in their steps.

The enormity of it all is begining to become obvious to all, even the most stuborn.

And the sooner the banks stop denying it, the sooner we can start properly fixing this mess.

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It might not be a D-notice per se, I believe there was some new legislation* that enabled the BoE to operate in secret and be exempt from FOI or the 30 year rule, meaning we will never find how who is being bailed and to what extent. I think there was a gagging order element too, to prevent public panic and runs initiated by media reporting, because, ya know, if Peston had just shut his mouth everything would have been fine, known as the "if wasn't for those pesky kids" clause in the new banking act.

Banking (Special Provisions) Act 2008?

As I said in my previous post, in this particular case, there has been no gagging at all, just the Indy moving a story from one place to another, and re-writing it to include some extra info.

I haven't been able to check the stuff about the Act you mention, but - from memory - the argument went a bit like this:

Banks depend on confidence. No bank hangs on to all its depositers' cash in a safe in the back office. Even under the most conservative of regimes, it lends the money out to other people (at interest), so that it can pay interest to the depositors. In theory, however, any depositor can walk into the bank and say, "I want to withdraw all my money, here and now." Usually, when that occurs, the bank, says, "Yes, sir." and walks to safe in the back office, and gets out an amount which matches the depositor's balance and hands it over. No problem - providing the bank has enough money to cover that one depositor wanting his money back in folding notes.

However, if all the depositors want their money back at the same time, then the bank is in deep doo-doo, since most of that money is out earning interest, to pay those depositors who want interest, but are content to leave their capital in the bank. Now, obviously the problem is compounded not only by the problem of getting money back from the banks creditors (which may take time, or even prove impossible), but by the standard practice (these days) of lending out more money than the bank actually has cash to cover. (A matter I'm NOT going into here).

So, if there is a panic about the bank's solvency, then that can become a run on the bank, when all the depositors queue up to demand their money at once. End result, a bank that might have been able to keep functioning, if everyone had not wanted their money back at once, can find themselves having to close their doors and declare themselves insolvent. Keep gloom all round.

Suppose a bank that is having some problems, but could keep going providing (a) they had a little more working capital (in the metaphor above, cash in the safe in the back office) and (B) so long as everyone doesn't ask for their money at once. At that point, a little discrete help from a friend with a lot of cash (the Bank of England), might mean that the bank could keep going. The discretion bit is required to avoid panic.

Alas, in the case of Northern Rock, the discretion wasn't possible. NR couldn't raise the money it required on the wholesale capital markets, and so it decided to go to the lender of last resort - the BoE for help. At the time, that request for help had to be made public, and the news caused a panic, which caused a run on NR, and the rest we know.

The argument, at the time, was that if the rules had allowed NR to ask for the help, and been able to receive it, confidentially, then a quick plug in the NR's capital shortfall would have prevented the collapse which followed. As a result, the government put through a measure which would allow for help to be given discretely, so that a bank could retain the confidence of its depositors, even if it needed a little emergency help.

Now, the problem with this idea is, first, that it depends on a degree of gagging. Secondly, it relies on a theory about the behaviour of the banks which looked sensible in the immediate aftermath of the collapse of NR, but not a little while later.

At the time, it looked as though NR was a one-off, or extreme case. More sober, more sensible, banks wouldn't get into that kind of trouble. Secondly, the theory depended on the idea that a little temporary help would have fixed the problem that NR was having with the wholesale markets. As history has shown, both ideas were wrong - our other banks were in almost as much trouble, and - crucially - the inter-bank lending was not "making things a bit sticky for NR," but just about to seize up completely. A bit of sticking plaster from the Bank of England was no solution.

The idea, however, seemed sensible at the time, and may seem sensible again, if we ever get back to a well-lubricated banking system. It's the old idea that it's better to put out a bit of smouldering upholstery quietly, than to cry "fire" in a crowded place, and watch people get trampled to death in the rush to get out.

The refusal of the man in the cockpit to panic, probably saved a lot of lives on the Hudson the other day. It is also worth considering this: all those people were saved by being taken off the wings of the plane where they were standing. If they had panicked about the plane sinking (which it eventually did) and jumped off those wings, there would certainly have been deaths from hypothermia. Orders designed to prevent panic are not always a bad idea.

db

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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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