Right; That's It

[Tummybanana]

Can anyone tell me what the point is in banks anymore? The Dailymash summed it up nicely; we, the taxpayer, are going to give banks money, and in return, they'll lend it back to us at a higher rate of interest.

I know that Gordy was sabre-rattling last week and saying that if banks didn't pull their fingers out he'd let councils loan out their funds instead, and I thought - well, why the hell not? Councils will have some knowledge of their local area, they'll know local individuals, they'll know their markets, they can work with local chambers of commerce to decide whether business loans are viable or not, and be able to look at long term prospects for the area rather than someone borrowing money to screw the area and run.

Seriously, as far as I can see, Banks are just a private sector administrative process now, whose "investment expertise" argument has been Belgranoed - we shot them just as they were planning to cut their losses and run.

Please, anti-socialist ideology aside, can someone give me a reason why we shouldn't just cut out the simonists and as taxpayers lend directly to strong business models and to individuals with good credit ratings?

[R K]

We're all turning communist baby. It's not like you have a choice.

[stonethecrows]

Can anyone tell me what the point is in banks anymore? The Dailymash summed it up nicely; we, the taxpayer, are going to give banks money, and in return, they'll lend it back to us at a higher rate of interest.

I know that Gordy was sabre-rattling last week and saying that if banks didn't pull their fingers out he'd let councils loan out their funds instead, and I thought - well, why the hell not? Councils will have some knowledge of their local area, they'll know local individuals, they'll know their markets, they can work with local chambers of commerce to decide whether business loans are viable or not, and be able to look at long term prospects for the area rather than someone borrowing money to screw the area and run.

Seriously, as far as I can see, Banks are just a private sector administrative process now, whose "investment expertise" argument has been Belgranoed - we shot them just as they were planning to cut their losses and run.

Please, anti-socialist ideology aside, can someone give me a reason why we shouldn't just cut out the simonists and as taxpayers lend directly to strong business models and to individuals with good credit ratings?

Can you name a single local council that would a) be competent to do this rationally and fairly, and not just abuse the situation to further line the pockets of their top knobs, all their cronies and non-job employees.

Champagne socialism at it's finest!

[mightytharg]

Please, anti-socialist ideology aside, can someone give me a reason why we shouldn't just cut out the simonists and as taxpayers lend directly to strong business models and to individuals with good credit ratings?

First, let me say that your timing is excellent, with the United States, the UK and the Eurozone all falling deeper into Communism, you have captured the spirit of the moment.

The problem of course is that the Governments would misallocate capital, and disobedience to the government could be punished by withdrawal of capital. In the same way that Conservative voters pay with their lives when Labour reallocate health spending to the areas who vote for them. You could be denied a mortgage because your parents were "middle-class", in the same way that children from good schools and families are currently prevented from going to the good Universities. Your business could fail because its competitors are owned by minorities who can borrow at a cheaper rate

The question itself shows a bit of a misunderstanding - the bail-outs only exist because we live under communism. Northern Rock should have failed instead of being used as a mechanism to destroy the remaining banks. Interest rates should be set by the banks and their customers, not by the Bank of England trying to hasten nationalisation.

Basically, the two causes for the current problems are excess borrowing and overlarge governments - the current policies are to encourage more borrowing and increase the size of State interference. That's why the outlook is bleak. The solution is to stop socialising the investment banks, insurance companies, car manufacturers and mortgage industry and just let the market take care of itself.

[Tummybanana]

Can you name a single local council that would a) be competent to do this rationally and fairly, and not just abuse the situation to further line the pockets of their top knobs, all their cronies and non-job employees.

Champagne socialism at it's finest!

No.

But at least they'd be locally accountable by election, unlike the private sector shower we have at the moment.

I can't think of a single bank I'd trust at the moment not to try and cover their butts. Plus, we don't have to pay for all the conversant Threadneedle St architecture, advertising campaigns, sponsorships, and everything else.

[mightytharg]

Plus, we don't have to pay for all the conversant Threadneedle St architecture

There's a talking building on Threadneedle Street! Where?

[Uriah Heap]

First, let me say that your timing is excellent, with the United States, the UK and the Eurozone all falling deeper into Communism, you have captured the spirit of the moment.

The problem of course is that the Governments would misallocate capital,

You couldn't misallocate capital worse than the banks have done over the last 10 years if you tried. Have you seen the numbers from RBS? The idea that capitalism is better at allocating scarce resources than socialism was always the strongest argument for capitalism. It can never ever be used again. It was never true and now we have the proof.

Edited January 19, 2009 by Uriah Heap

[the-sign-jacker]

the answer is simple. remove your £ and go gold.

end of problem.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Yo Libertarian socialist bro

[Guest X-QUORK]

I spent a number of years playing war and staring across the Iron Curtain at the Soviets, pitying their lack of freedom and backwards economic system.

These days I'm a lot less sure about who the good guys are.

[the-sign-jacker]

I spent a number of years playing war and staring across the Iron Curtain at the Soviets, pitying their lack of freedom and backwards economic system.

These days I'm a lot less sure about who the good guys are.

we are habing the same collapse, but reversed. its like the fall of the berlin wall,

only the wall is western paper backed currency.

[Tummybanana]

First, let me say that your timing is excellent, with the United States, the UK and the Eurozone all falling deeper into Communism, you have captured the spirit of the moment.

Zeitgest Jonny, that's me.

The problem of course is that the Governments would misallocate capital, and disobedience to the government could be punished by withdrawal of capital. In the same way that Conservative voters pay with their lives when Labour reallocate health spending to the areas who vote for them. You could be denied a mortgage because your parents were "middle-class", in the same way that children from good schools and families are currently prevented from going to the good Universities. Your business could fail because its competitors are owned by minorities who can borrow at a cheaper rate.

I'm not talking about a centralised bank; I'm talking about locally sourced funding from deposits. Somewhere like Rutland would, of course, be screwed, because it only has a catchment of 94,000 adults, but then businesses to work locally would have smaller ambitions. Where this system wouldn't work, of course, would be for larger businesses who want to work outside of their constituency, so this would have to be a system of fledgling loans. Basically, instead of sticking it all under a big volcano, and letting Kaupthing work out where to invest (usually pwoperdy), the Councils invest locally in making their areas and constituents profitable.

The question itself shows a bit of a misunderstanding - the bail-outs only exist because we live under communism. Northern Rock should have failed instead of being used as a mechanism to destroy the remaining banks. Interest rates should be set by the banks and their customers, not by the Bank of England trying to hasten nationalisation.

Basically, the two causes for the current problems are excess borrowing and overlarge governments - the current policies are to encourage more borrowing and increase the size of State interference. That's why the outlook is bleak. The solution is to stop socialising the investment banks, insurance companies, car manufacturers and mortgage industry and just let the market take care of itself.

Banks have proven that they're not competent to make those decisions. Unless you put a clause on any bonuses, which says that executives and ex-executives will receive bonuses ten years in arrears, based on the performance of the company at that time, you'll get your Adam Applegarths and Fred Goodwins, and that American guy Tom Fulp, was it? who sign up, cut a few dodgy deals and leg it from the company before the wheels fall off with a sweet pension.

What about - and I'm at the risk of summoning Injin here - other services such as Health, Police and Education? Should they be fully privatised, too?

[Gone baby gone]

No.

But at least they'd be locally accountable by election, unlike the private sector shower we have at the moment.

I can't think of a single bank I'd trust at the moment not to try and cover their butts. Plus, we don't have to pay for all the conversant Threadneedle St architecture, advertising campaigns, sponsorships, and everything else.

My personal opinion is... if banks are too important to fail, they should not be in the private sector.

[blankster]

From Maxwellism to Marxism in one step!!!!!

[mightytharg]

You couldn't misallocate capital worse than the banks have done over the last 10 years if you tried. Have you seen the numbers from RBS? The idea that capitalism is better at allocating scarce resources than socialism was always the strongest one but it can never ever be used again. It was never true and now we have the proof.

Exactly why RBS should be bankrupt. Now we have the same idiots (sorry Unc.) enriching themselves by staying on the board and spending taxpayers money. Instead of the council taking over, why not a new bank run by more competant people?

[the-sign-jacker]

Exactly why RBS should be bankrupt. Now we have the same idiots (sorry Unc.) enriching themselves by staying on the board and spending taxpayers money. Instead of the council taking over, why not a new bank run by more competant people?

no one has the competence to save this.

its akin to aiplane being in a 300mph nose dive,

and then 10ft from the ground asking the best pilot in the world to take over.

[Ruffneck]

going communist would be the ultimate in HPC (housing was free in the USSR)

[Tummybanana]

Exactly why RBS should be bankrupt. Now we have the same idiots (sorry Unc.) enriching themselves by staying on the board and spending taxpayers money. Instead of the council taking over, why not a new bank run by more competant people?

COMPETENT PEOPLE!

*slaps forehead*

*writes letter to RBS HR*

"Dear HR Department. Next time, in your job specification for Managing Director, please include "MUST BE COMPETENT.""

I bet they're kicking themselves for not thinking of that before hand.

[Meerkat]

Please, anti-socialist ideology aside, can someone give me a reason why we shouldn't just cut out the simonists and as taxpayers lend directly to strong business models and to individuals with good credit ratings?

Sorry, you have probably misunderstood what was the true cause of the current crisis. It wasn't the free market, it was exactly the opposite - 'wrong' (incompatible with the free market) commands by the central bank and governments. It was command economics and it will become a bit more of it for a while as the governments struggle with the free market realities. This is time to turn away from communism, not to embrace it. Why? Because command economics lead to even more massive waste of resources. You can find plenty of examples in the not too distant past (Cuba, USSR, Venezuela more lately).

[Meerkat]

You couldn't misallocate capital worse than the banks have done over the last 10 years if you tried. Have you seen the numbers from RBS? The idea that capitalism is better at allocating scarce resources than socialism was always the strongest argument for capitalism. It can never ever be used again. It was never true and now we have the proof.

Mate, you are so wrong... capital got mis-allocated because state abused it's power over the monetary policy and sent wrong signals (pricing, CB as the last resort to create moral hazard) to the market. Silly long term projects (especiallyu real estate) became NPV-positive because of artificially low cost of debt dictated by the state.

Anyway, it is not the free market that has failed. It is command economics that has failed yet again and the free market (Smith's Invisible Hand) is having an upper hand it the governments' struggle against the market economy. Let's be honest, OK?

[Gone baby gone]

Mate, you are so wrong... capital got mis-allocated because state abused it's power over the monetary policy and sent wrong signals (pricing, CB as the last resort to create moral hazard) to the market. Silly long term projects (especiallyu real estate) became NPV-positive because of artificially low cost of debt dictated by the state.

Anyway, it is not the free market that has failed. It is command economics that has failed yet again and the free market (Smith's Invisible Hand) is having an upper hand it the governments' struggle against the market economy. Let's be honest, OK?

So if it was all the states fault, how come some banks are so badly affected they a bankrupt and others have far less exposure?

[Meerkat]

So if it was all the states fault, how come some banks are so badly affected they a bankrupt and others have far less exposure?

Moral hazard & corrupt state.

EDIT: Well, I see what you meant. Clearly, some bankers hade less social and moral responsibility or enjoyed reckless empire building (control rents...) and took reckless risks to benefit short-term (large bonuses locked away, and fook everything else). But the way regulation worked (or didn't) allowed these private agendas rise above anything else if you were an a55hole big enough. No big banker has been imprisoned as someone remarked...

Edited January 19, 2009 by Meerkat

[Injin]

So if it was all the states fault, how come some banks are so badly affected they a bankrupt and others have far less exposure?

The banks shouldn't exist.

The market rejected banking back in the 20's but the state has bene propping them up since then using inflation to maintain the ponzi, this is now ending.

Expect banks to be back to small warehouses you store your actual valuables in for a feee within the next decade or so.

[Gone baby gone]

Moral hazard & corrupt state.

Doesn't answer the question does it?

Why did NR, Citi, RBS and HBOS get into such trouble, but others (Lloyds, Barclays, HSBC, Santander) managed to avoid such massive exposure? Or are you saying that the state was secretly operating inside RBS, et al and forcing them to make silly decisions that others (with the same information) could see were silly and didn't make?

I know that all banks are are fooked, but some are fooked much more than others.

[Injin]

Doesn't answer the question does it?

Why did NR, Citi, RBS and HBOS get into such trouble, but others (Lloyds, Barclays, HSBC, Santander) managed to avoid such massive exposure? Or are you saying that the state was secretly operating inside RBS, et al and forcing them to make silly decisions that others (with the same information) could see were silly and didn't make?

I know that all banks are are fooked, but some are fooked much more than others.

HSBC has £3.50 for every £100 it's promised to people.

It's "better placed" than the others but it's stil a long way off being anything but a giant bag of shit.