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swissy_fit

Why Can't Big Banks Fail?

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Why must the UK stand behind RBS and HBOS?

Why in fact did they stand behind N. Rock et al?

Why can't they just bail out retail depositors and let them fall, then rebuild a properly-controlled system afterwards?

Can anyone explain the "unthinkable"consequences? The Asset Death Spiral mentioned by Ambrose - what's that?

Obviously the two bankers bitches Brown and Cameron aren't going to do this, they'd see the country in anarchy and civil war before letting their mates lose anything, but I would like a clear explanation of why it "can't" be done. Both Peston and Ambrose say it can't be done, but present no evidence to support this.

I'm not interested in political reasons why not - I mean "real" economic reasons and consequences that wouldn't be forgotten in 10 years.

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Why must the UK stand behind RBS and HBOS?

Why in fact did they stand behind N. Rock et al?

Why can't they just bail out retail depositors and let them fall, then rebuild a properly-controlled system afterwards?

Can anyone explain the "unthinkable"consequences? The Asset Death Spiral mentioned by Ambrose - what's that?

Obviously the two bankers bitches Brown and Cameron aren't going to do this, they'd see the country in anarchy and civil war before letting their mates lose anything, but I would like a clear explanation of why it "can't" be done. Both Peston and Ambrose say it can't be done, but present no evidence to support this.

I'm not interested in political reasons why not - I mean "real" economic reasons and consequences that wouldn't be forgotten in 10 years.

The banksters own and control the state.

That's about tt really.

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Kennedy apparently tried to wrestle back control from the banks look what happened to him , the government are mere string puppets of such organisations , if they play ball ie listen to orders they are fine, if not they end up dead.

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The banksters own and control the state.

That's about tt really.

Also on a practical note there are many serious consequences.

RBS for example handles a massive amount of payments for the UK. Seen a vid about it and it is pretty staggering. If they simply shut their doors then the entire UK payments system would collapse instantly.

Cheques, Direct Debits, Standing orders throughout the UK ? Would probably grind to a halt.

Of course there is no reason it could not be wound up over a period of time to get over these issues. Would take years though.

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Also on a practical note there are many serious consequences.

RBS for example handles a massive amount of payments for the UK. Seen a vid about it and it is pretty staggering. If they simply shut their doors then the entire UK payments system would collapse instantly.

Cheques, Direct Debits, Standing orders throughout the UK ? Would probably grind to a halt.

Of course there is no reason it could not be wound up over a period of time to get over these issues. Would take years though.

Heres the thing.

If the banks did shut tomorrow, what would happen?

Would everyone go and sit under a hedge until they died of starvation, or would they sort it out themselves?

If they did sort it out themselves, would the big banks ever get back in the loop?

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I'm not sure how many people are still paid in cash (apart from the black economy) so if a bank went under, all those who are paid electronically, including pensions, wouldn't be able to get at their money.

IMHO, chaos would ensue, even if only one went under. This is because there would be run on all of them, and as covered many times on here, whether you call it Fractional Banking or whatever, there's not enough money in existence for everyone to get what they see as 'theirs'.

Not being able to pay any of your bills by D/D because your bank has gone under would be interesting. <_< Not!

Edited by deflation

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Heres the thing.

If the banks did shut tomorrow, what would happen?

Would everyone go and sit under a hedge until they died of starvation, or would they sort it out themselves?

If they did sort it out themselves, would the big banks ever get back in the loop?

I think people would sort things out. Barter would return pretty instantly. People would be working for goods etc.. However it would be painful. Energy ? Food ? And many other things would be in a mess.

I do think we would get through it. However it would not be pleasant, even if the outcome in 10 years was 'worth it'.

I like the pleasantries I have today. At the same time I do seriously dislike the banks and this Government. The banks do pay me at present though. :lol:

Tricky one. :ph34r:

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OK so far nothing except the political reality (which over the last 18 months has become obvious). The banks own the state.

Bankers can be killed as easily as presidents and prime ministers in times of extreme stress is my answer to that.

Preferably executed for treason by a Cromwellian peoples court.

So no real practical (unsurmountable) reasons then?

Do the banks own the army as well? Don't like the idea of a military government but what's the alternative?

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OK so far nothing except the political reality (which over the last 18 months has become obvious). The banks own the state.

Bankers can be killed as easily as presidents and prime ministers in times of extreme stress is my answer to that.

Preferably executed for treason by a Cromwellian peoples court.

So no real practical (unsurmountable) reasons then?

Do the banks own the army as well? Don't like the idea of a military government but what's the alternative?

The bankers enable the inflationary mechanism that pays for the soldiers.

The top brass in the military will know that.

No central bank - no standing army.

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I'm not sure how many people are still paid in cash (apart from the black economy) so if a bank went under, all those who are paid electronically, including pensions, wouldn't be able to get at their money.

IMHO, chaos would ensue, even if only one went under. This is because there would be run on all of them, and as covered many times on here, whether you call it Fractional Banking or whatever, there's not enough money in existence for everyone to get what they see as 'theirs'.

Not being able to pay any of your bills by D/D because your bank has gone under would be interesting. <_< Not!

A Cromwellian military government could freeze the system, bail out all retail depositors and let the rest go hang. Start again, and this time do it better. Yes it would be chaos, but the country would belong to the people again(not that we deserve it, but hey).

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I asked this question of a colleague yesterday who has great knowledge of such things and apparently it has to do with things such as credit default swaps & corporate bonds, etc. Big business, pensions etc use these instruments (ie not just cash) as places to put their money.

If banks go bust (or nationalised even) - then these are considered to be in default. When it's a very small bank like Northern Rock you have to deal with angry shareholders. When its a bank with a balance sheet the size of the national economy (such as RBS) then you will have massive corporate failures at all levels, and total devaluation of Sterling. Basically the probable collapse of the entire economy.

Now I get the feeling that there are some on HPC who would like to see exactly this happen. But the consequences are obvious - mass unemployment on a scale never seen before and all the horrible things that go along with that. You can kiss goodbye to your job, your pension and any sort of stability that you thought you had.

This scares me.

I want to see house prices come down just like anyone else on HPC (except Sibley). But not at any cost. Every single person in Britain would suffer - it is not just a kick in the teeth to naughty bankers.

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Life would continue, but the bankers would be out of power. You can see why their proxies (Gordon Brown et al) would be reluctant to let this happen.

Edited by SMAC67

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The bankers enable the inflationary mechanism that pays for the soldiers.

The top brass in the military will know that.

No central bank - no standing army.

Central bank to remain. In Cromwellian hands.

Anyone know any generals they could talk round to this?

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Do the banks own the army as well? Don't like the idea of a military government but what's the alternative?

I suppose they do in a way because nearly all Armed Forces pay is electronic into a bank account, including extras for being away from home, etc. They do carry a lot of cash around with them for local purchases / currency exchange, etc.

A partial return to a barter system would be good I think. I've mentioned this before but if people could build each others garden walls, repair each others computers and cars, help tend vegetables and livestock (2lb spuds = 1 chicken?) sew clothes, etc. on a 'work exchange' basis, it couldn't be taxed either.

It was the introduction of tokens, i.e. money that gave rise to the idea of taxation in the first place.

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Cash in the economy is about 2% of money. 98% of money is bank debt.

"paying depositors back" is no small thing. This is the essence of govt. support to a bank. Since the banks themselves don't have any deposits whatsoever (perhaps 5% in near cash assets), nobody would be able to get their money out without govt. backing.

So that then leaves money transmission within the economy (HUGE!!!!) and the non-cash assets held by banks. In the case of a business who owes say £10million or someone with a mortgage who owes say £200k, they can't get their hands on that cash as it is tied up in assets. So it is not a trivial thing to say apart from "paying depositors back". That is the whole essence of banking and the money system. They are de facto never able to repay deposits on demand - ever. If they were then they would serve no purpose whatsoever. Of course that doesn't stop banks from demanding that borrowers pay money back on demand (or close to it) which is why they can cause a recession in an instant if they so choose.

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Central bank to remain. In Cromwellian hands.

Anyone know any generals they could talk round to this?

But then you have the bankers in charge still.

So like..what's the point?

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Can anyone explain the "unthinkable"consequences?

If a large Sterling bank failed and was not supported by the government, the following are likely consequences:

1. Collapse of currency value on ForEx markets - making exports (food, clothes, fuels, technology - etc) prohibitively expensive in future.

2. International condemnation, sanctions and/or war - as foreign states are encouraged to take drastic military steps to defend the wealth of their citizens and prevent exploitation by the British who lauded it over them for centuries.

3. Collapse of confidence in industry and commerce - leaving many millions without jobs - leading to extremes of poverty - and the desperate and violent behaviours which frequently accompany dire circumstances. Civil unrest and destruction of physical assets - leading to a deepening humanitarian crisis not disimilar to those we see in third world countries.

It is not, of course, my opinion that the government had to do exactly what it did to avoid the above dire consequences - but it is clear to me that doing nothing was not an option. I consider it to have been a mistake, for example, to bale out investors in asset backed securities - but the government needed to act decisively in the interest of creditors in order to avoid a collapse in international trust.

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It would only be the collapse of what the Americans call a 'retail bank' that would precipitate this isn't it?

When Barings collapsed thanks to Leeson, I don't know who lost the money but I don't know anyone personally. BCCI was an 'investment bank' too I think. It would be different if it was RBS, Barclays or whoever!

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I asked this question of a colleague yesterday who has great knowledge of such things and apparently it has to do with things such as credit default swaps & corporate bonds, etc. Big business, pensions etc use these instruments (ie not just cash) as places to put their money.

If banks go bust (or nationalised even) - then these are considered to be in default. When it's a very small bank like Northern Rock you have to deal with angry shareholders. When its a bank with a balance sheet the size of the national economy (such as RBS) then you will have massive corporate failures at all levels, and total devaluation of Sterling. Basically the probable collapse of the entire economy.

Now I get the feeling that there are some on HPC who would like to see exactly this happen. But the consequences are obvious - mass unemployment on a scale never seen before and all the horrible things that go along with that. You can kiss goodbye to your job, your pension and any sort of stability that you thought you had.

This scares me.

I want to see house prices come down just like anyone else on HPC (except Sibley). But not at any cost. Every single person in Britain would suffer - it is not just a kick in the teeth to naughty bankers.

They're not just naughty bankers, they're criminally incompetent, they've usurped all power and are destroying the world you want to hold on to in any case. Your pension and job are probably history - how do you think they'll pay pensions when we owe the world trillions?

The question is what next now - Brown and Cameron will allow them to take everything and remain in power after the economic collapse - my question is, how can they be stopped and the post-collapse world taken back by the people?

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But then you have the bankers in charge still.

So like..what's the point?

With "Cromwell" standing behind the central bank chief with a gun, that'd be fine as a temporary measure.

We need to rebuild the system not lose it entirely. I don't really want to go back to bartering.

Finding a Cromwell might be tricky as well.

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They're not just naughty bankers, they're criminally incompetent, they've usurped all power and are destroying the world you want to hold on to in any case. Your pension and job are probably history - how do you think they'll pay pensions when we owe the world trillions?

The question is what next now - Brown and Cameron will allow them to take everything and remain in power after the economic collapse - my question is, how can they be stopped and the post-collapse world taken back by the people?

Take their tools away.

Mostly they get away with it because of complete an utter ignorance on the part of he general public.

So, time to start an ad campaign?

You'd have to be able to dodge bullets mind you.

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So what is worse, bail out the banks and go bust, or dont bail out the banks and go bust?

Is there any way to compare the consequences or are both results basically the same?

VMR.

Basically the same, but in one we are free of a hidden tyrant which makes it the better option.

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If you consider that trying to save the banks may bankrupt the UK, which is worse?

It seems like letting a bank go is like sawing off your trapped leg on a sinking ship. The alternative to not letting the bank fail is drowning with the ship. Yes, both are bad, but then there may be a time when this decision needs to be made.

IMO, a lot of this talk is exaggerated fear-mongering anyway. If a big bank failed it could be taken into administration. It wouldn't just close the doors and say "tough luck, your money is gone". There would be some sort of managed winding down. Regular banking services could be bought + managed by another bank. Loans could be auctioned off to other banks too (eg. I'll pay 100k for that 200k mortgage yielding 5%).

Of course, assets would tumble in value* (as they should). This is a good thing for many people as it would make houses, land etc cheaper. Isn't this what many people here want anyway?

The bad bit is that many companies continue to finance based on the value of their assets. If these assets decrease in value, they may not be able to finance. We're pretty much seeing this happen anyway, with commercial property tumbling in value too. The problem is, many businesses finance to expand quickly and they dominate those businesses who don't. There is no place for the tortoise, only the hare. Which, imo, is also wrong.

However, many businesses would fold quickly. A good number of these may fold anyway, with asset prices crumbling already. Whatever the idealist thinks, losing jobs and shaking up lives of many would have to happen, unfortunately.

Which brings me back to where I started - if bailing out the banks means bankrupting the UK, what's the point? I fear those at the helm will submit to the banks until they drag us all under though.

EDIT: * of course, a floor would be found. Property, for instance, will only fall so far below new build value. Building is cheap (relative to land cost) anyway, so no doubt land would take a big hit. Still, the cost of building would eventually call some sort of floor - they wouldn't spiral down to nothing.

Edited by Traktion

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It would only be the collapse of what the Americans call a 'retail bank' that would precipitate this isn't it?

When Barings collapsed thanks to Leeson, I don't know who lost the money but I don't know anyone personally. BCCI was an 'investment bank' too I think. It would be different if it was RBS, Barclays or whoever!

The KSF Isle of Man depositors who lost their money in that Icelandic bank are screaming blue murder at everyone in sight. Its the UK's fault that their investment in a Non-EU, non-UK bank located outside the EU and UK, apparently.

'We' have stolen their money, the anger is very palpable.

If this happened on a large scale there would be a revolution, as seems to be slowly happening in Iceland.

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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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