They Don’t Know What To Do Or They Don’t Know How To Do It.

[Extradry Martini]

Set religion aside for a minute as it is clouding the discussion. Some of you clearly hate religion so much that you are unable to address the question at hand.

Who are you referring to here?

Don't you find it interesting that there is a book, and not just any book but the best selling book of all time, the earliest written copies of which are undisputed must be at least 1600-1800 years old, which predicts a time in the future where a single world economic system will be in place, in which without some type of mark, symbol or authorisation or centrally given permission you will not be able to participate in the economy? And which also says that the person (man) who puts this into place and oversees it will rise to power as a result of a global catastrophy?

I wouldn't care if it were written in a Koran or the writings of a Roman Senator or Greek Philosopher or Persian Mathematician. Just the fact it was written down that long ago I find to be VERY curious. I am not sure what disturbs me more, the idea that I might live through the times described or the fact that so many of my fellow men, posters on this forum are so disinterested and blinkered that they'll give it less serious thought and consideration than Jade's wedding.

Until very recently this global economic system of control would have been impossible to put into place, but now it is not only technically possible, but possibly economically and politically desirable.

The question at hand? Really?

[bogbrush]

Can't atack the arguments, so you have a go at the person making them.

Well, I've seen that before.

Look, if you want to have any credibility in this, explain how you sort out the little guys from the others. So far, it's we "feel" or it's separate them by current account, so those who happened to have had he misfortune of opening something called a "deposit account" get wiped out, ot equally arbitrary designations. We are looking for a practical solution, and so far you haven't produced one.

Either way, lay off the ad hom stuff.

ffs kiddo, you spend half your posts trying to dish it out, now you squeal? Grow up, as you said on another post.

You're not looking to do anything apart from bail the whole stinking mess out. If you can't help then leave it to people who want to. I'd like to help what I designate the innocents, I think it's possible with some thought and evaluation, you don't. Fine, thanks for the help.

[Bloo Loo]

We have a GLOBAL currency system already.

I dunno what you are all on about. ALL national currencies are bank based, are freely tradeable where they haven been debauched.

the currency matters not. The System IS ,and has always been for as long as anyone here has been alive, GLOBAL.

[Sledgehead]

Sorry but no, I think you must see this yourself, but just enjoy the argument.

Lets do a quick 1-10

1 Being equity holders

10 being little old ladies putting their life savings into a saving account with their local branch.

As far as I can tell apart from a vehicle for a argument the point of this thread is to determine at what level you draw the line correct or not??

So lets expand that.

1: Ordinary Shares

2: Preference Shares

3: Over the counter traded bonds

4:

5:

6:

7:

8: Savings products (called saving bonds etc)

9: Interest paying instant access saving accounts

10: Current accounts

I would argue that 1-3 should certainly be wiped out, because these you make an active decision to invest in knowing the value can well rise and fall.

While this might seem fair in principle, give or take the odd class action by shareholders on auditors, it still leaves you with th ethorny issue of an exit strategy. If the country's credit rating is ever to be rescued, we need to think about how the banks get re-privatised - ie an exit strategy.

With this in mind, you might care to ask yourself who would be likely to step up to the plate and buy shares in a patched up bank. You? EDM? Me?

You might com eto the conclusion that such people would be thin on the ground. What you need is another bunch of suckers, much like the current shareholders ... trouble is, wiping them out is unlikely to endear the government in their eyes. It will also send out a very loud and very clear message to everyone in the world : banking shares ain't worth the candle.

That leaves you with only one option: wait til everyone forgets. That means these banks and their assets and liabilities could be on the governments books for a generation. I can't imagine that improving our cost of borrowing.

[D.C.]

I have argued in the past that things would go Japanese/deflationary etc, I had an interesting discussion on here that I thought that the Japanese "lost decade" was the best possible outcome (and yes I know they made mistakes on policy, I merely argue that whatever they had done the outcome would have been much the same)

I agree that Japan would be a wonderful outcome given the alternatives.

Sadly I don't think it is even possible for us to set our sights that high.

We can not rely on building up exports as no is buying anything we could possibly make. Well managed exporting nations are as least as hard hit by this as the feckless ones.

We already have massive debts.

[Extradry Martini]

Sorry but no, I think you must see this yourself, but just enjoy the argument.

Lets do a quick 1-10

1 Being equity holders

10 being little old ladies putting their life savings into a saving account with their local branch.

As far as I can tell apart from a vehicle for a argument the point of this thread is to determine at what level you draw the line correct or not??

So lets expand that.

1: Ordinary Shares

2: Preference Shares

3: Over the counter traded bonds

4:

5:

6:

7:

8: Savings products (called saving bonds etc)

9: Interest paying instant access saving accounts

10: Current accounts

But it isn’t split like that, it is split as follows:

Secured Debt (e.g. repo counterparties)

Senior Debt (most creditors – including current account holders and senior bond holders – i.e. together)

Subordinated Debt, which is split into various sub-tiers

I would argue that 1-3 should certainly be wiped out, because these you make an active decision to invest in knowing the value can well rise and fall. These investments are traded and are used to make money. Bond investors actively assess bond default risk and rely on rating agencies to draw judgements. A bond issue by a bank with an AAA rating is in itself no different to a bond issue by a dodgy technology firm with a B rating. All the rating does is give an informed view on the likelihood of default, but no guarantee. Default can and should be expected on bonds. The possibly exists on all bonds.

Sorry, but you are wrong: Many, many other people buy corporate bonds – including little old ladies, as somewhere “to park their cash”. Bonds are savings products – above all they are bought by pension funds – precisely for the reason that they are “safe” (being senior debt) and liquid. You want to wipe them out?

I’m amazed you can’t see that it is all the same thing.

8-10 I would also say that are accessed in a retail environment are primarily used to safeguard cash. A retail investor walking into a high street branch or online page, of course should be treated differently to the assets managed by a bond fund manager.

What about the fund manger’s clients? The people invest in money market funds are no different from the people you describe above - seen an ad in the newspaper.

Your argument seems to imply that because there are intermediate levels it means it is impossible to draw a line, ******** is it.

No, I am saying that one should draw a line – but in the capital structure itself, not in the arbitrary pecking order you have created.

Investors provide money to the bank for the operations, a duty of investors is to access risk and price their investment accordingly . If I bought RBS at £12 and it turns out not to be worth it I should lose my money, I failed as an investor to evaluate my investment properly.

If I buy RBS bonds for a 1.5% risk premium when actually the probable default rate is much higher, I have failed as an investor. I know that bonds can and do default, I should accept that.

Just because bond investors did not see it coming this time is no excuse. If you remember the bond issues from Enron started to have to be issued with ever increasing coupons because bond analyst saw it coming where equity investors did not.

You know perfectly well that a high street branch offering a saving product called a bond is a marketing term only and not the same thing as a tradable coupon paying bond issue. You know that full well.

This is my point – I know otherwise: corporate bonds – of all kinds - are bought by savers as well as investors.

So don’t pick me up on sarcasm when you have been condescending and needlessly obfuscating for the sake of getting a high page count and argument going.

Look, I wouldn’t have picked you on anything had you not described what I said as “hostile”. I have not been “hostile” in the slightest to you. If you don’t like the fact that I am showing your distinction to be wrong, then it is you this personally and not something I can help you with.

Edited February 20, 2009 by Extradry Martini

[Extradry Martini]

This is my point (and Bingos). It's not hard really is it, at least not for most of it?

Fine, I accept that you think that - but what we are discussing is how you sort them out. I haven't heard any answer which is at all practical yet.

[Extradry Martini]

ffs kiddo, you spend half your posts trying to dish it out, now you squeal? Grow up, as you said on another post.

You're not looking to do anything apart from bail the whole stinking mess out. If you can't help then leave it to people who want to. I'd like to help what I designate the innocents, I think it's possible with some thought and evaluation, you don't. Fine, thanks for the help.

What - what do you think we have been talking about in this whole thread? And when have I "dished it out"? At what stage did I resort to the cowardly tactic of ascribing an ulterior motive to you (when I know nothing about you) then attacking you for it?

[bogbrush]

Fine, I accept that you think that - but what we are discussing is how you sort them out. I haven't heard any answer which is at all practical yet.

Well you've decided the answer is to bail it all out, so your line is drawn at a place that funds all the bank losses from my personal money. That idea has the merit of being clear, I'll give you that. Not much else, but you can have that.

I've outlined the main principles of drawing the line at "depositors" and this isn't the place to do the detailed work, that can be done by technicians. At the margin it gets sticky like anything does, but a couple of hard days thought by somebody and they could thrash out something useful I reckon. Then let these putrid corpses fall apart and salvage the useful infrastructure, and we can get on with our real lives without fussing about the banking industry.

[bogbrush]

What - what do you think we have been talking about in this whole thread? And when have I "dished it out"? At what stage did I resort to the cowardly tactic of ascribing an ulterior motive to you (when I know nothing about you) then attacking you for it?

You've been called on it by other posters on this thread. I couldn't care less, I'm a big boy and won't complain.

[Extradry Martini]

Well you've decided the answer is to bail it all out, so your line is drawn at a place that funds all the bank losses from my personal money. That idea has the merit of being clear, I'll give you that. Not much else, but you can have that.

Actually, I haven't. If you had been paying attention and behaving like an adult having an adult discussion, you would have seen that.

I've outlined the main principles of drawing the line at "depositors" and this isn't the place to do the detailed work, that can be done by technicians. At the margin it gets sticky like anything does, but a couple of hard days thought by somebody and they could thrash out something useful I reckon. Then let these putrid corpses fall apart and salvage the useful infrastructure, and we can get on with our real lives without fussing about the banking industry.

No, it has to be done on a practial level. That is with the minimum needed to save the system.

[Injin]

Totally academic - the system will fail. 100% guaranteed.

Interesting though.

[Extradry Martini]

You've been called on it by other posters on this thread.

Don't be ridiculous.

[Extradry Martini]

Totally academic - the system will fail. 100% guaranteed.

Interesting though.

One day, yes.

[bogbrush]

Actually, I haven't. If you had been paying attention and behaving like an adult having an adult discussion, you would have seen that.

Well you've called for nationalisation repeatedly. Tell me the difference then.

Good to see you keeping it respectful as usual................

No, it has to be done on a practial level. That is with the minimum needed to save the system.

Yeah, on an internet forum (where's the "doh" emoticon when you need it)..............

Oh, and you have been called on it. You even replied to it, so why come over all hurt? I couldn't care less if you think I've been stroppy and nor should you - at least have the stones to stand by it and don't get a hissy when you get some back.

[otters]

Fine, I accept that you think that - but what we are discussing is how you sort them out. I haven't heard any answer which is at all practical yet.

I thought that had already been done for us, taking out the arguement that the Fscs could collapse, it is they who guarantee

the £50k in savings accounts. Are you saying that should a bank be allowed to fail the Fscs should renege on their promise.

[Extradry Martini]

Well you've called for nationalisation repeatedly. Tell me the difference then.

Good to see you keeping it respectful as usual................

What difference?

Yeah, on an internet forum (where's the "doh" emoticon when you need it)..............

What are you talking about?

Oh, and you have been called on it. You even replied to it, so why come over all hurt? I couldn't care less if you think I've been stroppy and nor should you - at least have the stones to stand by it and don't get a hissy when you get some back.

No, of course I haven't been "called on it" - in this thread or any other. I don't ascribe ulterior motives to what other people say and then attack them for having it because: It is cowardly, it is pointless, it doesn't help the discussion or help demonstrate any of my points and because it would show the person using it as knowing that he has been proven wrong. it is an utterly stupid thing to do!

[Extradry Martini]

I thought that had already been done for us, taking out the arguement that the Fscs could collapse, it is they who guarantee

the £50k in savings accounts. Are you saying that should a bank be allowed to fail the Fscs should renege on their promise.

Not at all, no. I'm not sure I understand your point though.

Edited February 20, 2009 by Extradry Martini

[Injin]

So, to conclude.

Nationalisation is the only option.

Repealing the legal tender law so that all debts can be cleared through asap isn't an op0tion (but why is a mystery.)

The financial system must be kept exactly as it is. No quibbles. All discussion must revolve around preserving it.

Sophisticated investors are exactly the same as pensioners who think that the bank has their savings kept n a safe, morally, legally and practically.

Things are scary and we must act right now!

etc

Edited February 20, 2009 by Injin

[Extradry Martini]

So, to conclude.

Nationalisation is the only option.

Repealing the legal tender law so that all debts can be cleared through asap isn't an op0tion (but why is a mystery.)

The financial system must be kept exactly as it is. No quibbles. All discussion must revolve around preserving it.

Sophisticated investors are exactly the same as pensioners who think that the bank has their savings kept n a safe, morally, legally and practically.

Things are scary and we must act right now!

etc

Sorry Injin, I'm with you now. How do the debts get cleared - with a new currency?

[KingBingo]

Sorry, but you are wrong: Many, many other people buy corporate bonds – including little old ladies, as somewhere “to park their cash”. Bonds are savings products – above all they are bought by pension funds – precisely for the reason that they are “safe” (being senior debt) and liquid. You want to wipe them out?

No I am not wrong. A corporate bond fund is a risky investment. Just like a equity fund. Both are used by pension funds. Are you suggesting that because pension funds invest in Japanese equities that means that Japanese equities cannot be allowed to loose value that is absurd.

Lets pick two simple examples.

SCHRODER CORPORATE BOND FUND

SCHRODER JAPAN ALPHA PLUS

Note the risk warning at the bottom of each:

The value of this investment and the income from it can go down as well as up. Past performance should not be regarded as a guide to the future. The investment described may not be suitable for all recipients and this factsheet does not constitute personalised investment advice. No liability is accepted for any loss arising from errors or omissions.

A tradable bond can and does rise and fall in value just like a equity does, for a number of reasons, sentiment included.

Your only right in so far as they are usually considered 'safer' investments than equities.

However, if you think bonds cannot lose value you simply wrong. Furthermore no bond fund on earth invests solely in bank shares. They do diversify. the reason being is they know that bonds can default.

Actually the Schroder bond fund is a good example. The manager Adam Cordery foresaw a problem with financials and sold out of the sector. He did his job properly and saw risk and repositioned the fund as heavily into cash as he could. This is exactly what your paying a fund manager for. He was right, mid 2008 the risk premium demanded for investment grade corporate bonds went from around 1% to 7%. Or to put it another way the tradeable value of the bonds fell significantly. Why? because the assumed default rate increased.

Compare that to walking into a high street branch and investing into a saving product. Are you presented with a disclaimer saying that "the value of your savings can go down as well as up", of course not, because one is saving the former at the top of the post is investment.

I know your intelligent I know your financially literate so if you continue to deny any distinction between saving and investment and its impossible to tell them apart than I can only conclude your arguing for the pure fun of it, the way Injin does.

[Injin]

Sorry Injin, I'm with you now. How do the debts get cleared - with a new currency?

No, you just remove the bank of englands monopoly on printing it.

It'll swiftly become available at cost as printers up and down the country churn it out, allowing everyone to clear their debts in short order.

[KingBingo]

Just to be clear where exactly your wrong:

Bonds are savings products

They certainly are not. They are tradable investments. Ask any bond fund manager, any pension fund manager.

[punter]

In May of last year, I thought that the Fed at least had carried out enough partial measures to avoid catastrophe for the time being, and in October, I believed – because of a very high level of awareness on the part of policy-makers - that we had seen the worst of the financial crisis (though not of that in the economy, nor the lows in the stock market). However, I think I may have been premature in that, and I now believe that the risk is as high as it was a year ago.

-

gosh you really are stupid aren't you. what possible special knowledge or qualifications do you think the Fed people have to command an economy? they're ripping us off and socialising bankster losses. it's a massive scam also happening in the UK where taxpayers are being saddled with 2 trillion pounds of worthless Banks debt.

No, they know exactly what they're doing and that is scamming and saddling populations with massive bankster losses to rip us off. only a revolt will stop them and their destructive policies, their time will come

Edited February 20, 2009 by punter

[uncle rogi]

I can only conclude your arguing for the pure fun of it, the way Injin does.

nope, he and others on here tell the truth and point out reality and you argue against it because of cognative dissonance.

big difference.

the truth is the biggest ponzi scheme in history is collapsing right in front of our eyes...

i.e. the mountain of debt created post 1971 when nixon severed the final link between money and anything real.....(banker politician combo then went out of control, and are now cashing out)

all ponzi schemes collapse this one is no exception.