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Laura

The Cost Of Bailed Out Banks, By A Bank

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At the crux of this debate is the conflict of interest of owning large stakes in the banks whilst trying to implement significant regulatory changes in a global forum and balancing this with influencing banks’ lending behaviour. We see 3 main costs to the UK;

* 1 – During the temporary ownership period the stakes account for c.4% of net debt to GDP under the Maastricht definition. Whilst we do not see the stakes as long-term holdings, if fully consolidated, UK net debt to GDP would go from 64% (2009) to 165%;

* 2 – Indirectly, there is a cost to the sovereign from providing guarantees to the sector (both implicit and explicit) – for every 10bps of additional financing costs, we estimate annual costs of c.£1bn for the government;

* 3 – Last but not least, we estimate a financing cost of c.£3.2bn annually of holding these stakes, equivalent to a meaningful 8% of 2010E UK budget interest expense.

..... if the UK’s currently temporary stakes begin to look longer-term, RBS and Lloyds liabilities would have to be incorporated into public sector net debt figures — and that would send Britain’s debt-to-GDP ratios ballooning. Exactly what you don‘t want given current sovereign jitters.

http://ftalphaville.ft.com/blog/2010/06/02/249691/bailed-out-bank-stakes-cost-uk-3-2bn-a-year-jp-morgan-says/

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..... if the UK’s currently temporary stakes begin to look longer-term, RBS and Lloyds liabilities would have to be incorporated into public sector net debt figures — and that would send Britain’s debt-to-GDP ratios ballooning. Exactly what you don‘t want given current sovereign jitters.

Good point and this shows again what a massive scam the bailout was. All liabilities accumulated by the banks have been off-loaded onto the tax payer, just to keep the party (i.e. bonuses) going for them.

Profits are privatised while losses are dumped onto the taxpayer.

It's about time our broken debt based commercially issued monetary system is replaced by a monetary system where it's not the few profiting from the creation of our money supply.

Why do we have to pay private banks interest to create our money?

Yeah but think of the cash flow !

Into the banksters pockets, sure, I hope everyone thinks about that everytime they have to pay taxes.

---

Edited by wise_eagle

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  • 144 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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