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The Saved And The Damned

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Hmmm.

The Saved and the Damned

http://www.golemxiv.co.uk/2011/10/the-saved-and-the-damned/?utm_source=rss&utm_medium=rss&utm_campaign=the-saved-and-the-damned

By Golem XIV on October 24, 2011 in latest

I had a meeting the other day with one of Ireland’s very top bankers. This person agreed to meet me and answer a few questions on condition of complete anonymity. That this person was willing to talk to me at all was a surprise.

....

What she said is this: There is horse trading going on but not what is being reported in the press. According to this very senior banker it was now known that the plan was all but agreed to re-capitalize all the banks but to the very minimum degree. France and Germany were agreed on this. As I wrote before I left there essentially has been a bidding war looking for the lowest amount.

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Yes, they are hoping to bail out the banks for the lowest sums they can get away with because:

1. They don't have any cash so can't spend much what with Christmas coming up.

2. They know the Public will not stomach huge sums - although the sums mentioned are huge.

3. They know the banksters will take a big chunk of the bail-out cash and give themselves bonuses.

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3. They know the banksters will take a big chunk of the bail-out cash and give themselves bonuses.

Well then they're very stupid. It should be conditional upon the "bail-out" that ALL banks involved - without ANY exceptions - have their payroll cut down to the bare minimum & administered completely by a 3rd party. Basic £15k for all senior staff and directors.

Of course - the chances of that are one in a trillion..... Because the powers-that-be are

1 - THICK;

2 - CRETIONOUS &

3 - In the loop.

:angry:

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Yes, they are hoping to bail out the banks for the lowest sums they can get away with because:

1. They don't have any cash so can't spend much what with Christmas coming up.

2. They know the Public will not stomach huge sums - although the sums mentioned are huge.

3. They know the banksters will take a big chunk of the bail-out cash and give themselves bonuses.

Is it not the case that given how the monetary system functions, recapitalising the banks has a powerfully deflationary effect. Therefore there are conflicting motives between monetary supply, banking balance sheets, and sovereign debt:

A - Minimise taxpayer exposure, bad for politicians, "immoral", threatens sovereign default, sucks banking and private funds out of circulation, diverts capital away from investment that could offer growth

B - Maximise bank lending, combats effects of retracting credit, but threatens further malinvestment and "kicks the can"

But, at the same time they need to try and make the already insolvent banks safe against defaults, defaults made all the more likely by the retracting credit, which conversely puts pressure on increasing A and reducing B to try and prevent the politically damaging impact on the wider economy, which will result in the politicians being voted out.

Ultimately the general public must lose because they represent "safest" form of borrowing and in the short term this appears the lesser of the evils. Given a choice between borrowing, which the wider public don't immediately grasp as bad because it doesn't take the food off their table, and allowing the money flowing in the economy to collapse, politicians will always take the former road. The fact savers have been losing and will continue to lose is a given, and not even considered an issue.

The whole merry-go-round argument goes on and on. Austerity? Borrowing? The argument is never focused on why this appalling situation came about, and the short term nature of human psychology means if that debate isn't had now, it never will be. All we hear is that we need "banks to lend more", which makes me more angry every time I hear it. Yes, I suppose thats true, but only for a given value of "true".

So that is the reason they want to minimise bank recapitalization. They are motivated to sail as close to the wind as possible, because sovereign debt, bank solvency, and the monetary supply are so intrinsically linked. It has nothing to do with bonuses.

Edited by Fraccy

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  • 294 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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