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zugzwang

Osborne Set To Flog Rbs Shares At A Loss

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Trebles all round for the banksters (yet again).

http://uk.reuters.com/article/2015/05/10/uk-britain-election-rbs-idUKKBN0NV08P20150510

Britain may begin selling part of the state's holding in Royal Bank of Scotland (RBS.L) at a loss later this year, sources familiar with the matter told Reuters.

The government wants to accelerate the disposal of its shareslb_icon1.png in RBS and Lloyds Banking Group (LLOY.L), rescued at a combined cost to taxpayers of 66 billion pounds during the 2007-9 financial crisis.

It has already sold nearly half of its 41 percent stake in Lloyds but has yet to start selling its 80 percent stake in RBS, which received a 45.2 billion-pound state bailout.

The Conservative party, which won Britain's general election last week, sees the sale of shares in bailed-out banks as a reflection of how it has turned around the country's economic fortunes.

It has made a profit on its investment in Lloyds, but at current share prices it is sitting on a loss of 13.5 billion pounds on its investment in RBS.

Sources told Reuters that Finance Minister George Osborne is open to the idea of beginning to sell RBS shares at a loss later this year after the Conservatives won an unexpected majority in Thursday's vote. They said he plans to launch an independent review of the matter in the coming weeks.

Osborne said in January that the party would review what to do with the government's RBS stake early in the new parliament.

At that time, he said he would need a lot of persuading to give up on the principle that the government would at least get its money back.

The Sunday Times reported that sources at RBS said the "mood music" from the finance ministry had changed in recent months and officials were warming to the idea of allowing a partial stake to be sold at a loss.

That could result in UK Financial Investments (UKFI), which manages the government's stake, starting to sell the shares later this year.

Osborne has already said he plans to sell nearly 9 billion pounds worth of Lloyds shares in the next 12 months, including some at a discount to private retail investors.

RBS Chief Executive Ross McEwan said in March that he believed the government could start selling RBS shares early in the next parliament.

A Treasury spokesman said he had no further information to provide on the sale. RBS declined to comment.

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Unfortunately the robbery has already occurred, the moment the money left its was gone.

However this should be good sign for a HPC at least medium term.

Either

  • house prices are heading down and they don't want to loose more money later
  • interest rates are about to rise and they don't want to repossess on people, or the share price will be lower due to less juice in the market.
  • Things are going to go tits up and the black hole needs to be shifted off the balance sheet.
  • The most unlikely scenario is its about to go fantastic and they want to sell it to their mates for a double you money play IMHO.

In nearly every situation its better that the government does not have skin in the game picking winners or amending policy for the benefit of a business that it owns.

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Osborne said in January that the party would review what to do with the government's RBS stake early in the new parliament.

At that time, he said he would need a lot of persuading to give up on the principle that the government would at least get its money back.

In the event it seems he didn't need much persuading - just a 10 seat majority and a pressing need for money.

"At least get its money back" was only ever a ploy and a lie to sell the idea of the bailout arrangements to the people/taxpayers.

Now UK people are to get the reality that it'll be sold at a loss (at a loss to the people/taxpayers that is).

"The government would at least get ITS money back". Typical.

Edited by billybong

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Unfortunately the robbery has already occurred, the moment the money left its was gone.

However this should be good sign for a HPC at least medium term.

Not sure it has any significance for HPC, one way or t'other.

It's just a step in gradually unwinding the damage done in 2008/9 when the government's socialist instincts resurfaced as they poured money into failing companies and pumped a zombie economy. The price paid in 2008/9 is irrelevant today: it was all part of doing "whatever it takes" to "save the world".

It raises one important red flag: it'll be a credit on the UK balance sheet. Politicians will doubtless be tempted to claim that as a reduction in the deficit and debt, without having to cut any pet spending.

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RK

Who gave the money to the banks in the first place.

Who was incompetent enough to have a bank run on his watch.

Who 'Never saw it coming' years after this site was in full flow.

Who mocked Vince Cable 'We were right, you were wrong.'

Please stop this silly Labour trolling. You lost and that's that.

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RK

Who gave the money to the banks in the first place.

Who was incompetent enough to have a bank run on his watch.

Who 'Never saw it coming' years after this site was in full flow.

Who mocked Vince Cable 'We were right, you were wrong.'

Please stop this silly Labour trolling. You lost and that's that.

Not to forget: who took banking regulation off the BoE and gave it to the utterly hopeless FSA?

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Is this so when it goes tits up again RBS can be split into a cheaply bought profitable good bank with the taxpayer being left with the crappy bad bank?

No matter how you look at this Brown over paid for this turd and the taxpayer got lumbered with it. If the shares are sold off cheaply the taxpayer loses once again and is clearly there to give a nice profit to the bankers.

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Does this money go onto the debt we have, so if it is 1.400,000,000,000, it now becomes 1.413,000,000,000?

Not much then...

Barely a rounding error when you put it like that.

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Not sure it has any significance for HPC, one way or t'other.

It's just a step in gradually unwinding the damage done in 2008/9 when the government's socialist instincts resurfaced as they poured money into failing companies and pumped a zombie economy. The price paid in 2008/9 is irrelevant today: it was all part of doing "whatever it takes" to "save the world".

It raises one important red flag: it'll be a credit on the UK balance sheet. Politicians will doubtless be tempted to claim that as a reduction in the deficit and debt, without having to cut any pet spending.

Socialist instincts? Perhaps, but I'm not sure New Labour had any. Any instinct they might have had for social justice was conspicuously absent in their treatment of these criminals after the fact. As I'm sure you're aware, the Neoclassical and New Keynesian schools are essentially two sides of the same free market coin.

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It will not be seen as a credit, as it will already be on the balance sheets, it will be seen as a loss.

Nonetheless, as a cash injection it reduces debt.

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RK

Who gave the money to the banks in the first place.

Who was incompetent enough to have a bank run on his watch.

Who 'Never saw it coming' years after this site was in full flow.

Who mocked Vince Cable 'We were right, you were wrong.'

Please stop this silly Labour trolling. You lost and that's that.

Tories backed Brown spending plans, promised to match them, were consulted on the bank bail outs and approved them.

Labour lightly regulated the banks, to criticism by the Tories who wanted them to be regulated even less!

You can't keep blaming Gordon Brown like left wingers keep blaming Thatcher

Just what would the Tories have done differently had they been in power up to 2007/8? Probably nothing and arguably an even bigger bubble (after all they have form)

Edited by RentierParadisio

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Tories backed Brown spending plans, promised to match them, were consulted on the bank bail outs and approved them.

Labour lightly regulated the banks, to criticism by the Tories who wanted them to be regulated even less!

You can't keep blaming Gordon Brown like left wingers keep blaming Thatcher

Just what would the Tories have done differently had they been in power up to 2007/8? Probably nothing and arguably an even bigger bubble (after all they have form)

Brown (and his right-hand-man Balls) were absolutely to blame. The fact the then-opposition were also useless doesn't affect that.

We can only speculate on what the tories would've done in power, but any monetarists among them would've seen the credit bubble (which is clear in any graph of money supply) and raised interest rates to dampen it[1]. Bear in mind that some commentators - from Vince Cable to BBC journalists - warned of the bubble as far back as 2003, which might have been a good time to pop it, comparable to when they explicitly popped the bubble in 1989 for a moderate recession in the early '90s.

[1] As the BoE would've done if they'd been using a meaningful measure of inflation measuring the UK economy rather than the growth of Chinese cheap imports.

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Tories backed Brown spending plans, promised to match them, were consulted on the bank bail outs and approved them.

Labour lightly regulated the banks, to criticism by the Tories who wanted them to be regulated even less!

You can't keep blaming Gordon Brown like left wingers keep blaming Thatcher

Just what would the Tories have done differently had they been in power up to 2007/8? Probably nothing and arguably an even bigger bubble (after all they have form)

Much of this is fair comment, but it ignores the fact that NuLab had succeeded in making it politically impossible not to endorse the spending frenzy, at least to say so anyway. Certainly given the Tories had been totally characterised as baby-eating fiends.

It's easy to forget the ridiculous atmosphere Brown created with his abolition of boom and bust, Golden Rule ********, and general creation of the client State.

Edited by bogbrush

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Brown (and his right-hand-man Balls) were absolutely to blame. The fact the then-opposition were also useless doesn't affect that.

We can only speculate on what the tories would've done in power, but any monetarists among them would've seen the credit bubble (which is clear in any graph of money supply) and raised interest rates to dampen it[1]. Bear in mind that some commentators - from Vince Cable to BBC journalists - warned of the bubble as far back as 2003, which might have been a good time to pop it, comparable to when they explicitly popped the bubble in 1989 for a moderate recession in the early '90s.

[1] As the BoE would've done if they'd been using a meaningful measure of inflation measuring the UK economy rather than the growth of Chinese cheap imports.

Ireland had an even bigger bubble than the UK. Osborne wrote an astonishingly misguided panegryic to the Irish economic miracle in 2006, contrasting it favourably with the stifling regimen of over-regulation in the UK.

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Brown and Balls were responsible, Tories may have agreed, but they weren't in power. As was pointed out Brown was lauded as some sort of economic god at the time (prudence, no more boom and bust, a 'booming' economy). Of course, the emperor had no clothes.

Any Cassandra voice was ignored and ridiculed. We were all here writing posts amazed that this was happening without going tits up.

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Blair, Brown and Balls were responsible. The Conservatives in opposition suddenly woke upto the bubble after it started to collapse (for sure they would know all along) and identified it as a bubble before the 2010 general election.

Then after they got in power the bubble turned into sustainable house price rises almost overnight.

Edited by billybong

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Ireland had an even bigger bubble than the UK. Osborne wrote an astonishingly misguided panegryic to the Irish economic miracle in 2006, contrasting it favourably with the stifling regimen of over-regulation in the UK.

What's that got to do with anything?

If the growth of credit had pushed interest rates up, it wouldn't have bubbled. That's nothing to do with regulation, just basic common sense. Banking regulation may have been defective (I couldn't possibly say), but very largely it's a convenient scapegoat.

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What's that got to do with anything?

If the growth of credit had pushed interest rates up, it wouldn't have bubbled. That's nothing to do with regulation, just basic common sense. Banking regulation may have been defective (I couldn't possibly say), but very largely it's a convenient scapegoat.

That Osborne was evidently as bubble blind as Brown, Bernanke or Mervyn King! That much is incontestable. Basic common sense was rather more uncommon than you imagine.

In truth, the problem can't be localised to the UK, its politicians or institutions. The central dogma in Western economics from 1979-2008 was an unyielding belief in the unregulated free market's capacity to deliver optimal economic solutions and market stability. There are no empirical grounds for such a belief - which assumed the status of ideology after the collapse of the former Soviet Union - and its conceptual foundations (neoclassical general equilibrium theory and rational expectations theory) have been comprehensively falsified. Prior to 2008, the BoE, Treasury, US Federal Reserve, World Bank etc. shared the conviction that markets were risk-minimising and self-correcting when left to their own devices. The $57 trillion hole (and counting!) left in the world economy by the GFC establishes beyond conjecture that they are not.

Edited by zugzwang

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That Osborne was evidently as bubble blind as Brown, Bernanke or Mervyn King! That much is incontestable. Basic common sense was rather more uncommon than you imagine.

In truth, the problem can't be localised to the UK, its politicians or institutions. The central dogma in Western economics from 1979-2008 was an unyielding belief in the unregulated free market's capacity to deliver optimal economic solutions and market stability. There are no empirical grounds for such a belief - which assumed the status of ideology after the collapse of the former Soviet Union - and its conceptual foundations (neoclassical general equilibrium theory and rational expectations theory) have been comprehensively falsified. Prior to 2008, the BoE, Treasury, US Federal Reserve, World Bank etc. shared the conviction that markets were risk-minimising and self-correcting when left to their own devices. The $57 trillion hole (and counting!) left in the world economy by the GFC establishes beyond conjecture that they are not.

Erm... free markets? Any last apology to them was abandoned with liquidation of the Bretton Woods. All you have had since then is crony capitalism, favouritism and perverted incentives due to lack of the punishment (or feedback if you will) a truly free market would bring about to anyone making reckless leveraged financial decisions. And indeed drilling down to the lab vs tory discussion, all of them are socialists sharing same beliefs - the marginal differences in those do not amount to any meaningful actual policy differences.

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In the event it seems he didn't need much persuading - just a 10 seat majority and a pressing need for money.

"At least get its money back" was only ever a ploy and a lie to sell the idea of the bailout arrangements to the people/taxpayers.

Now UK people are to get the reality that it'll be sold at a loss (at a loss to the people/taxpayers that is).

"The government would at least get ITS money back". Typical.

hang on, the bail outs were never included in the official borrowing figures?????

return of same should also be excluded from the same figures????

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