Tuesday, February 10, 2009

What noise do you think this will make when it bursts?

Barclays defends derivatives-led growth as balance sheet balloons

Pop? Bang? I really don't know. I've never heard a £2 trillion balloon burst before. How exciting!

Posted by jackas @ 12:20 AM (1056 views)
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7 thoughts on “What noise do you think this will make when it bursts?

  • I know its scary TC, but I’ve reached the stage where all I can do is laugh now.

    Check out the bit about “a 1% fall in the value of their assets would wipe out all shareholder equity”. Now where have I heard that before….

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  • “In theory it would need only a 1 per cent deterioration in the bank’s £2.05 trillion of assets to wipe out its capital cushion of £17 billion and require it to seek fresh capital. ” enough said..

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  • Maybe someone told Barclays they should get on the “derivatives ladder” before its too late.

    I hope it all works out for them, then they can start paying me a decent fecking rate on my savings….oh no. sorry silly me, far to old fashioned.

    Go On Barclays! Shoot the lights out you geniuses!!!

    Tick Tock.

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  • Any connection to the Obama bail-out in the US? $900 billion, I think. Could Barclays become another Lehmans? Super wealthy pumping money into Barclays thinking that they can hold the US to ransome. Stocks to crash shortly I feel. (I’m not registered by the FSA for giving financial advice, not that they have a good track record, but please view them as a point of view, and not financial advice).

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  • really?
    “Barclays sparked surprise yesterday as it disclosed that it had expanded its balance sheet by a mammoth £900 billion over the past year, making it significantly bigger than the entire British economy.”

    impressed by this I did a search on {bigger than the entire British economy} and came up with this

    Will Obama Have To Bail Out Britain?

    According to the Financial Times, RBS has a balance sheet of around $2.7 trillion, much of it toxic. The GDP of the entire British economy is $2 trillion. Not only is RBS too big to fail, it’s bigger than the entire annual British economy. RBS fails, Britain might as well.


    and ~~~ The Financial Times states “we are witnessing the socialization of all balance sheet risk of the UK banks by the UK government.”

    and ~~~ Combined with the destruction of the pound’s value, Britain’s banking crisis may force it outside its borders for financial help. But to whom? The EU is up to its ears with financial problems in member states, notably Italy, Latvia and Greece. The IMF? Possibly, Britain got similar help from them in the 70’s, but the problem may be too big for them this time.

    Britain is in deep trouble, which may grow into a cluster foxtrot on a scale witnessed recently in Iceland, where the country, and I mean the entire country, went completely broke. Only one country may be left to rescue Britain.

    Sixty-seven years ago the U.S. stepped up to save Britain from the Nazis. In short order Obama may have to step up to save Britain from the bankers.

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  • So the obvious question is – what is happening in Iceland? If we can expect to see a similar thing here – and I don’t see why not, then maybe we should be paying close attention to iceland and trying to avoid some of the problems faced by icelanders. What’s happened to their currency/house prices/inflation/interest rates etc

    I can imagine that another RBS problem emerges – run on bank – bail out – fall in sterling – Britain in trouble – inflation rises sharply – interest rates fly to double figures.

    And I can see this happening, start to finish, in the space of 2 or 3 months.

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  • I must confess that I am no expert when it comes to the inner workings of the city, but does the fact that a UK bank has 2 Trillion in liabilities, largely due to complex financial bets it acquired when it bought a bankrupt investment bank, fill me with confidence that all is dandy? Nope.

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