Friday, July 31, 2009

The Cost of Protecting Banks

IMF puts UK banking bail-outs at £1,227bn

"Fresh calculations from the International Monetary Fund have revealed the full scale of assistance meted out to Britain's collapsed banking system. The Fund said that when one combines all the support for banks, including capital injections, the buying of frozen assets, Government guarantees and Bank of England liquidity provision, the total bill amounts to 81.8pc of gross domestic product – equivalent to £1,227bn"....( HOW MUCH?)

Posted by alan @ 09:08 PM (815 views)
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12 thoughts on “The Cost of Protecting Banks

  • According to the Telegraph, there are roughly 30,000,000 taxpayers in the UK (http://www.telegraph.co.uk/finance/financetopics/recession/5438225/Recession-shrinks-number-of-top-taxpayers.html).

    By my reckoning, £1,227,000,000,000 divided by 30,000,000 million working inhabitants comes out at £40,900 each. Let’s just keep it simple and say £40K each.

    My conclusion, £40K is the ‘stay in the UK’ banker’s tax. Of course, I’m oversimplifying things a bit here – we can roll over some of the debt onto our children and the actual debt might be that high. I know I should be angry but I’m just depressed by this.

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  • shipbuilder says:

    Don’t be silly, quiet guy. The politicians and bankers are productive members of society and economically active. Our ire should be reserved for the workshy scrounging benefit claimants and foreigners flooding our shores. Surely they must have cost us more than £1227 billion, right?

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  • stillthinking says:

    People don’t connect the debt to payments they will make in the future. Thats why nobody cares. Or they assume they are too poor to be liable. What I worry about is not this debt, but when the deflationary period ends the government won’t be able to use interest rates to control inflation because the country can’t handle a base rate of more than 6%. So there must be mandatory restrictions on lending, sounds good but not really, and I think also taxation will ultimately be used to combat inflation.

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  • clockslinger says:

    I don’t understand these figurs at all. Government borrowing (which is public debt, isn’t it) is 81% of GDP but I’ve noticed on FOREX websites (and the like) a lot of dire predictions for the yen and Japan generally where “borrowing” is a lot greater percentage of GDP than this. However, I note that the Torygraph figures only refer to public (government) borrowing…so what I want to know is this:- add in private debt (mortgages, overdrafts and credit cards held by yer average Brit) plus UK corporate debt, plus public debt and what kind of percentage do we then get? I’m inclined to think that the UK will look very much worse whilst Japan and Germany (for example) will look much better. Does anyone know where to find these stats?

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  • clockslinger

    Sorry I don’t, but I do recall seeing a list of about 140 countries in order of the money they had and Germany, Japan, China etc were up near the top and actually had alot of money, whereas USA, Spain and UK took pretty much the bottom 3 places out of 140 odd countries with huge debts.

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  • clockslinger says:

    str…yes, having “a lot of money” is what I was thinking about. For example the Japanese are great savers to the extent that it really shifts the figures.

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  • 3. stillthinking said…

    “People don’t connect the debt to payments they will make in the future. Thats why nobody cares.”

    The irony of our child-obsessed society is that nobody cares a jot about the future. Not just debt, but the environment, resources, sustainability of our economic and political systems. Individualism means being concerned with what affects me, now. Hence problems solvable with a bit of foresight turn in to crises and the inevitable cry from Middle Britain that ‘something must be done’. Short-termism begats short-termism.

    As a Greek proverb goes – “A society grows great when old men plant trees whose shade they know they shall never sit in.”

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  • nomad

    Thanks for the link.

    I’m surprised countries like Germany aren’t in a surplus situation.

    In fact I’m not altogether sure the figures are correct.
    EG Germany is shown as having a 1/3 of the external debt we have in total, yet more by 50% per head of population and a much higher percentage of GDP. That can’t be right surely.

    The list I saw year or so ago had what we would call the productive (manufacturing) countries, Germany, Japan, China etc showing a significant surplus with USA UK and Spain showing the largets deficit.

    Unless of course the link misses other information which offsets the external debt to show a surplus when all figures are taken into account. IE the list doesn’t show countries creditors or should that be debtors (money owed to them).

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  • shipbuilder

    ‘The irony of our child-obsessed society’ – what do you mean by that exactly.

    Like the proverb though.

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  • Can anyone connect the figures given in the last para of this article to the figures given elsewhere in the article?

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  • clockslinger says:

    Nomad: thanks for the link. Like STR, not quite the order I expected and I wonder if this offsets private savings and adds corporate debt…(I seem to recall a Spectator article about this at the beginning of the year)

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