Thursday, Sep 24, 2009

Be Prepared

The Telegraph: Bank of England's Mervyn King says HBOS and RBS came within hours of collapse

Mr King describes the consequences of letting the banks fail.
“Individuals would not have had access to the money in that bank. Their deposits would have been frozen. The accounts would have not been there for salaries to be paid in to, so many people would not have been paid their salary.
‘‘In turn, they wouldn’t have been able to pay bills to businesses so the businesses would have found that their flow of payments would have come to an end.’’

Posted by devo @ 09:33 PM (2571 views)
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1. devo said...

"Bank of England's Mervyn King says HBOS and RBS came within hours of collapse"

Do you remember this headline on October 7th 2008?

Of course not. Widespread panic would ensue; domino effect etc.

We're always the last to know.

Thursday, September 24, 2009 09:53PM Report Comment

2. layers said...

And so comforting to know that since '98 the bank of last resort ie the tax payer has ponyed up nearily a trillion in this c@untry alone - fundamentals improving? Don't think so. Bored of black being white, it'll happen some time, just keep reading the signs of the times.
And thanks for the insight Merve, am sure that's what they wanted you to think.

Thursday, September 24, 2009 10:03PM Report Comment

3. devo said...

Baroness Shriti 'Green Shoots' Vadera, the Business Minister called a meeting of bankers on October 7 last year to advise the government on a bailout.

Banksters: You're gonna give us money; then more money; in fact as much as we ask for. And this is how you're gonna do it...

Thursday, September 24, 2009 10:14PM Report Comment

4. quiet guy said...


"We're always the last to know."

Bit harsh that. If the government had told the truth, that would have made things worse.

Incidentally, your post seems like a good argument for separating the retail banking system from commercial banking à la Glass-Steagall. What's to stop us having to bail out the failures again?

Thursday, September 24, 2009 10:20PM Report Comment

5. devo said...

'your post seems like a good argument for separating the retail banking system from commercial banking'

Goldman changed status at the drop of a hat as soon as the temperature started to rise, then quickly extracted and extended its blood funnel, once 'too big to fail' kicked in.

The banks have the power to make it up as they go along (for now).

Thursday, September 24, 2009 10:29PM Report Comment

6. icarus said...

The BBC take on the effects of the Lehman collapse in tonight's programme was pathetic. Just a blow-by-blow account with a sub-text that said "The world was in dire straits and it was touch-and-go for a while but we fixed it in the end". No critical questions were asked, no mention of whether anything really was fixed, no analysis of alternatives to bank bailouts (guaranteeing commercial paper markets?), no mention of where all that credit that was liberated actually went, no question of where we are now heading. And that smug, overweight Baroness "I'm on first name terms with everybody who's important" had you reaching for the puke bucket.

Thursday, September 24, 2009 10:29PM Report Comment

7. quiet guy said...

"Goldman changed status at the drop of a hat"

True but that's not really the point I was getting at. Goldman was rescued partly because of its political connections and because it was deemed too important to go under. The very fact that GS was allowed to dodge the bullet is a sign of the US government's weakness. Is the US planning to stop this happening again or it is just more of the same?

What I want is to force the banks to restructure such that investment banks can be allowed to fail without taking down our financial infrastrucure like ATMs and pay being transferred to current accounts. Imagine if the US government had let GS go. There would have been a lot of pain and a lot of real fear in Wall Street. I don't see any sign of real change in the big banks; they're going to screw it up again someday and I'm tired of paying for failure.

Thursday, September 24, 2009 10:38PM Report Comment

8. devo said...

quiet guy,

No offence, but your post @7 reads as if you're arguing with yourself.

I obviously see things from a different point of view from most on this site.

Here is my perspective:

The banks and the government are essentially part of the same entity. Some would say by design; I would say by necessity.

Thursday, September 24, 2009 10:48PM Report Comment

9. quiet guy said...


I'll try again:

I see the fact that GS could change its status and was too big to fail as a symptom of the problem - not the cause.

When you talk about "The banks and the government", I presume that you're referring to the really big investment banks. The US has shut down hundreds of small regional banks and we had no problem disposing of the likes of Dunfermline.

I acknowledge that there is a great deal of evidence to support your view about the way banking works now in the real world but I'd like to think that we can do better.

P.S. no offence taken and I hope the same goes for you. Now where's that mirror ... I feel ready for another argument :)

Thursday, September 24, 2009 11:01PM Report Comment

10. devo said...

'I see the fact that GS could change its status and was too big to fail as a symptom of the problem - not the cause'

Is this relevant seeing as it continued to carry on its normal operations, regardless of any change in nomenclature?

Thursday, September 24, 2009 11:09PM Report Comment

11. devo said...

When you talk about "The banks and the government", I presume that you're referring to the really big investment banks.

I'm talking about 'The System' ie. the global banking and political system.

Small regional banks aren't even cannon fodder; more the equivalent of Baldrick's turnip.

Thursday, September 24, 2009 11:13PM Report Comment

12. icarus said...

Merv - tell me again how the civilised world came to an end each time an American bank failed. Oh, they were only small banks were they? Well, (1) maybe that's a clue as to how the banking system should look and (2) all those small and medium-sized banks add up to two or three very big banks.

Thursday, September 24, 2009 11:13PM Report Comment

13. paul said...

I thought The Love of Money was a bit of a whitewash.

No questions were asked of these people, no probing into how the crisis came about, no flagging of potentail conflicts of interest, no fingers pointed.

Just a resounding and unified "We saved you from armageddon which we were also good enough to keep a secret from you so you should be grateful".

Hmmm. Thanks BBC for your insights.

Thursday, September 24, 2009 11:31PM Report Comment

14. rumble said...

Quiet guy, exactly. We give our cash to retail banks to look after, and they speculate with it (and our taxes).

Friday, September 25, 2009 01:34AM Report Comment

15. nomad said...

6.&13. Yes, it was written up as the 3rd of three - looking at where we are now and what still needs to be done. Instead it was the Gordo saved the world story, with a distinct lack of objectivity or criticism.

I have occasionally puzzled over the strange intensity of Paul's anti Aunty stance but now I understand it.

Friday, September 25, 2009 09:13AM Report Comment

16. crunchy said...

8. devo

Spot on, but who is the most powerful? If the banks are, we effectively are governed by them.

Who owns who? Which banking mob would you elect or did we already and will we do just the same in the future?

The unknown entity and career politians........... Just a thought. No need to delete my post.

Friday, September 25, 2009 09:20AM Report Comment

17. Macca said...

Not one mention of house prices getting out of control and being a major contributor to the crisis then? House prices were obviously highly affordable and it was only the pathetic poor subprimers that refused to keep up their payments that created the problems and brought the system to its knees.

Friday, September 25, 2009 10:47AM Report Comment

18. mark wadsworth said...

King is talking scaremongering b0llocks.

The whole electronic payments system with Direct Debits and cash machines is a brilliant service, but that has nothing to do with banks lending to banks lending to banks, something which was bound to go *pop*.

It is quite possible for whole banks to go *pop* and for depositors and savers not to notice a thing, e.g. when all B&B depositors and savers were transferred to Banco Santander.

Friday, September 25, 2009 11:13AM Report Comment

19. house said...

If I remember rightly, one of the American president's warned us of the power of the bankers. Can somebody remind us all who this was.

Friday, September 25, 2009 11:14AM Report Comment

20. 51ck-6-51x said...

Mark Wadsworth said, "King is talking scaremongering b0llocks."

- I agree, it's just more sowing of fear about something that is out of the sphere of control of the subject ( the new terrorism / nuclear war / etc... ).

If a body wishes to control subjects then the body should make them afraid, if the body wants to continue to control subjects it should make the subjects afraid of things over which they have no control - not only does it make the control look like protection, but it also takes the subject's mind of things she should concern herself about, things to fear over which she does have control.

Friday, September 25, 2009 12:38PM Report Comment

21. 51ck-6-51x said...


are you referring to James A. Garfield as I posted the other day?:

“Whoever controls the volume of money in our country is absolute master of all industry and commerce ...and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – James A. Garfield, president of the United States (1881) – two weeks before he was assassinated.

Friday, September 25, 2009 12:39PM Report Comment

22. house said...

@20, Thank you, yes. The whole thing is fixed in my opinion, we small people do not stand a chance to control our destiny.

Friday, September 25, 2009 12:52PM Report Comment

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