Tuesday, Dec 08, 2009

Our investment portfolio

Telegraph: UK backs £167bn of overseas bad debt

British taxpayers stand behind more than £167bn of toxic assets in the US, Ireland, the Middle East and beyond, it has emerged as the Treasury disclosed details of what Royal Bank of Scotland has dumped in the state insurance scheme for bad debts. Most of the £281.9bn of assets RBS has placed under taxpayer protection are based outside the UK, with loans secured against everything from negative equity properties in Dublin to hedge fund assets in Caribbean tax havens and container ships docked in ports around the world.

Posted by quiet guy @ 08:32 AM (1561 views)
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18 Comments

1. mrflibble said...

Well old Gordon did 'save the world' :-P

Tuesday, December 8, 2009 08:40AM Report Comment
 

2. tom101 said...

Beyond caring now. Just want to leave

Tuesday, December 8, 2009 08:52AM Report Comment
 

3. crunchy said...

1. mrflibble

The next thing you will hear is that he will be feeding the third world. Scrap that! Copenhagen and biofuels. Nasty thing, food inflation. : (

Tuesday, December 8, 2009 09:01AM Report Comment
 

4. crunchy said...

1. mrflibble Did you know Carbon Dioxide CO2, will be classed as 'toxic waste' soon? That's not a gag, or is it?

Tuesday, December 8, 2009 09:12AM Report Comment
 

5. mrflibble said...

4. crunchy, does that mean RBS will be investing all out money in it or are they sticking to magic beans still?

Tuesday, December 8, 2009 09:17AM Report Comment
 

6. nomad said...

On behalf of us all, can I express our admiration and deep affection for Sir Freddie Goodwin, enjoy your cotton wool encased retirement.

Tuesday, December 8, 2009 09:18AM Report Comment
 

7. crunchy said...

Yep, along with big oil 'CO' and big Al.. Go figure! Some may call it a growth industry, but I beg to differ, because to me the future numbers look down.

Tuesday, December 8, 2009 09:23AM Report Comment
 

8. crunchy said...

6. nomad

A mere pimple on a giants............

Tuesday, December 8, 2009 09:26AM Report Comment
 

9. Newbie said...

".....and 70,000 UK mortgages at an average loan-to-value ratio of an alarmingly high 95pc."

So, rough conservative analysis, say, these houses were bought between 2000- and 2007 for an average of about £130k each.

70,000 x £130k = 9 100 000 000

So as well as being forced to waste many tens of thousands in rent, I, along with all of you, have been lumbered with a debt of over Nine Billion Pounds, in future taxes, to keep these people in their houses, whilst keeping me in debt bondage, without the ability to own my own house.

Well Done The Labour Party.

You couldnt have F***ed up my dreams and aspirations and life, any more if you had set out to do so.

Tuesday, December 8, 2009 09:34AM Report Comment
 

10. a saver said...

"The Treasury stresses in the document that its “central expectation is that overall net losses on the insured pool will not exceed the £60bn first loss [borne by RBS]. The direct cost to the taxpayer from the APS is therefore expected to be nil”.

What are the chances of this really not costing the taxpayer anything???

Tuesday, December 8, 2009 09:44AM Report Comment
 

11. mrmickey said...

At the end of the day somebody pays, the banks can't their bust, that leaves the taxpayer. It seams there is a struggle going on for the tax base between the government and the banking system the banking system appears to be winning.

Tuesday, December 8, 2009 09:56AM Report Comment
 

12. paranoia blue said...

We are merely, still, in an asset-bubble blowing state!
Stand by your beds, this isn’t going to be a gentle pop, but a catastrophic explosion!
The only question: Will they detonate in series, or concurrently?

Tuesday, December 8, 2009 10:28AM Report Comment
 

13. paranoia blue said...

Sorry wrong board :{

Tuesday, December 8, 2009 10:29AM Report Comment
 

14. icarus said...

@9 - that's the DIRECT cost to the taxpayer. What's the indirect cost if the game is fixed so that RBS can earn its way out of trouble?

As government support and backstops get bigger the banks' risk-taking gets bigger. It's like giving a child a gun, telling him not to use it but letting him know that if he does use it you'll get him out of trouble.

Tuesday, December 8, 2009 10:37AM Report Comment
 

15. stillthinking said...

The problem is not so much whether the banks can bear the losses instead of the taxpayer, the problem is the losses themselves. The only way that the bank can cover losses independently is to increase the pricing of loans, in our current environment that means making debt too expensive and leads to debt repudiation and an economic slump, worsening their losses.

Basically pricing industry out of credit availability (you might borrow to expand at 3% but not at 7% etc)

So I think there is a case for the good of the economy as a whole that the losses are directed to the taxpayer immediately. Otherwise we end up in the situation that the government shrilly demands additional lending, while at the same time mandating that the banks increase capital to absorb losses (by reducing lending), which is what we have now to a certain extent.

The bankers already got away with it irrespective of where the losses now fall. The only way to recoup the losses would be to attempt legally to reclaim monies paid out during the irresponsible lending period, which isn't happening, and also the bankers (people) took as personal profit only a small slice of the bad loans. They needed to lend out 1 billion irresponsibly to get 50 million (guessing here) so there isn't enough banker bonus money available to reclaim anyway.

So it isn't really between the banks and the taxpayer, it is already just on the taxpayer one way or another. I think there is a good case personally to prosecute and claim back the past bonuses (small or not), accept the losses (good bank bad bank) and just move on. Ideally in my world, the banks would have been allowed to bust and have deposits above 50K switched into equity, in which case our situation now would not be so dire.

Tuesday, December 8, 2009 10:52AM Report Comment
 

16. refusetobuy said...

"The Treasury stresses in the document that its “central expectation is that overall net losses on the insured pool will not exceed the £60bn first loss [borne by RBS]. The direct cost to the taxpayer from the APS is therefore expected to be nil"

Seeing as we own 85% of RBS then that's a £51bn loss to the taxpayer.

Tuesday, December 8, 2009 11:00AM Report Comment
 

17. timmy t said...

More evidence that RBS's top end employees truly are world class and must be paid whatever bonuses are required to keep them there. I mean, you do have to be exceptional to deliver this kind of business performance. Who could ever argue that they aren't worth millions?

Tuesday, December 8, 2009 11:20AM Report Comment
 

18. matt_the_hat said...

15. refusetobuy - Yes but it falls under a different column in the national accounts ;-)

Tuesday, December 8, 2009 01:42PM Report Comment
 

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