At last, there were public figures prepared to reject the political and financial blackmail of a debased White House-Wall Street elite.
This is an unfashionable view; it runs counter to The Daily Telegraph’s editorial line. But the hard-sell of President Bush and the US Treasury Secretary felt too much like the pressure patter of a door-to-door hawker. Their message was crude: “Trust us. You are in a terrible place. Only we can get you out of this mess. No need to check the details. Hurry now, or it will be too late. Here’s a pen. There’s the dotted line. Just sign.”
But with the President’s ratings so low, few would let him leave the House with anything more than small change. Congress asked, not unreasonably: “If you guys know so much about banking, how come we are in such trouble?”
Having spent most of the year telling America, contrary to mounting evidence, that the US economy was just dandy, Mr Bush’s credibility is threadbare. When making statements, he’s beginning to look as if he doesn’t even believe himself. As for Mr Paulson, his long association with the jackpot culture of Goldman Sachs is, in the eyes of many outsiders, a gilded millstone.
Predictably, the refuseniks have been pilloried as ill-informed nihilists. They have been lambasted for failing to understand the consequences of their actions. They are, according to the Big Bail-out Brigade, condemning the rest of us to be buried alive in the rubble of a disintegrating banking system.
Try a different take. Yes, the West’s financial infrastructure is in severe distress. Yes, more banks are going to crumble. Yes, there will be a recession. But allocating $700bn (it would almost certainly turn out to be more) to a clean-up programme for toxic assets, in effect socialising the poison of private greed, has no merit other than to delay the inevitable. No amount of federal cash can rewind the X-rated horror video.
There is a conspiracy of bankers and politicians whose self-interest is masquerading as sophisticated policy. They want us to believe that they have the keys to salvation. I have not seen a scrap of evidence to confirm this.
There will, of course, be a renewed effort in Washington to push through a package of national deliverance. Concessions will be made. The US taxpayer will be offered improved terms. And, having made their point, having stood up for “traditional American values”, some of the naysayers in the House of Representatives will cross over, enabling a deal to be done. Their consciences will be salved, but the crisis will not be solved.
Meanwhile, in Britain, the ban on short-selling bank shares has done nothing to make them more attractive to investors. Having blamed hedge funds for driving down the price of supposedly healthy businesses, officials must be at a loss to explain why bank shares keep falling.
Halifax-Bank of Scotland dropped another 14pc yesterday to 122p. There is now a yawning gap, about £3bn, between the offer made by Lloyds TSB and HBOS’s stock market capitalisation. This is the share price’s way of telling us that it doesn’t think the takeover is going to happen.
Both boards insist the deal will go ahead, but shareholders may have other ideas. Which is a shame, because the creation of Lloyds-TSB-HBOS would help perform the much-needed service of consolidating a bloated industry, clearing out thousands of unwanted bankers, and ridding our high streets of too many branches. It baffles me that we’re closing Post Offices (2,500 out of 14,000 to go) and yet we have a multiplicity of banks.
I recently visited Kingston-upon-Thames, where there is a blight of banks in the centre. On one street alone, there were five or six. I checked online and discovered that in this one wealthy town there are three Barclays, two HSBCs, plus branches of Royal Bank of Scotland, Halifax, Cheltenham & Gloucester, Alliance & Leicester, Northern Rock, Bradford & Bingley, Lloyds TSB, Co-operative Bank, Abbey, NatWest, Household Bank, and Beneficial Finance – I may have missed a couple.
This, perhaps, will surprise you, but traditional banking – collecting retail deposits and making loans to ordinary customers – is barely profitable. Compared with the potential gains from a day at the currency-swap races, or a night in the derivatives casino, current accounts are cold potatoes. That is why bonus-hungry executives, at what we used to think of as boring banks, were so keen to spin the red-hot wheel of fortune.
In these troubled times, protecting customers, especially depositors, is the right thing to do. The Government should extend the guarantee it has given to Northern Rock to all bank deposits. Beyond that, however, Britain’s over-banked economy needs a Malthusian cull.
Update: David Goldsby accuses me below of failing to anticipate this crisis but in fact I have been predicting that things would go horribly wrong for some time, as this article shows.
Good work Jeff as always. If you haven't already done so you may want to talk to the financial instutions partners at Bain, McKinsey and BCG. I had a talk with one of them today who had done much more high quality supporting analysis then either I or the government has probably done. His total need number was $1.3 trillion (vs. $700 billion or really $850 bn) with a slower paydown than my estimate of $1.2 billion with a paydown through refinancings, restructurings and re-writes that leaves a stub of $250 billion after five years: his estimate is more in the area of $400-500 after 5-6 years, representing the near-worthless residual portfolio net investment amounts.
Both he and I felt their is so much left uninspected and unexplained in the available government information and anaysis and the allocation and monitoring process so poorly established that the money may actually cause rather than cure some large financial system dislocations. Worth a few phone calls.
And don't forget the Isle of Man and Channel Islands where billions are also held in deposit accounts and investment funds in less then secure circumstances. Irish and UK guarantee schemes do not extend offshore. Jersey has no protection scheme but proposes soon to introduce a guarantee for full protection as reported. The Isle of Man so far has a Depositors Compensation Scheme (DCS). There is no �kitty� or fund collected in advance, compensation may take many years and you will be charged interest on your claim! The DCS currently compensates people who have money in current and deposit accounts in the Isle of Man with 75% of up to �20,000 of net deposits per depositor per bank, if the bank fails. This means maximum compensation payable is �15,000 per depositor � this amount would be paid to someone with �20,000 or more. Loans may be netted off against deposits you have with the same bank. eg if you have a total of �32,000 in current and deposit accounts, but a mortgage of �18,000, your net deposits are �14,000. The DCS would pay you 75% (or � ) of �14,000 in compensation, ie �10,500. If there are sufficient funds on liquidation of the failed bank, the remaining �3,500 would be paid from the liquidation proceeds. The DCS covers individuals, companies and trusts who have bank accounts in the Isle of Man, whichever country they are resident in. Payment is per depositor, not per account, therefore each person who shares a joint account can receive compensation, but if you have more than one account you won�t receive more than one compensation payment. Compensation is paid out of levies collected from other banks in the Isle of Man. Levies are collected at a maximum of �250,000 per bank per year. As there are a limited number of banks which pay levies, it may take many years for compensation to be paid to depositors. This period will also vary according to when liquidation proceeds are collected from the failed bank and how much is recovered. There is no "standing fund" of compensation (i.e. money is not collected before a bank failure). All banks in the Isle of Man that are licensed to take deposits are members of the DCS. Some banks, which do not take deposits, are not members of the DCS. Your deposits with each banking licence holder (i.e. bank that is licensed in the Isle of Man) are covered separately, even if they are part of the same group. Share and deposits accounts with building societies in the Isle of Man are not covered by the DCS. Deposit compensation schemes in the UK, Ireland or elsewhere do not cover deposits with banks or building societies in the Isle of Man. In order to claim compensation you will have to assign your rights to the whole deposit to the DCS manager and you will be charged interest on the amount of your claim. The Island's Financial Supervision Commission (FSC) administers the DCS as the Scheme Manager. The Isle of Man also has a scheme to compensate investors in authorised collective investment schemes. Known as the ACISCS it partially compensates you if an authorised collective investment scheme in which you have invested fails to pay you when money is due to you. Compensation may be due to you if a manager or trustee of an authorised collective investment scheme fails to repay you when required by the terms of the scheme. Compensation payable is as follows : 100% of the first � 30,000 90% of the next � 20,000 with a maximum compensation of �48,000 Compensation is paid out of levies collected from other authorised scheme managers and trustees in the Isle of Man. There is no "standing fund" of compensation i.e. money is not collected in advance.
DEMOCRAPS.....REPULSIVES........
IN THE US FDIC PROTECTS BANK DEPOSITS UP TO 100,000 PER BANK, THIS GOVERNMENT CONTINUANCY LAW/ INSURANCE WAS PUT IN PLACE AS INSURANCE TO RETURN THE DEPOSITS AND PREVENT THE HURT THAT CAME FROM BANK "HOLIDAYS" IN THE MIDST OF THE GREAT DEPRESSION., OR/AS THE GREAT DEPRESSION.
well, the bums in the USA passed their PORK riddled bailout and the EU is expected to follow suit. I say, vote all the bums OUT !!!!!!!!!!!!!
http://www.youtube.com/watch?v=razF08A-9Is
Let's see....they were told by the people to get out of iran, reply? In essence, f*** you!
they were told by the people no bailout, reply? In essence, f*** you!!
I might be wrong or misreading signals from the swine, but that pretty much tells you lemmings who run this "republic". so,...you gonna really get angry and change things with a stern look?
ROFLMAO. Actually, you all aren't even as cohesive as lemmings were portraid. Hel, atleast they stuck together...umm, sheep? nope, they too hang together...well, I guess just fools will have to do.
Ha! Ha! Some comments here seem to suggest we are meant to take Jeff Randall seriously. Surely not - he's been banging on for years about the 'need' for de-regulated markets, and for businesses to be left to get on with the job. Look where that has got us.
Some here apparently want to thank God for Jeff Randall - so maybe he really has undergone some miraculous conversion on the way to Damascas! But even if that's true, Jeff, you really are too late to be even slightly credible.
What next?
AltA loans (otherwise known as 'liar loans') and prime loans must be reset within a year. OTC derivatives equal 9 years of global GDP, at least.
$700bn is a PR job; it exists to pretend that there is a quick fix to this problem.
While the smart money quietly crept out the exit in 2006/7, everyone else was being sold dud assets and shares based on unrealistic p/e ratios, and of course the lie most easy to deny: property prices.
The bankers' bank, the Bank of International Settlements, says that UK property is 40% overvalued.
Would you bet against a banker who literally owns the house? I wouldn't.
UK property due to be 40% cheaper unless if overshoots on the way down as it did on the way up in which case UK property halved in price if not more.
Crazy times. Hey ho. Maybe the young will learn from the excessive foolishness of their parents and grandparents, and they'll be able to buy a house at a reasonable ratio to their income...just like their grandparents did. Pity their grandparents and parents proved to be so very stupid with money.
Every cloud has a silver lining.
What next?
AltA loans (otherwise known as 'liar loans') and prime loans must be reset within a year. OTC derivatives equal 9 years of global GDP, at least.
$700bn is a PR job; it exists to pretend that there is a quick fix to this problem.
While the smart money quietly crept out the exit in 2006/7, everyone else was being sold dud assets and shares based on unrealistic p/e ratios, and of course the lie most easy to deny: property prices.
The bankers' bank, the Bank of International Settlements, says that UK property is 40% overvalued.
Would you bet against a banker who literally owns the house? I wouldn't.
UK property due to be 40% cheaper unless if overshoots on the way down as it did on the way up in which case UK property halved in price if not more.
Crazy times. Hey ho. Maybe the young will learn from the excessive foolishness of their parents and grandparents, and they'll be able to buy a house at a reasonable ratio to their income...just like their grandparents did. Pity their grandparents and parents proved to be so very stupid with money.
Every cloud has a silver lining.
I really don't think people actually understand how bad this is going to end up.
propping up the banks, I am sure these devious souls will find a way of making more cash to inflate their personal fortunes. HOW about this one, my elderly neighbour worried about losing his savings, { a 90 day penalty BOND taken over one year at 6% gross interest} �50000 in total, enquired as to the procedure to move his money to another building society, the answer was he would have to pay a penalty if he were to move his money from this account, QUITE CLEARLY STATED ON HIS REQUEST FORM which he took out five months ago, fair enough you might say, but how do these penalties stack up, = to take out his �50000 the sum would be �50000 x 6% x 90 days divided by 365 days total cost to him �739, Since his 6% was reduced by 20% for tax purposes to 4,8% the "society paid the other 1.2% to the taxman", his society will received back his interest of 4.8% plus the tax he had paid to the taxman of 1.2%, I reckon he should have only paid a penalty as follows �50000 x 4.8% divided by 90 x 365 = �591 and not as he was charged as above, saving him �148, Buyer Beware.........
I agree with Jeff who wrote the article. It's like throwing more cash down the endless pit !!!!!!!!
http://www.youtube.com/watch?v=gf6xadMwGz0
I agree with Jeff who wrote the article. It's like throwing more cash down the endless pit !!!!!!!!
http://www.youtube.com/watch?v=gf6xadMwGz0
Fom the NY Times:
CHARGE OF THE TARP BRIGADE
(Charge of the Light Brigade, Alfred Lord Tennyson)
(Modified by WilliamBanzai7)
Half a trillion, half a trillion,
Give or take 200 billion, onward!
All in the valley of Balance Sheet Death
Rode the seven hundred billion tax dollars.
"Forward, the TARP Brigade!"
"Charge for the ABS Credit Default Swaps!" Hank said:
Into the valley of Balance Sheet Death
Rode the seven hundred billion taxpayer dollars.
"Forward, the TARP Brigade!"
Was there a politician dismay'd?
Not tho' the Congress knew
Some guy named Hank had blunder'd:
Their's not to make reply,
Their's not to reason why,
Their's but to do and die:
Into the valley of Balance Sheet Death
Rode the seven hundred billion taxpayer dollars.
CDOs to right of them,
CDSs to left of them,
AIG and the GSEs in front of them
Volley'd and thunder'd;
Storm'd at with Wall Street shot and shell,
Boldly that load of Federal largesse rode and well,
Into the jaws of Balance Sheet Death,
Into the mouth of subprime contagion Hell
Rode the seven hundred billion taxpayer dollars.
Flash'd all the workout sabres bare,
Flash'd as they turn'd in air,
Sabring the asset backed losses there,
Charging an army of tawdry bankers, accountants, and shysters, while
All the world wonder'd:
Plunged in the seedy subprime-smoke
Right into the red numbers they broke;
Lehman and Bear Stearns
Spared from the sabre stroke
Shatter'd and sunder'd.
Then they rode back, but not
Not the seven hundred billion.
Subprime CDOs to right of them,
Subprime CDSs to left of them,
Fat Wall Street advisory fees behind them,
Volley'd and thunder'd;
Storm'd at with derivative losses, asset backed shot and shell,
While level 3 zeros fell,
They that had fought so well
Came thro' the jaws of Balance Sheet Death
Back from the mouth of subprime contagion Hell,
All that was left of it?
Nothing left of seven hundred billion buckaroos!
When can its glory fade?
O the wild loss charges!
All the world wondered.
Honor the huge expenditures they made,
Honor the TARP Brigade,
Noble seven hundred billion taxpayer dollars.
(TARP--Troubled Asset Relief Plan of 2008)
What is with the DT comments pages? They take forever to load, freeze or post in triplicate. This is the most problematic site on the web. You will get people paranoid that government nosy parkers are cookieing the comments.Or is the NWO compiling their lists already? Bring it on.
What is with the DT comments pages? They take forever to load, freeze or post in triplicate. This is the most problematic site on the web. You will get people paranoid that government nosy parkers are cookieing the comments.Or is the NWO compiling their lists already? Bring it on.
What is with the DT comments pages? They take forever to load, freeze or post in triplicate. This is the most problematic site on the web. You will get people paranoid that government nosy parkers are cookieing the comments.Or is the NWO compiling their lists already? Bring it on.
What is with the DT comments pages? They take forever to load, freeze or post in triplicate. This is the most problematic site on the web. You will get people paranoid that government nosy parkers are cookieing the comments.Or is the NWO compiling their lists already? Bring it on.
What is with the DT comments pages? They take forever to load, freeze or post in triplicate. This is the most problematic site on the web. You will get people paranoid that government nosy parkers are cookieing the comments.Or is the NWO compiling their lists already? Bring it on.
This article is spot on IMO.
Bottom line-Wall street has conned the world banks and investment houses etc into buying dodgy debt. Foreigners are not happy including the chinese and japanese who have the biggest stakes in US treasuries. If the US government start the printing presses these nations will dump their treasuries, the lights will go out in America
This article is spot on IMO.
Bottom line-Wall street has conned the world banks and investment houses etc into buying dodgy debt. Foreigners are not happy including the chinese and japanese who have the biggest stakes in US treasuries. If the US government start the printing presses these nations will dump their treasuries, the lights will go out in America
This article is spot on IMO.
Bottom line-Wall street has conned the world banks and investment houses etc into buying dodgy debt. Foreigners are not happy including the chinese and japanese who have the biggest stakes in US treasuries. If the US government start the printing presses these nations will dump their treasuries, the lights will go out in America
In response to Evans below who wondered where these trillions have come from:
http://video.google.com/videoplay?docid=-9050474362583451279
In response to Evans below who wondered where these trillions have come from:
http://video.google.com/videoplay?docid=-9050474362583451279
In response to Evans below who wondered where these trillions have come from:
http://video.google.com/videoplay?docid=-9050474362583451279
In response to Evans below who wondered where these trillions have come from:
http://video.google.com/videoplay?docid=-9050474362583451279
Why does this stupid 'comment' system keep repeating people's replies - it is really, really, REALLY annoying...
"G" @ 9:59 PM (UK Time) on 10/01 - Outstanding analysis! It's refreshing to see folks who're truly informed as to how our Constitutional Republic has been (intentionally) placed in this current quagmire.
Most sheeple just don't understand the existence and power of the Globalist Elite and their minions of puppets (Central Banks, Wall $teet, "Crapitol sHill", the "mainstream" media, Madison Avenue & "Hollyweird". The Elite's agenda has been implemented over the decades & their long planned quasi-socialist dystopia (enforced via an Orwellian police state) is on the horizon. Americans need to educate themselves & rise up before our Constitutional Republic is no more!
http://www.jbs.org
http://www.infowars.com
"G" @ 9:59 PM (UK Time) on 10/01 - Outstanding analysis! It's refreshing to see folks who're truly informed as to how our Constitutional Republic has been (intentionally) placed in this current quagmire.
Most sheeple just don't understand the existence and power of the Globalist Elite and their minions of puppets (Central Banks, Wall $teet, "Crapitol sHill", the "mainstream" media, Madison Avenue & "Hollyweird". The Elite's agenda has been implemented over the decades & their long planned quasi-socialist dystopia (enforced via an Orwellian police state) is on the horizon. Americans need to educate themselves & rise up before our Constitutional Republic is no more!
http://www.jbs.org
http://www.infowars.com
"G" @ 9:59 PM (UK Time) on 10/01 - Outstanding analysis! It's refreshing to see folks who're truly informed as to how our Constitutional Republic has been (intentionally) placed in this current quagmire.
Most sheeple just don't understand the existence and power of the Globalist Elite and their minions of puppets (Central Banks, Wall $teet, "Crapitol sHill", the "mainstream" media, Madison Avenue & "Hollyweird". The Elite's agenda has been implemented over the decades & their long planned quasi-socialist dystopia (enforced via an Orwellian police state) is on the horizon. Americans need to educate themselves & rise up before our Constitutional Republic is no more!
http://www.jbs.org
http://www.infowars.com
"G" @ 9:59 PM (UK Time) on 10/01 - Outstanding analysis! It's refreshing to see folks who're truly informed as to how our Constitutional Republic has been (intentionally) placed in this current quagmire.
Most sheeple just don't understand the existence and power of the Globalist Elite and their minions of puppets (Central Banks, Wall $teet, "Crapitol sHill", the "mainstream" media, Madison Avenue & "Hollyweird". The Elite's agenda has been implemented over the decades & their long planned quasi-socialist dystopia (enforced via an Orwellian police state) is on the horizon. Americans need to educate themselves & rise up before our Constitutional Republic is no more!
http://www.jbs.org
http://www.infowars.com
Someone else posted this from 2006, I'll post it again:
http://www.telegraph.co.uk/finance/2937928/Ten-reasons-why-it%27s-all-going-to-go-horribly-wrong.html
Impressive stuff.
Leaving aside the rights and wrongs of the larger issue of bailouts, as I understand it, the UK Government waived competition regulations to allow the proposed merger of Lloyds TSB and HBOS.
This would have been a perfect opportunity, in return for this, for the government to have insisted that Lloyds TSB keep some of the duplicated bank branches open, but INCORPORATE SUB POST OFFICES within them.
If we can let the likes of WH Smith run post offices, then surely they would fit well within the banking structure. Lloyds can afford to subsidise to post office structure, Grannies get somewhever to go and cash their pension, everybody wins
I am just glad the $700 bn is giung to be administered by the bankers representatives, who else could be more trusted? I wonder if anyone in Zimbabwe is glad they put their money in guaranteed accouns -lol.
No matter how 'uneducated' the masses, as some people in these posts believe, anyone with the wherewithal to borrow money they knew they couldn't afford must have seen a catch coming at some time. Capitalism does not reward the masses for nothing. Something 'useful' has to be done. How anyone could buy a house thinking it would pay pensions and build fortunes enabling Joe Bloggs to walk the beaches of Shangri-La simply by acquiring a massive debt is delusion on a fantastic scale.
Everybody wanted everything without doing anything for it.
From the top to the bottom the whole process was floored; instigated by banks, condoned by governments and seized upon by the public. The real mystery in all this is how the brown stuff didn't hit the fan sooner. Yes, some made a killing by selling early but considering the mess left behind their profits might not be all they hoped. And the sad thing is, not far from now the whole thing will start all over again.
Howard Wiley
on October 02, 2008
at 09:16 AM
Your rant completely misses the point and you do not understand what I am trying to say. I do not believe in a nanny state and I do believe in the free market. I do think that a government has a responsibility to intervene if it sees the people behaving irresponsibly and putting the future of everyone at risk.
Or perhaps you live life looking at the self too much and not understanding the concept of society and 'community'. We all have to live together and consider whether or not our actions affect others. If our actions do affect the lives of others in a negative and bad way, then I believe it is up to governments to intervene.
Jeff- the new link to the archived article- "10 reasons why it's all going to go horribly wrong" from May 2006 just serves to remind us how utterly derelict the handling of the economy has been for so long despite so many ominous signs of impending trouble. How it is possible for our Prime Minister to even appear in public reminds us of the total lack of economic reality and cogent understanding of the normal factors behind judicious household economics held by the masses in today's Britain. This disaster has been many years in the making, and all the essential elements for a storm of this magnitude have been brewing up for years. A politician determined to maximise his popularity by sowing the wind has reaped a destructive whirlwind and many ordinary (but ignorant folk who trusted his judgment) will be blown away by his overweening vanity in his achievement trumpeted in the House of Horrors- The end of (Tory) Boom and Bust.
Ref: Ellen O'Day
�pressure was put on the mortgage lenders to lend money to people (mostly poor blacks) who could not afford to repay the mortgages.
�The banks were also bullied into lax lending practices by an organization called ACORN (Obama was an activist that worked with ACORN).�
�Many middle class people in the US and elsewhere purchased homes they could ill afford�
What a shame Ellen you omitted to comment in the last quotation that the in the US the middle class are mostly white. It would have been in keeping with �mostly blacks� (without evidence). Your ill-hidden racism lacks intelligence.
With a little hope the Telegraph will not take up your offer to write a so called �better article�. Arrogant beyond belief
Ref: Ellen O'Day
�pressure was put on the mortgage lenders to lend money to people (mostly poor blacks) who could not afford to repay the mortgages.
�The banks were also bullied into lax lending practices by an organization called ACORN (Obama was an activist that worked with ACORN).�
�Many middle class people in the US and elsewhere purchased homes they could ill afford�
What a shame Ellen you omitted to comment in the last quotation that the in the US the middle class are mostly white. It would have been in keeping with �mostly blacks� (without evidence). Your ill-hidden racism lacks intelligence.
With a little hope the Telegraph will not take up your offer to write a so called �better article�. Arrogant beyond belief
The bailout comes as no surprise it was obviously going to happen because all those hedge funds run by the ruling elite and their friends would of been obliterated and at the end of the day that�s is GW and the majority of the GOP's main concern. They will always look after themselves and their friend�s financial interests first at the expense of the tax payer. I would love to see an investigation into how much the GOP and GW administration has invested in hedge funds right now, you can bet this bailout will benefit them directly at the tax payer�s expense. Democracy is dead, neither the US or UK governments act for the benefit of the pubic they are ruled by a mega rich elite who can do whatever they want with absolutely no repercussions. In a free market all these greedy banker types who where recklessly gambling with money they did not have should have all gone to the wall and lost their jobs and houses, instead they will continue to pickup the kind of bonuses we could only dream of winning on the lottery, and they will continue to milk this unregulated system for years to come while we are saddled with the bill for the next generation or so.
Tax payers money will be used, trying to solve the banking crisis. It's just a matter of how and how much. Depositors should be fully protected but because banking is central to a modern economy, large parts cannot be allowed to fail. Tax payers money will be used in a 'plan' or in nationalisations. For me, I would rather see a rationalisation enacted by the private sector than the authorities but I see no reason why banks who gain from a 'plan' should not pay it back when times are better and the crisis is behind us.
An interesting thought:
If this bailout package goes ahead and fails, will the people not be worse off than they would have been if the bailout never occurred? Will they not be caught in a deeper recession having saddled their children and grandchildren with even more debt and possibly a bankrupt government? The bailout package offers no guarantees.
I think this quote is particularly relevant in this case:
�We can't solve problems by using the same kind of thinking we used when we created them.�
Albert Einstein
Thank you sir at last a little reason in the press. The banks got themselves into debt through foolishness ergo they should not be bailed out. If any bailing out is to be done it is to secure the deposits of savers and no more. Shareholders supporting a foolish industry deserve what it really returns, not taxpayers income.
As for gordy broon, the man who has already commited the UK taxpayer to more than the congress baulked at dumping on the american taxpayer, with nary a mention of concern for those who bear the burden - that action alone makes it clear that the man is more than just amoral - he is immoral.
....and David Goldsby could be wrong.......
An interesting thought:
If this bailout package goes ahead and fails, will the people not be worse off than they would have been if the bailout never occurred? Will they not be caught in a deeper recession having saddled their children and grandchildren with even more debt and possibly a bankrupt government? The bailout package offers no guarantees.
I think this quote is particularly relevant in this case:
�We can't solve problems by using the same kind of thinking we used when we created them.�
Albert Einstein
I too was cheering on the Congress on Monday night from a cold and rainy Northern mill town. I heard Anatole Kaletsky sneer on Radio4 the following morning that the USA was now 'ungovernable' - I thought it was democracy in action. You know, the kind of thing soldiers were supposed to be fighting for in Iraq and Afghanistan. Those congressmen will be fighting for re-election and (for a change) seemed to be heeding the views of their voters. It was impressive to see this mass outrage at least temporarily stop the bill. But, the full court pressed by the City and Wall Street, the media and the entire political establishment is hard to counter. If the bill is not stopped, those who vote for it should at least be held accountable for the economic mess they create. Remember, these are the folks that couldn't see the housing bubble.
David H
How dare you tell me, and anyone else for that matter, that we need to be controlled like little children by the 'authority' of the educated eli5te - because that, sir, is what you imply by:
'It is up to governments to keep check on the way people are behaving and spending' and
'...it is up to the informed and educated to advise and help these people'.
It was precisely this typr of meddling thaty got us into this mess. We do not have a free market, haven't had one for years.
It is time that government got out of peoples lives, let us: the market, right ourselves, stoppped spending OUR money on stupid war, a bloated welfare state, daily intrusion, the black hole of the NHS.
We were not born on this earth from the womb of the government, therefore the government has no right to behave like our mothers.
Great article.
There's nothing nihilistic about rejecting this bail out. Take it from a man who's been passionately warning people of this global pyramid scheme for the last five years, me.
The bailout will be passed and the banks will fail despite throwing good money after bad.
I suppose there's a consolation for the american tax payer; their $700 billion dollars won't be worth that much in 5 years. You might as well go the whole hog and give them all your money and surrender your savings and pensions.
PS. Don't give them your clothes though. They've got real value.
David H
How dare you tell me, and anyone else for that matter, that we need to be controlled like little children by the 'authority' of the educated eli5te - because that, sir, is what you imply by:
'It is up to governments to keep check on the way people are behaving and spending' and
'...it is up to the informed and educated to advise and help these people'.
It was precisely this typr of meddling thaty got us into this mess. We do not have a free market, haven't had one for years.
It is time that government got out of peoples lives, let us: the market, right ourselves, stoppped spending OUR money on stupid war, a bloated welfare state, daily intrusion, the black hole of the NHS.
We were not born on this earth from the womb of the government, therefore the government has no right to behave like our mothers.
Ellen O'Day
on October 02, 2008
at 02:46 AM
Apart for your terible command of english grammar (referring to people as 'which' and not 'who'), you miss a very important point. It is up to governments to keep check on the way people are behaving and spending; this is one of the functions of a genuine and caring government. You cannot go blaming the masses as the authorities and governments allowed this to happen. The trouble is the powers that be have exploited human nature and its need and desire for more money and wealth. With billions of people living together on one planet it is essential that we are regulated and there has to be some form of order. To just blame everyone for this mess we are in is churlish and irresponsible. The people to blame are the bankers, the authorities and the governments. They knew exactly what was happening and allowed it to continue. You cannot blame uneducated and badly imformed people for doing something that they think is in their best interests.....it is up to the informed and educated to advise and help these people.
Interesting Fractional Money as mentioned by Ed, try googling for "money as debt" for an easy to understand video.
Im a Kansas, USA Farmer, born and raised. This is the most anti-patriotic, fascist, and treasonous act against America since the inception of the Federal Reserve Bank in 1913.
The most treasonous act prior to that was the war of Abraham Lincoln against the South.
The FED. RESERVE has been the problem all along since 1913 as it is nor federal and there is no reserve.This fractional money system is based on lending say 20 times any saving in the bank and charging interest on this cyber money that only exists on a computer.
What a lot of comments and they�re still coming in thick and fast! Overall, I prefer the view of our �Man in the street� (on October 01, 2008 at 01:42 PM). His seems much more reasonable and probably healthier than most. eg Our �Man in the Moors� (on October 01, 2008 at 10:44 AM) comes across as somewhat poor in spirit. Anyway, getting back to debasics, so to speak- I still have great faith in our �four red lines� here in the UK and how these could help the �Man in the street�. It seems to me that we may already have available all the �machinery� we need to make a difference when our jobs and lives are being spoiled, unnecessarily. First we have �Freedom of information�, especially via IT; then we can �Raise a concern� when we can see something unfair or untoward is on the horizon; next, making the most of such open, honest and proper feedback (which respects an includes both tangible or intangible assets like �good ideas�) we can get our heads together as equal stakeholders in the EU style spirit of �dialogue� rather than �blame game�; Finally, we can work in partnership in the most appropriate ways to reduce burdens fairly for everyone and keep things moving. Not being a financial wizard I like to think of the �four red lines� in this most practical of ways.
The article is almost hysterically childish in the limited analysis of the problems striking the banking industry. And many of the post are worse, confirming that a nightly feed from the British Bias Corporation (America/Bush is the great Satan) or the lunatic fringe watching MSNBC (Bush is bad) can warp the mind of even the most rational viewer.
Here is the unpleasant truth: everybody is complicit in the unravelling of a problem that was 25 years in the making. Easy credit was viewed by everyone as a 'good thing'.
So Bush and his crowd were delinquent in their duties (although Bush warned about the danger of easy credit), but so were the Democrats (See the video on YouTube of the Dems saying there was nothing wrong with Fannie Mae and Freddie Mac
http://www.youtube.com/watch?v=3p1Wc2NFa3w).
During the Clinton administration pressure was put on the mortgage lenders to lend money to people (mostly poor blacks) who could not afford to repay the mortgages.
The banks were also bullied into lax lending practices by an organization called ACORN (Obama was an activist that worked with ACORN). ACORN members would crowd the bank lobby preventing people from entering. They would continue to do this until banks relented and gave NINJA loans - No Income, No Job required.
Then there are the quants that proposed bundling these shaky mortgages as mortgage backed securities that could not fail because houses always increased in value. That is what you believed if you are under 40.
And the rating agencies that gave these securities a safe triple A ratings when they were patently unsafe. The AAA rating meant that investment banks actually used the instrument as collateral.
And on. Many middle class people in the US and elsewhere purchased homes they could ill afford often having mortgages with interest only repayments because houses always go up.
Then there were the pension funds who put pressure on the banks to provide better returns - that is where you and I come in.
In other words, unlike the fatuous ill tempered article implies, everyone - institutions, professionals and investors alike - the man in the street -us - all are to a greater or lesser extent to blame. As Pogo said, "I have seen the enemy and he is us".
Attention Telegraph: For a small fee I would provide you with a better article more informed and with a better perspective on the crisis. And hell I am not even a journalist.
Bring on the new world order
Bring it on, Its going to happen.The rich will control the finances,food and control the massses. Slowly they plan and bit by bit we ignore. Bring it on . I am excited not becuase of the bad news , but of THE GOOD NEWS
Can one of you "honest" economist tell me where all these TRILLIONS of dollars came from?
This bail-out is exclusively for foreign banks that made dumb decisions by buying up bad US debt. It really is that simple. After the money is dispersed the melt-down will continue. The idiots that seem to think this is the demorats or the repugnants fault are so far off base, where would one even start to try to explain it to them?? This has been engineered by the FED and central banks of the world by blowing bubbles with unnatural low interest rates for the purpose of enslaving the masses to the last speck...the result will be a one world currency that will be invisible...everything tracked with supercomputers...
This bail-out is exclusively for foreign banks that made dumb decisions by buying up bad US debt. It really is that simple. After the money is dispersed the melt-down will continue. The idiots that seem to think this is the demorats or the repugnants fault are so far off base, where would one even start to try to explain it to them?? This has been engineered by the FED and central banks of the world by blowing bubbles with unnatural low interest rates for the purpose of enslaving the masses to the last speck...the result will be a one world currency that will be invisible...everything tracked with supercomputers...
The American "Bail-Out" plan is a daring concept designed to achieve three primary objectives a) restore liquidity to the market for junk securitized debt, b)restore the tiny cushion of equity in many wall street firms and c) to restore market confidence.
Purchasing junk debt at market value does nothing for the firm's net worth. Thus buried in the language is obscure reference to the Housing Recovery Act for guidance on pricing. It talks about pricing debt based on discounting cash flow to maturity at the feds cost of funds. This amounts to a huge gift to the Wall Street funds as the feds want 3% while Buffett would want 30% ROI.
If this were not enough the act puts the actions of the Secy of Treasury beyond the reach of any court in the land except for violations of the Constitution.
$750 bil is a big reward for those who have failed due to their own greed and blindness.
Better for the public to suffer the consequences now than the much worse effects of leaving them in place.
10/1/2008 3:48 PM
Mode: e-mail
By; Panda
While listening to Sen. Obama in the well.
Theme: good banks vs bad (over leverage/toxic) banks
The good local and regional banks are lending. The bad banks, with there $52 trillion (per SEC Chair) in bad leverage debts, sit in the Paulson clearing house.
The first saddle-block on the C-section did not take. While the campaign mode poles and day trades look forward to the after birth for the good of the mother (tax payer/consumer). The baby is the $52 trillion outstanding.
In watching C-Span: the past has produced a transfer of public/consumer debt, to a negative savings rate; up to the investment bank multiple profit return; aided by 30 or 40 to 1 leveraging. Remembering the time I push to cull commodity speculation, i.e., oil/corn, the incumbents were more than happy to point out those investment bank(s) margins of profit.
The city of thieves, thru there campaign lobbyist has been and still currently more friendly the folks of paper wealth than the consumer. Case in point, between the noises of the day traders, the theme is clear the USA federal government will spend more then the trillion debt ceiling of $11 trillion. Never forget that our federal fiscal book now borrow $1 trillion in a $3 trillion of expenditures.
I admit I have yet to comprehend the complexities of the market to market pricing or how the Paulson/Bush legislation will get those handfuls of top bad banks to keep their own skin in the game to de-leverage their own doing of $52 trillion of bad debt. Being among them, I do hear the masses.
My bottom line, do not allow the Paulson Wall Street approach to shit on the smaller good banks that are still lending. The footnote is WSJ 9-30 Industry is Remade in Wave of Deals: Bank of America, J.P. Morgan Chase and Citigroup Inc. collectively combined to 31.3% of US deposits. To big to fail still holds and anti-trust is frown on in light of competitive global financial markets.
Never losing sight of my four objectives � which have been trashed by the current city of thieves � the mother�s health. Favorabilia rei, potius quam actores, habentur.
The battle to come is the level of government forced skin in the game in de-leveraging thru the Paulson clearing house by the bad banks which are claiming to be the plaintiff.
In laymen langue; the city of thieves has screwed the people into a recession, and better times will be long delayed. There is NO TRUST in finger pointing.
From my perspective, the government (debt) is printing money at a [future] destructive rate.
Panda
From this link:
http://mises.org/story/3131
By Frank Shostak
Can the Rescue Package Prevent Economic Disruptions?
Some supporters of the package are of the view that the package is necessary in order to prevent economic disruptions. They mean by this that various phony activities should be kept alive by wealth generators for a little bit longer until a proper system is established. By "proper," they mean more controls.
For a while, the government's package can appear to be working; this is because there is still enough real savings to support both profitable and unprofitable activities. If, however, savings and capital are shrinking, nothing is going to help, and the real economy will follow up with further declines.
Hence the rescue package cannot prevent so-called economic disruptions. If anything, government intervention would make these disruptions much worse. Again, a better alternative is to let the market do the job. The market's ability to make swift adjustments without much drama was vividly illustrated only a few weeks ago when the very large investment bank, Lehman Brothers, was allowed to go belly up. The world did not come to an end. Instead, this was a healthy development. A money loser was eliminated from the market. This freed up resources to promote growth.
One could have made the case that when Lehman was on the brink it was too big to fail � assets of $639 billion and employing over 26,000 people. Yet in a few days the market, once allowed to do the job, reallocated the good pieces of Lehman to various buyers and the bad parts have vanished. It was poetry.
Likewise Merrill Lynch, which was bought by the Bank of America, will see the good parts of it reinforced while the useless parts are likely to be removed.
On September 18, 2008, Washington Mutual, the largest US saving and loan bank, was forced into liquidation. The bank had $307 billion in assets and $188 billion in deposits. What prompted the closure are heavy losses on its $227 billion book of real-estate loans, of which a large portion was in subprime mortgages.
Ellen O'Day can speak for herself. There are plenty of us who have not lived beyond our means. We save, we live debt free and we are getting screwed out of our savings by our government. We're sick of being lied to. The fact of the matter is if these bankers were drug dealers, we would have seized their homes, their cars and their bank accounts BEFORE THEY WENT TO TRIAL. Many of us simply want the same thing for Wall Street. And I thought the article was great.
Mmmm... These same Democrats that want to fix this problem are the very same Democrats that caused the problem to begin with. Throw the bums out...
The article is almost hysterically childish in the limited analysis of the problems striking the banking industry. And many of the post are worse, confirming that a nightly feed from the British Bias Corporation (America/Bush is the great Satan) or the lunatic fringe watching MSNBC (Bush is bad) can warp the mind of even the most rational viewer.
Here is the unpleasant truth: everybody is complicit in the unravelling of a problem that was 25 years in the making. Easy credit was viewed by everyone as a 'good thing'.
So Bush and his crowd were delinquent in their duties (although Bush warned about the danger of easy credit), but so were the Democrats (See the video on YouTube of the Dems saying there was nothing wrong with Fannie Mae and Freddie Mac
http://www.youtube.com/watch?v=3p1Wc2NFa3w).
During the Clinton administration pressure was put on the mortgage lenders to lend money to people (mostly poor blacks) who could not afford to repay the mortgages.
The banks were also bullied into lax lending practices by an organization called ACORN (Obama was an activist that worked with ACORN). ACORN members would crowd the bank lobby preventing people from entering. They would continue to do this until banks relented and gave NINJA loans - No Income, No Job required.
Then there are the quants that proposed bundling these shaky mortgages as mortgage backed securities that could not fail because houses always increased in value. That is what you believed if you are under 40.
And the rating agencies that gave these securities a safe triple A ratings when they were patently unsafe. The AAA rating meant that investment banks actually used the instrument as collateral.
And on. Many middle class people in the US and elsewhere purchased homes they could ill afford often having mortgages with interest only repayments because houses always go up.
Then there were the pension funds who put pressure on the banks to provide better returns - that is where you and I come in.
In other words, unlike the fatuous ill tempered article implies, everyone - institutions, professionals and investors alike - the man in the street -us - all are to a greater or lesser extent to blame. As Pogo said, "I have seen the enemy and he is us".
Attention Telegraph: For a small fee I would provide you with a better article more informed and with a better perspective on the crisis. And hell I am not even a journalist.
Go to www.mises.org.
The Austrian school has predicted this cycle due to fiat money over and over, for decades.
Google Ron Paul while you're at it.
The Irish have shown the way forward. Once you know your money is safe you start to relax and can start spending again.
Wealth is just an illusion created by the velocity of money. At present money is in a traffic jam. The Irish move is a step towards getting it moving again.
The logical next step would be to sell your shares in financial institutions and place the money in an Irish Bank, perhaps buying a few of their shares as well.
The flood of money away from non guaranteed banks will affect their share prices and probably their solvency.
The Irish have shown once again that they understand the people. Brown has shown once again that he is clueless.
Other European countries will complain but that will only underline the contempt in which they hold their people.
Make mine a Guiness
Actually Bush was right all year. The American economy was, as John McCain accurately stated, and in fact remains, sound. We are having a significant problem in the banking/finance industry, which affects some other sectors of the stock market, but the broader economy continues to grow, even if at a slower rate than we'd like. Most average Americans are weathering the subprime mortgage "crisis" quite well, even if many of us will have our 401Ks and stock portfolios decline a bit in value in the short term. My suggestion is for the federal government, as a moral matter, to help out the originating bankers who were basically forced by the government to make loans they would not have offered if left to their own business judgment, and to let the chips fall where they may for the two FMs and their shareholders, the borrowers who knowingly took on more debt than they could hope to repay on terms they knew they couldn't meet, and the riverboat gambler buyers of subprime mortgage backed securites, all of whom knew the risk they were taking and none of whom were forced to take it.
Credit has been too free and easy for the last 16 years. The Repulocrat (republicans and democrats) created this mess and now they scream, "We hate the choice we have to make because of 'the other parties' malfeasance, but we have NO choice!" Democrats under Clinton want home loans people on the dole could afford; republicans under Bush turned a blind eye markets that should have been regulated. Both parties have been shipping US jobs overseas and allowing illegal aliens to take root in America and displays citizens clinging to the lowest of the countries economic ladder.
How can any of the mess we're in come as a surprise?
I have a family and I fear for our future. Especially in today's times.
As the US election nears I feel confident terrorists will attack my country if they can. It appears Israel is prepared to attack Iran (probably after the US election but before the inauguration).
The times are fearful. What ever happens to the US will plague Europe as well. The US sneezes and the rest of the world catches cold.
I can't help wondering if what ails the US is also ailing Europe; tight credit, failing banks, and purchasing sub-prime loans.
Bon Chance my friends!
Dale
Credit has been too free and easy for the last 16 years. The Repulocrat (republicans and democrats) created this mess and now they scream, "We hate the choice we have to make because of 'the other parties' malfeasance, but we have NO choice!" Democrats under Clinton want home loans people on the dole could afford; republicans under Bush turned a blind eye markets that should have been regulated. Both parties have been shipping US jobs overseas and allowing illegal aliens to take root in America and displays citizens clinging to the lowest of the countries economic ladder.
How can any of the mess we're in come as a surprise?
I have a family and I fear for our future. Especially in today's times.
As the US election nears I feel confident terrorists will attack my country if they can. It appears Israel is prepared to attack Iran (probably after the US election but before the inauguration).
The times are fearful. What ever happens to the US will plague Europe as well. The US sneezes and the rest of the world catches cold.
I can't help wondering if what ails the US is also ailing Europe; tight credit, failing banks, and purchasing sub-prime loans.
Bon Chance my friends!
Dale
i'm a small business owner and find this whole mess amusing. if i make bad decisions, i pay for it. if i lose money, no body will bail me out. banks are businesses. if they made bad decisions or paid millions of dollars to their ceo's then it is their fault. i can't afford to pay the bank for my debt, and then pay them more because they wasted the money i paid them.
Your 2006 "I told you so" article you cite is impressive but misses a crucial point, namely, the Bank of England's and Fed's irresponsibly low interest rate regime. This is the fuel that lighted the conflagration. Letting central bankers have control over interest rates insulates the single most important element of economic policy from the rough and tumble of political debate. As a result they can get it wrong and the politicians don't have to take responsibility.
ah to vote , the magical mystical mythical choice between a giant douche and a turd sandwich , how exactly does this happen every election , if you can figure out which one is which you must be high on drugs or sleep deprived or in a rubber room having a pleasant day thanks to medication (legal drugs) , however this year is slightly if ever so slightly different and this may or may not be the first time , no matter which puppet is chosen(mr hat or mr hand)they could not possibly be any worse than the doofus man child (gwb) even if they tried
I don't see why governments are trying to support financial institutions when there it is a force beyond them. As a certain Mr Rothschild said years ago 'give me the control of money and I care not for the laws of men', or some such. As is illustrated by JP Morgan's takeover of Wash Mutual, which is one we heard about because it's a biggy, world power is being concentrated and it's not just business because at this level it's a force beyond political power.
At last someone with balls, please Tele sing from the same sheet. Randall,s not deceased.
"Why $700B is it just a tad surprising that that is the cost of the war in Iraq?"
The Iraqi war has cost more than that!
"Am do you believe the man who brought World War 3 to the tipping point, but decries Russian invasion of Georgia as illegal!"
What World War 3... oh, I see! You are comparing the U.S. invasion of Iraq to the Russian invasion of Georgia. Maybe you forget about those many UN resolutions pertaining to Iraq. I don't recall a single one concerning Georgia, can you?
"How much do the private investors in US owe?"
It is NOT the private investors that owe... it is the private borrowers who got loans they should not have, that are now delinquent, with real estate values falling, leaving many financial institutions with upside-down notes. This was caused by a Congress forcing these institutions to write notes (read give loans) to basically anyone who applied, regardless of ability to pay.
"Give every US citizen $0.5M each, and the problem will be solved for $175B (350M population), or a quarter of the Bush Bailout."
Your math is obivously incorrect, but what is a few zeroes between liberals and their useful idiots in the American press? The calculation you propose is actually $175 TRILLION ($175,000,000,000,000!)
"Obviously some animals are superior to others as Orson wells wrote in Aminal Farm."
The actual usage is some are MORE equal... sort of like Affirmative Action, but we wouldn't expect you to catch that. Also, Orson Welles was most known as an actor, H.G. Wells is a renowned Sci-fi author, but it was George Orwell who wrote Animal Farm!
This is the problem we have in the United States, people who do not pay attention to details, and then they go cast votes, knowing nothing about who they are voting for, other than what is pasted on the little commercial break news bits on broadcast TV. Then they go and comment professing wisdom not knowing it is really ignorance.
How sad it is for them, and the actual people who carry the load for them. Continue to vote for people who will take care of you, you will soon forget how to fend for yourself, and by default forfeit your liberty.
How liberty is wasted on those United States citizens who willfully surrender their God-given rights to the government!
Earn money first, then spend it.
Those of us who run our businesses and private lives by this method, although greatly punished by the current prevailing financial culture, sleep very soundly 7 days a week. As the bankers & businesses go through the equivalent of the Dollar DTs, maybe they'll crawl off the floor, stare into the mirror and pledge to:
Earn money first, then spend it.
You don't get it. Congress didn't reject the bill. The people rejected it. If these fools hadn't voted it down they would most certainly been voted out of office in November. Now there is only a chance of it happening.
To quote Mark Twain:
"Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself."
"Why $700B is it just a tad surprising that that is the cost of the war in Iraq?"
The Iraqi war has cost more than that!
"Am do you believe the man who brought World War 3 to the tipping point, but decries Russian invasion of Georgia as illegal!"
What World War 3... oh, I see! You are comparing the U.S. invasion of Iraq to the Russian invasion of Georgia. Maybe you forget about those many UN resolutions pertaining to Iraq. I don't recall a single one concerning Georgia, can you?
"How much do the private investors in US owe?"
It is NOT the private investors that owe... it is the private borrowers who got loans they should not have, that are now delinquent, with real estate values falling, leaving many financial institutions with upside-down notes. This was caused by a Congress forcing these institutions to write notes (read give loans) to basically anyone who applied, regardless of ability to pay.
"Give every US citizen $0.5M each, and the problem will be solved for $175B (350M population), or a quarter of the Bush Bailout."
Your math is obivously incorrect, but what is a few zeroes between liberals and their useful idiots in the American press? The calculation you propose is actually $175 TRILLION ($175,000,000,000,000!)
"Obviously some animals are superior to others as Orson wells wrote in Aminal Farm."
The actual usage is some are MORE equal... sort of like Affirmative Action, but we wouldn't expect you to catch that. Also, Orson Welles was most known as an actor, H.G. Wells is a renowned Sci-fi author, but it was George Orwell who wrote Animal Farm!
This is the problem we have in the United States, people who do not pay attention to details, and then they go cast votes, knowing nothing about who they are voting for, other than what is pasted on the little commercial break news bits on broadcast TV. Then they go and comment professing wisdom not knowing it is really ignorance.
How sad it is for them, and the actual people who carry the load for them. Continue to vote for people who will take care of you, you will soon forget how to fend for yourself, and by default forfeit your liberty.
How liberty is wasted on those United States citizens who willfully surrender their God-given rights to the government!