tag:blogger.com,1999:blog-2948538160252327076.post8374089751251596471..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: UK Bank pre-tax profits higher now than before the crisisAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2948538160252327076.post-81374385178515388322012-07-17T13:32:57.348+01:002012-07-17T13:32:57.348+01:00Only to be expected. This is Britain.Only to be expected. This is Britain.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-57007306356282354412012-07-17T13:21:20.738+01:002012-07-17T13:21:20.738+01:00The main reason the general public didn't obje...The main reason the general public didn't object to what was ahppening (apart from that they probably didn't understand it anyway) was property. All those nice TV progs about making lots of money for doing very little by buying property - and all the homeowners( I am one btw) who just liked the idea that they were increasing their worth without doing anything at all. Situation now is the same in that no-one is prepared to accept cuts in living standards. We will end up having the situation forced on us, which of course is no good to anybody but there it isernienoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-49667575802982120332012-07-17T10:56:53.047+01:002012-07-17T10:56:53.047+01:00I disagree with Ralph! (what else is new?)
It is ...I disagree with Ralph! (what else is new?)<br /><br />It is shareholders, not depositors, who truly benefit from and clamour for their banks getting bailed. Shareholders stand to lose everything. Depositors have FSCS and while many depositors may not even be aware of it their savings are protected by the FSA insurance.<br /><br />A bank where depositors share the risk would be:<br /><br />a) certainly a bank with no FSCS insurance and therefore more vulnerable to a run by depositors.<br /><br />b) most likely a bank where depositors are shareholder, ie, a cooperative bank or something similar. Which is a fine thing but hardly a new idea that could enter the banking industry today and heal it. It's already there, and look at how bad things are.<br /><br />In the end I think Ralph's suggestion needs not be heeded. We just need to let banks fail. Depositors will continue to be safeguarded by FSA insurance. Let the angry shareholders take the executive managers to court for fraud. That is how the system is supposed to work, and these bailouts are preventing the system to purge itself of the rot.drooghttp://gravatar.com/droogthegwirenoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-60825593425072430172012-07-17T01:23:47.788+01:002012-07-17T01:23:47.788+01:00Alice this country is screwed. The rot goes deep....Alice this country is screwed. The rot goes deep. Perhaps there is nothing that can save us.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-41354489925098302052012-07-17T00:45:30.735+01:002012-07-17T00:45:30.735+01:00I don't often agree with Ralph Musgrave, but I...I don't often agree with Ralph Musgrave, but I do on that point. The biggest cause of reckless bank behaviour is the State guarantee of deposits. You can put your money in the most dodgy sounding bank imaginable, but as long as they are covered by the FSA in the UK, then you get your money back if they go t*ts up. Why should a bank act prudently, make sensible loans, not get involved in casino style investment banking, if their returns will be lower, and the interest they can offer to depositors is equally low? They can't compete with the dodgy banks offering higher rates.<br /><br />If depositors stood to lose all their money if the bank went bust then they would be very careful where it was put. And that would be a powerful brake on risky bank behaviour. Any bank that took aggressive risks would risk depositors taking fright and leaving, causing a bank run.<br /><br />As it is the taxpayer takes the risk for depositors instead. If a bank goes bust, the taxpayer has to stump up, like in the case of Northern Rock, or the Icelandic banks. No-one would have put a penny in an Icelandic bank without a State guarantee.Jimnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-49306097892811837492012-07-16T16:26:34.760+01:002012-07-16T16:26:34.760+01:00Another way in which it’s our fault is thus.
Eve...Another way in which it’s our fault is thus. <br /><br />Everyone wants the money they deposit in a bank to be used for COMMERCIAL purposes (loans to businesses, mortgages, etc): that way the bank makes the money work, which earns interest for depositors.<br /><br />At the same time, depositors refuse to accept the risk normally associated with COMMERCIAL activity: the possibility of losing some or all one’s money. Depositors want TAXPAYERS to foot the bill when a bank goes bust. Then they throw up their hands in faux surprise when told about the size of the bill footed by taxpayers.<br /><br />People who want their bank to invest or lend their money on should carry the relevant risks, as advocated by Lawrence Kotlikoff, Prof R.A.Werner and others.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-13953125009769412992012-07-16T13:14:03.961+01:002012-07-16T13:14:03.961+01:00@Jim
A number of economists did predict the crisi...@Jim<br /><br />A number of economists did predict the crisis well ahead of time including Steve Keen, Ann Pettifor, Joseph Stiglitz, & Nouriel Roubini.<br /><br />They all agreed and argued cogently about what the problem was i.e. banks creating too much debt in order to make excessive profits with no regard to consequences. <br /><br />This is not hard to understand. I think we can blame bankers for breaking the law, and for lending unwisely--they are the experts and must carry the burden of decision making. We can also blame one-eyed politicians who made bad policy and who ignored opposing opinions when they did come across them.<br /><br />And note that the same people who predicted the 2007 crisis are predicting another one quite soon. Perhaps 2012 or 2013. And still no one is listening. The voices are much louder this time.<br /><br />The problem now is the same as it was in 1929, and 2007. The argument about hindsight doesn't really apply.Jayaravahttps://www.blogger.com/profile/13783922534271559030noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-41981556777523573222012-07-16T10:02:36.239+01:002012-07-16T10:02:36.239+01:00I'm afraid that you are looking at this with h...I'm afraid that you are looking at this with hindsight. If anyone had tried to slow the party down in the mid 2000s, to stop the massive rise in house prices, to increase interest rates to slow the economy down and get it on a more even keel, they would have been absolutely murdered by the electorate at the polls. With hindsight we can see that is what should have been done, but anyone suggesting it at the time would have been howled down. <br /><br />We have no one to blame but ourselves, collectively. We would not have accepted a small amount of pain then, because we could not see the large amount of pain in the future. Such is human nature.Jimnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-41696849125790457322012-07-16T08:38:49.815+01:002012-07-16T08:38:49.815+01:00Would some of the increase in profits be attributa...Would some of the increase in profits be attributable to the banks' being given ultra-cheap money and investing it in ultra-safe government bonds, thus getting a steady flow of risk-free income?Sackersonhttps://www.blogger.com/profile/17284329249862764601noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-63216107609825830122012-07-16T04:46:13.734+01:002012-07-16T04:46:13.734+01:00What I suspected all along....What I suspected all along....Anonymousnoreply@blogger.com