Interesting piece by Simon Jenkins

[omnipleasant]

Labour and the Clueless Eton Wonders both argue that the problem is the total volume of credit, not that banks are reluctant to lend - i.e. using a nationalised bank would make no difference.

I think they're probably wrong.

[policecar]

RECESSION FACT CANNON

I'm reliably informed the second hand car market is booming - like crazily booming - apparently the car auctions are a bloodbath and stock is becoming scarcer

[flatandy]

How come I can't flog my worthless piece of crap, then, PC?

[wetkingcanute]

I believe in Capitalism and as a Capitalist I believe the government should have left the private banks to go bust.
As a capitalist I also believe that there are some things that should be run by the state. Major infrastructure, roads, railways, water etc.
What the government should do is fully Nationalize a Bank and make it do what they want.
And as for PFI ...WTF...they (the government) haven't got a clue. Taking all the risk and giving away vast amounts of cash.

[moggyonspeed]

Sadly, the article is pretty much spot-on.

Thing is, Mong & Co. have not exercised any kind of sanction whatsoever in getting the banks to lend - they've just pocketed the cash in tranches 1 and 2, hiding behind the oh-so-convenient barricade of "recapitalisation" to give them an excuse not to lend.

The good news (if there is any) is that, people's attitudes toward the banks having changed so much, they'll increasingly look to other ways of managing their money. Fewer debit cards. Fewer credit cards. Magic. Roll on the day when cash makes a resurgence, making "hard-working families'" hard-earned wages go further and their giving less and less to the Revenue. More magic.

[flatandy]

This is weird. Almost everyone on this thread is of the same opinion. The government should have fully nationalised a bank and got it to undercut the private banks.

It's not like the government give a toss about the free market and competition laws if they're happy to guarantee bank loans and so on.

But, despite WKC, PC, Moggy, Simon Jenkins, me, and (to and extent) Omni, all thinking the same thing, no major political party is suffesting it.

British politics is properly fcuked by the right-wing small-state ideology which has stopped Brown or Cameron offering the pragmatic solution.

[moggyonspeed]

"I think they're probably wrong."

Agree with Omni on this one.

Personally I'd rather, if the gummint were going to recapitalise anyone, they recapitalise their own bank i.e. the Post Office, bring back the use of the PO current and savings accounts in post offices up and down the UK, and change its remit to also offering business loans as well. Start off with financing the SMEs this way, and then see how it goes from there.

[VikingHumpingWitch]

Um, I hate to hijack this thread with my "child-like" (copyright Policecar) grasp of matters fiscal, but I don't want to start yet another economy thread either. Have I got the gist of this or not?

Banks lend money to people who aren't really credit-worthy
People start to default and creditors want their money back
Banks have cash flow crisis as a result
Banks stop lending money
Government gives banks money

Is that about right?

[jonren]

Moggyonspeed reiterates some sound common sense.

Irresponsible loan coys throwing money at people who could not afford the repayments and secured by the house. Ocean Finance and others. The joint stock banks were more prudent until recently. Joe public is in for one rough ride. Two years ago, i predicted record repossessions and record unemployment. One or two remember my post. I'm not smug about it, just sad. As you know, people like me and Oldtwit do not have to worry.I truly feel for younger people, paid off, large motgage deabt and no hope of paying their debts. The government has presided over this disaster. To say they could have done nothing is a lie. Could have legislated to curb irresponsible lending. It was done before by MacMillan's government. They fixed the deposit on cars and fixed the repayment period. The motor industry suffered but people got out of debt.

[moggyonspeed]

Hmmm ... not bad for a girlie, Vox.

Seriously, what Andy says about the right-wing ideology thing kinda rings true.

All I'd add to that is that, for the first time in yonks, most everyone that counts in the UK (99.9% of the population) are affected - sometimes really badly - by the actions of a small handful. So in my opinion, here we have what could become a seminal moment in UK politics, where the old left/right arguments cease to make any sense.

Time will tell, I guess.

[omnipleasant]

VHW - it's more to do with the way the bad debt was packaged up, then sold for profit, then re-packaged, then re-sold, and so on until no-one knew how much of the stuff there was, or where it was, so everyone panicked when a there were a few defaults.

The government isnt really "giving money to banks" as such. It's trying to guarantee that they won't go under so they will stop panicking and start lending to corner shops again.

"But, despite WKC, PC, Moggy, Simon Jenkins, me, and (to and extent) Omni, all thinking the same thing, no major political party is suffesting it"

That suggests to me that there's a lot more to it than we realise. As I said, I strongly suspect it's summat to do with competition law, as well as the precise details of the credit problems, which are obviously a lot more complicated than simply "the banks won't lend".


PS - how do you do that quote thingy in your post, anyone?

[jonren]

"Banks lend money to people who aren't really credit-worthy
People start to default and creditors want their money back
Banks have cash flow crisis as a result
Banks stop lending money
Government gives banks money

Is that about right?"


That is correct,Vox, perhaps over simplified but that does not detract from the truth. I pointed out earlier that the government years ago should have legislated to stop the practices you have outlined. Look at the loan adverts that have been in the papers for years now. lending money at extotionate rates and using the house as security.Companies of poor standing and some sharp practices. The government could have legislated them out of business and saved thousands of people untold misery. In the last few years the joint stock banks were just as bad.

When the first personal loans came out in the UK,in the fifties, the maximum amount was £50. To get one you had almost to prove you did not need it. Tell the bank it was to pay a bill and you were shown the door. The would give to top up your holiday outlay. You would be well enough of to have already paid the air fair. Only the better off went abroad so the money was advance to certain payers. there was little or no default. In 1952 I worked in the RBS. I cannot believe that institution is in such dire straits. Founded by Royal Charter 1727, Fckd by stupidity 2008.

[VikingHumpingWitch]

I'm just thinking that if I had known about this, I'd have given up work (and taxpaying) and spent my days running up as many loans as I could acquire, cashing them all in and stashing them under the bed. I would have had to declare myself bankrupt but I'd have a bit fat wad of cash right now.

[sushimo]

On the top of each post is Quote, Modify, on the right hand side. Click Quote instead of reply.

[jonren]

!PS - how do you do that quote thingy in your post, anyone?" - - - -Omni


Right click and highlight the passage. Press copy

In the reply box right click press paste.

[omnipleasant]

Jan 28, 2009 16:19:26 GMT sushimo said:

On the top of each post is Quote, Modify, on the right hand side. Click Quote instead of reply.

Testing..?

[omnipleasant]

Aha.

[jonren]

Omni listen to Sush. I know what you are after now. I quote the MSN way.


"I'm just thinking that if I had known about this, I'd have given up work (and taxpaying) and spent my days running up as many loans as I could acquire, cashing them all in and stashing them under the bed. I would have had to declare myself bankrupt but I'd have a bit fat wad of cash right now" - - - - - VHW


You would be joining thousands of irresposible people who have already done just that. There is little stigma to bankruptcy now. In my day a gun to the head was less shame tha bankruptcy

Had the RBS been in its present trouble sixty years ago, directors and senior management would have been standing in front of trains. Now they will just take a very large bonus and head for the Bahamnas. Baskets!

[jonren]

Omni and Sush. I am a bit slow. Sometimes my posts are overtaken by you 'whippets'.
I trust you guessed what i was trying to do, Omni

[policecar]

as someone else has already said Ocean Finance hasn't caused this mess - Clinton and greed has caused this by repackaging dogshit bad debt and selling it on like it was actually worth something.

People should be in prison for this.