Does the chancellor live amongst us "normal" folk ?

VTech

Just been watching him on TV this morning and I struggle to see his vision of growth and how we will sell off the banks.

I personally took offence when he said that the UK people had worked hard to invest the £60,000,000,000.00 in order to save the banks and deserved to get their money back. WTF ! I never wanted to invest !!!

I realise it was the only option and that there was no way we could let them go but it wasnt through my own choice to invest, likewise the removal of the RBS head honcho doesnt help, wanting to grow the bank back should have been the major factor, not trying to sell of for the quickest return which in fact will see us all lose billions of the initial investment.

Business growth is where its at, allow businesses to flourish, if they have a decent plan let them have a fighting chance, Dubai did it and look whats happened there !

We are a country that picks up the pennies whilst the pounds float away on a warm blanket of air.

daviesee

Regardless of how we got here, we are where we are - I believe that the Government should not sell off any banks until a profit is made on the investment, if at all. The banks that are turning the corner could provide a steady income for the Chancellor and they won't be able to sell the banks that are not turning things around.
Why let that go? Oh yes, there is an election looming and the short term future must look bright. :roll:

Sirius631

Personally, I think they should have let Northern Rock go bang. There were already safeguards in place to protect deposits of up to £30,000. Anyone with more than this in any one place needs their head examining. This would have acted as a warning to other banks.

There is a cry of "We've got to pay the bankers what they expect or they will go to other countries." I say that this is a global recession so there is nobody that will be hiring a great deal, so pay them what they are worth (less than they think) and if they want to jump ship then they should provide their own life preserver.

VTech

Sirius631 wrote:

Personally, I think they should have let Northern Rock go bang. There were already safeguards in place to protect deposits of up to £30,000. Anyone with more than this in any one place needs their head examining. This would have acted as a warning to other banks.

There is a cry of "We've got to pay the bankers what they expect or they will go to other countries." I say that this is a global recession so there is nobody that will be hiring a great deal, so pay them what they are worth (less than they think) and if they want to jump ship then they should provide their own life preserver.

They had no choice, the death of northern rock going totally bankrupt would have destroyed the UK as trust left the £ and we would now be totally bankrupt.
Its not as easy as simply letting a bank go bust, all the talk about should we/shouldnt we help was nonsense, there was never a choice in the first place, we were always going to assist.

4kicks

From personal experience the chancellor is indeed only visiting this planet.

I think the governments handling of the whole crisis as been very naive:

I find it very curious why the government didn't let the banks fail with a written understanding they would honour all ongoing interbank liabilities, plus personal assets as well as "issuing cash".. (another buyer couldn't do that but as the govt is the lender of last resort they effectively could, you could print gilts as payment of contract obligation as opposed to issuing them to reduce the banks debt levels), hence negating any failed bank bankers bonus as you put the bank out of business and they just buy the assets (and staff) you want, nothing more.

I would have let N-Rock fold in the same way the US let Lehman fold to show the other banks that as they have failed youre not messing around and will not overpay...

Then you of course hold on to the asset until its profitable, as well as insisting on 100% board control (not just board presence)...sod the other shareholders and key warrant holders, they've lost anyway. Interestingly the US govt made an $18 billion profit on its TARP I-Bank "investment", and as you've effectively created a duopoly (more so as Co-Ops in the brown stuff) in UK highstreet banking the profits on Govt share of Lloyds should have a higher ROI...

The concept of paying average UK investment bankers (and they are decidedly average, trust me!) more than they are worth because "otherwise they will go elsewhere" is farcical, ..Imagine some banker telling Mrs I-Bank that shes got to leave behind China Whites and Sketch, and little Tarquins got to leave St.Pauls to go and live in Singapore....

ballysmate

Hey! Who you calling normal?

FocusZing

The bonds markets still look highly leveraged, property asset prices are at historic highs, with historic low interest rate. Inflation rates are rising and would be much higher if not manipulated down (the BOE remit was to control this with interest rates).

Interest rates will start to rise (they are starting to in America). So there will be much more pressure on a property market correction (which is why GO's latest policy is to help co ownership, stimulus). Real problems still ahead.

It does really annoy me Banks were allowed to turn into a money making machine by pycopaths. Leaving behind the traditional conservative approach to banking for mortgages (2.5x salary) and investment for business.

Max Keiser is certainly exteme with some of his views (probably playing the media game for the headlines and attention). In the same token he speaks a lot of sense too, having played the game.

pinno

FocusZing wrote:

It does really annoy me Banks were allowed to turn into a money making machine by pycopaths. Leaving behind the traditional conservative approach to banking for mortgages (2.5x salary) and investment for business.

I presume you are using the word conservative in a non-political sense ?

It was Dennis Healey in 1976 who tried in vain to limit mortgages to 3x annual income. It was quoshed by the then Tory opposition.

The mess was caused by huge speculation in the mortgage market where lenders were lending to people and organisations who had no hope of paying it back and these sub-prime mortgage/borrowers were hidden amongst portfolios where 95% of the borrowing was reasonably safe. The house of cards collapsed and we are paying for it.

The reality has cut deep as the effect of the bubble that burst has revealed the true depth of what was a paper boom. The economic bubble before the collapse had little or no substance.

plowmar

There is no sense in any of Osbourne's announcement apart from politicaly for the benefit of his 'chums'

Selling back LLoyds (which the market is "keen to invest in" - Wed. last week; whilst the share price remains stagnant) and RBS will lead to considerable losses, which of course will all be Labour's fault, but future investment profits in the medium term.

The increase in loan/deposits coverage forced onto the banks will reduce the amount of funds needed for lending which of course is needed to stimulate the economy. Barclays and Nationwide ,who have both been increasing their lending, will now have to stop.

The mad scheme for mortgage assistance only helps to maintain the value of properties not nescesarily making houses cheaper to buy for the vast majority of homebuyers. THe correct thing for a Conservative Govt. to do would be to allow property prices to fall until supply met demand - letting market forces work.

FocusZing

pinarello001 wrote:

FocusZing wrote:

It does really annoy me Banks were allowed to turn into a money making machine by pycopaths. Leaving behind the traditional conservative approach to banking for mortgages (2.5x salary) and investment for business.

I presume you are using the word conservative in a non-political sense ?

It was Dennis Healey in 1976 who tried in vain to limit mortgages to 3x annual income. It was quoshed by the then Tory opposition.

The mess was caused by huge speculation in the mortgage market where lenders were lending to people and organisations who had no hope of paying it back and these sub-prime mortgage/borrowers were hidden amongst portfolios where 95% of the borrowing was reasonably safe. The house of cards collapsed and we are paying for it.

The reality has cut deep as the effect of the bubble that burst has revealed the true depth of what was a paper boom. The economic bubble before the collapse had little or no substance.

Yes. Tories, "New" Labour (Blair, Brown) were much the same.

k-dog

pinarello001 wrote:

FocusZing wrote:

It does really annoy me Banks were allowed to turn into a money making machine by pycopaths. Leaving behind the traditional conservative approach to banking for mortgages (2.5x salary) and investment for business.

I presume you are using the word conservative in a non-political sense ?

It was Dennis Healey in 1976 who tried in vain to limit mortgages to 3x annual income. It was quoshed by the then Tory opposition.

The mess was caused by huge speculation in the mortgage market where lenders were lending to people and organisations who had no hope of paying it back and these sub-prime mortgage/borrowers were hidden amongst portfolios where 95% of the borrowing was reasonably safe. The house of cards collapsed and we are paying for it.

The reality has cut deep as the effect of the bubble that burst has revealed the true depth of what was a paper boom. The economic bubble before the collapse had little or no substance.

That whole thing drives me mental - borrowing too much also pushed house prices through the roof and all those people saying "look how much my property is worth now" don't get the fact that in paying a mortgage for 20 years they've paid more than even the hugely inflated price they're getting for it.

And now as a 35 year old making reasonable money and even buying his first house at 22 I can't afford a decent house for my family. It's not even a case of saving up - it's just not possible in a million years.

The only people who profited from all the nonsense were the banks and the rich who own multiple properties - and I don't see why I should care about either of those at the expense of regular people.

Frank the tank

Not read the thread but when the "nationalised " banks become profitable let's keep hold of them so the profits can go into government coffers rather than future profits go into the hands of the few. We all dug them out, let us have the benefits.

In answer to the title of the thread though, no he doesn't. Suprised a man with Vtechs intellect should ask a question with an obvious answer.

Mikey23

But they want to take away my bus pass, free prescriptions and winter fuel payments... That'll sort it then

ballysmate

pinarello001 wrote:

The mess was caused by huge speculation in the mortgage market where lenders were lending to people and organisations who had no hope of paying it back and these sub-prime mortgage/borrowers were hidden amongst portfolios where 95% of the borrowing was reasonably safe. The house of cards collapsed and we are paying for it.

The reality has cut deep as the effect of the bubble that burst has revealed the true depth of what was a paper boom. The economic bubble before the collapse had little or no substance.

There certainly was reckless lending but also reckless borrowing. People were remortgaging, taking equity out of their property to fund lifestyles they could otherwise not afford. There were people releasing equity to buy cars and even holidays, which they would in effect have to pay off over 25 years. Just because someone is willing to lend you money, it doesn't always mean that it is a good idea to take them up on the offer.
I have never fully understood our, and by that I mean the man in the street, preoccupation with the rising value of our homes. It is usually only an issue if you wish to sell up and downsize or it is a bequest. For the rest of us, rising prices ensure that if you want to move up the housing ladder, the next rung is moving that much further away. The young generations now can't afford to buy a house of any description.

k-dog

^totally. The upward trend is at least linear not a flat cost increase - so any advantage is lost by the fact that your new house is more more expensive than your profit on the old one. Crazy how anyone thinks it's a good thing.

The only time it's an advantage is if you're old and want to downsize - but like I said before you've already paid for all that equity by paying a mortgage over decades (no-one ever looks at the total amount - just the monthly payment).

It would be much more sensible if you bought a house, lived in it for a while and then sold it on for a similar amount. The whole system is going to collapse soon as the sums just don't work.

If house prices are going up by 10% a year (in some places anyway) and salaries are only going up a small % then it doesn't take a genius to see that in a few years no-one can afford anything. We're going to be considerably worse off than previous generations unless something radical happens.

AchillesLeftKnee

Ballysmate wrote:

There certainly was reckless lending but also reckless borrowing.

Bullseye. Thank you. So nice to see someone else who's willing to see past the, frankly, propaganda we've been fed with regard to where the blame lies for the mess the place is in. IMHO, one of the most sickening aspects of the whole thing has been the way the blame has been heaped onto the banks by politicians whose job it was to prevent it happening in the first place, and by the sizeable minority who can't possible accept that they are also to blame.

Clearly I'm not saying the banks were blameless, but the way in which the other guilty parties have colluded to focus blame on the banks is, at best, distasteful, and at worst downright dangerous - the first part of learning from mistakes is to admit to making them, and that just isn't happening.