Torygraph: Lenders may have tapped Bank scheme for £200bn

WTF?_2

If this is true, then the banks are in very big trouble indeed:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/03/cnsls103.xml

Troubled lenders in the UK may have tapped the Bank of England's emergency funding scheme for as much as £200bn, according to investment bank UBS - double the most aggressive estimates.
Alastair Ryan, UBS banks analyst, has calculated that "the take-up could be £200bn or more".
..
The Bank for International Settlements on Monday revealed that UK lenders issued a record £45bn of mortgage-backed bonds in the three months to June in order to use the scheme. Mr Ryan described it as "a qualified success" because inter-bank lending rates are still well above base rate at about 5.75pc.
Bankers and economists were surprised by the forecast, calling it "unlikely but plausible". One, Simon Ward, economist at New Star, said: "If it is right, then the British banking system is relying much more heavily on state support than either Europe or the US, which would suggest the banking system here is in greater trouble."



Not looking good at at all - with a possible tidal wave of UK mortgage and loan defaults about to hit, UK banks have already had to get potentially hundreds of billions of pounds in bailouts just to rescue them from their ill-advised US sub-prime investments.....

Just how much cash does Gordon have available to hand out to get various people off the hook of their dodgy investments? Already billions on the NR nationalisation and bailout plans for homeowners, maybe hundreds of billions of bond swaps and now talk of a £40bn 'take on the dodgy mortgages' bailout. Bankrupt Britain here we come.

Max_Headroom_3

It's a good job the entire country is just so cash rich isn't it..? :rolleyes:

WTF?_2

Yes - as the chancellor and PM never tire of telling us "The fundamentals are strong, low interest rates and high employment" so I'm sure we'll just sail though any crisis


I'm surprised more people aren't asking why, after almost a decade of unprecedented growth and supposed 'prosperity', the wheels are flying off the wagon so spectacularly only a few months after the economy starts to cool off?

We arguably aren't even in recession yet, but we are still seeing all sorts of businesses, individuals and institutions in crisis. And we're warned that the money isn't there for useful improvements to our society or more pay to compensate the ordinary person .... but the government still finds tens or even hundreds of billions in bailouts for selected people who have put themselves into a bad financial situation through bad decisions and greed.


Something is very, very wrong.

carolt

Couldn't agree more, !!!!!!.

If the govt had devoted a fraction of their efforts and our finances to actually getting the economy back on track, instead of trying to prop up the housing market and bail out those who got themselves into their own mess (whilst feathering their own nests well, of course), then we might not actually be in this mess at all.

Please, let the Labour Party see sense and BOOT OUT GORDON THE MORON.

I almost feel sorry for the Tory Party and the mess they're going to have to clear up once they're in power.

And, given their track record under Maggie, I don't exactly have much hope they're going to exactly target their resources at those in greatest need. Shame we don't have any electable alternatives.

HammersFan

carolt wrote: »

Shame we don't have any electable alternatives.

Carol - I hope all is well with you. Of course, I still don't think house prices will fall as much as you do...but after a very long time, I found something we agree on. Well said.

harbinger13

carolt wrote: »

If the govt had devoted a fraction of their efforts and our finances to actually getting the economy back on track,

I almost feel sorry for the Tory Party and the mess they're going to have to clear up once they're in power.

And, given their track record under Maggie, I don't exactly have much hope they're going to exactly target their resources at those in greatest need. Shame we don't have any electable alternatives.

For knowledge - what would be viable efforts for getting the finances and economy back on track - it would mean less of Govt spending. Where do they currently spend more. I have read they pour a lot into NHS, if the retrench on that spending then the public is sure to cry - NHS is too big an institution whose finances are out of control and no body is competent enough to control it either.
True - instead of wasting money to support those Housing Builders by providing 30% free deposits - they could have saved the money. But that is not too much of saving - but it would have helped.
If the Govt reduces spending in other big projects such as transportation, then our bills will rise. I just dont see any place substantial where they can cut back.

It would be good to know - if some have an idea of where to stop Govt spending. They might be reading this forum.


As far as the alternative goes - Cameron is just a one liner ranter - for the media. He just does not present any alternative in the House. All he does is jab jab jab...

We need somebody who would own that the Govt is in a MESS and there will be hard times in the near future - by letting the economy cool down - or even tough out a year of recession which is followed by less demand and rise in joblessness - but controlled spending, bringing the books in Balance. This should be the basis on which the new leader should enter the race - but alas we know people hate the truth.

carolt

You'll notice my post was in the past tense - things the govt. should have done rather than things they should do - properly regulating the housing market, several years ago, overseeing the banks' excesses to prevent a Northern Rock etc - obviously rather too late for that now.

As to what they should do now - don't think there's any way out of this with out an awful lot of pain, frankly. Not sure I agree that cutting public spending is the way out of this, although I'm no economics expert - but if that was the way, I'm sure existing money could be used more effectively. My OH works in the public sector and is shocked by the amount of public money wasted on useless consultants who for huge sums (like £1000 a day!) are brought in to just state the bleeding obvious. A move away from the use of consultants would be great but is unlikely, I would have thought to happen under the Tories either, as they're even more in love with them.

WTF?_2

There's simply no way out of this other than to let the markets find their level and for the financial authorities to work to maintain stability as it all unfolds.

Those who made bad investments have to take their lumps.


It's sadly typical of the new mentality that seems to have taken hold these days that there's some sort of 'magic bullet' for every situation. For the housing market it's 'low interest rates' that have been seized upon as the solution to the problem by those who demand simple answers to complex problems.

Max_Headroom_3

Here's a thought. If the banks are in so much trouble (and it's not unlikely) then maybe that is the real driver behind the governments "lets not let anyone get their house repossesed, lets buy it and rent it back to them first" madcap scheme.

Think about it, another two "Northern Rocks", another 2x £50 million pounds for the government to find! (They've set the precident now, they can't avoid having to step in if it happens).

Much cheaper to bail out the banks bit by bit as mortgages default, that way you're only picking up some of the pieces, not all of them.