Lehmans

GDB2222

I feel at the moment like I did when I heard of the planes crashing into the twin towers. Awe at the enormity of what is going on. **

The right move for the US authorities is not to let ideology stand in the way of propping up the banking system. If they are not doing that, then I think we are seeing history being made, and pretty certainly, we'll be heading for a proper recession.



** There was even more awe after the twin towers at the US reaction, which was all that al qaeda could have hoped for, and more!

ad44downey

GDB2222 wrote: »

The latter, but that surely follows from the former. My point is really that the banks cannot be allowed to go insolvent en masse. One or two is maybe not such a big deal, but you saw what happened with Northern Rock. The large banks are very interlinked, so I couldn't see Barclays surviving if HBOS failed, or vice versa. I don't think it's far-fetched to say that a failure of the clearing banks in this country would lead to food riots and martial law being imposed. The obvious thing to do, to avoid that, is simply to declare the banks solvent.

I don't think you can make a distinction between banks becoming insolvent and the payments system breaking down. Say I bank at Barclays, which is insolvent. I turn up at your supermarket and present my Barclays debit card. You accept the transaction, give me my food, and you now are owed money by an insolvent bank. Wouldn't you just rather hang onto the food?

Lehmans is really rather big to be allowed to go under. Of course, it's chapter 11/ administration, but it's all quite worrying, and you have to wonder which are the next dominos to fall.

No-one's suggesting Barclays, Lloyds TSB, etc. are going to go under just because Lehmans does?
It's bad for banks but no-one's suggesting they're all going to go under as far as I can see.

WTF?_2

GDB2222 wrote: »

The right move for the US authorities is not to let ideology stand in the way of propping up the banking system. If they are not doing that, then I think we are seeing history being made, and pretty certainly, we'll be heading for a proper recession.

I think it's more a question that they simply couldn't bail them out. Out of reserves.

Still, once their big banks and institutions start toppling like dominoes I'm sure the consequences of spinning up the printing presses won't seem so dire.

GDB2222

!!!!!!? wrote: »

I think it's more a question that they simply couldn't bail them out. Out of reserves.

Still, once their big banks and institutions start toppling like dominoes I'm sure the consequences of spinning up the printing presses won't seem so dire.

Yes, I see that as the way forward, sadly.

ad44downey

Lehman goes under, Merrill Lynch rescued all in the same week-end.

Bank shares around the globe will take a kicking but we'll live. Maybe other banks will learn from this. Maybe not

GDB2222

ad44downey wrote: »

No-one's suggesting Barclays, Lloyds TSB, etc. are going to go under just because Lehmans does?
It's bad for banks but no-one's suggesting they're all going to go under as far as I can see.

Well:
1. You don't know who owes money to whom in the banking system, and Lehman is a big player. There's also all the derivatives floating around.
2. Other players in the US are suffering the same problems as Lehmans.
3. I think it's over-optimistic to suppose that the UK banks don't have exposure to the US banks.
4. The problems the UK banks face themselves over UK property are just as severe as the US banks, if not more so. Property prices are even more inflated here than they were in the US. It doesn't seem so severe yet, because we are lagging the US a bit in the down part of the house price cycle. There's also all the commercial property as well....

I'm very tempted to lay in supplies of bottled water, baked beans, and some air freshener.

turbobob

GDB2222 wrote: »

I'm very tempted to lay in supplies of bottled water, baked beans, and some air freshener.

Why air freshener of all things?

ad44downey

GDB2222 wrote: »

Well:

4. The problems the UK banks face themselves over UK property are just as severe as the US banks, if not more so. Property prices are even more inflated here than they were in the US. It doesn't seem so severe yet, because we are lagging the US a bit in the down part of the house price cycle.

.

ahhh, the silver lining. At least you'll be able to get a cheap house!

GDB2222

turbobob wrote: »

Why air freshener of all things?

Sorry, cheap joke. It goes with the baked beans.

turbobob

LOL! I was getting ready to stock up on opium, vodka, Pot Noodle and 7.62mm rounds reading this thread :rotfl: Might as well go out with a bang...