So what happens if a bailout deal is not reached?

dad-of-4

Max_Headroom wrote: »

I keep seeing references on the news (and indeed on sites like this) along the lines of "if a bail out of Wall Street is not forthcoming then the fallout would be unthinkable".

Well what is "the fallout"? What's going to happen if a deal is not reached? Can it really be as bad as all that?

And if they do bail the banks out, how long before they go back to their bad old ways? After all, they know they're underwritten now, they can effectively do what they want now they're officially "too big to fail" surely?

the banks became to big to fall the minute we let them print our money.

if your determined to worry, google

New World Order
Zeitgeist
a crude awakening.

:rotfl:

Max_Headroom_3

GDB2222 wrote: »

A few banks would not be a problem. All the banks would be. The factories can't pay their staff or buy raw materials without banks, etc etc etc. It all just stops working without banks. So, rather than inventing a whole lot of new ones, it's better just to declare the existing ones solvent.

Are all the banks about to fall over without this rescue plan then..? :huh:

GDB2222

Max_Headroom wrote: »

Are all the banks about to fall over without this rescue plan then..? :huh:

If I heard the B&B figures correctly, they have £50bil of mortgages and £20 bill of deposits. The deposits are to be guaranteed by the government. That leaves £30bil of other funding that's going down the pan (except I think the govt's going to guarantee most of that too). Only a bit of that was equity. the rest of it was borrowed from other 'financial institutions', ie banks mostly. That's why there's a domino effect.

There's no hope of raising more equity capital for banks now, so any bank in difficulty is going to keep sinking until rescued.

dad-of-4

Max_Headroom wrote: »

Are all the banks about to fall over without this rescue plan then..? :huh:[/quote

of course not, as banks fall, the assets shift over to other banks, for less money, if they fall, then again the assets will be picked up by another bank, at some point the high risk debts that have caused this get bought up for such a low price, there is vertualy no risk attached, so a subprime mortgage, at high interst rate, actualy becomes a low risk prime mortgage but at a high subprime interest rate.


this all works out so beautifully for the banks that can go the distance if its allowed to go that way. its a win win of imaginable scale.

it can only fall as far as the bank that prints the money.

Walletwatch

GDB2222 wrote: »

If I heard the B&B figures correctly, they have £50bil of mortgages and £20 bill of deposits. The deposits are to be guaranteed by the government. That leaves £30bil of other funding that's going down the pan (except I think the govt's going to guarantee most of that too). Only a bit of that was equity. the rest of it was borrowed from other 'financial institutions', ie banks mostly. That's why there's a domino effect.

No, that is not quite the case. The deposits, unfortunately the better and safer chunks of the bank get taken over by Abbey / Santander, and along with that, the Government rids itself of two things - the pressure of actually running deposits and dealing with deposit holders, and the risk / ignominy of savers queueing up outside B&B branches come Monday morning. It's only the now fashionable term "toxic part" that is taken over by the Government, which is 50 billion pounds of loans and mortgages.

A by-now-disillusioned-soul
WW

Max_Headroom_3

Well, it looks like we might be about to find out the answer to this question... :eek:

Walletwatch

Gordon Brown saying on Sky News that he is closely monitoring the situation. Fat lot of good that is going to do now...

Jonbvn

Walletwatch wrote: »

Gordon Brown saying on Sky News that he is closely monitoring the situation. Fat lot of good that is going to do now...

Gordy really is the proverbial rabbit in charge of the cabbage patch.

He really is defining the analogies for useless! When I was a lad we had

1. A chocolate fire guard.

Then-
2. Ashtray on a motorbike.

Now-
3. Gordy as PM!:rotfl:

BTW better to laugh than cry!

Max_Headroom_3

Jonbvn wrote: »

Gordy really is the proverbial rabbit in charge of the cabbage patch.

He really is defining the analogies for useless! When I was a lad we had

1. A chocolate fire guard.

Then-
2. Ashtray on a motorbike.

Now-
3. Gordy as PM!:rotfl:

BTW better to laugh than cry!

Gordon Brown, the proverbial chocolate fire guard on a motorbike.

poppy10_2

Max_Headroom wrote: »

What's going to happen if a deal is not reached? Can it really be as bad as all that?

Lots of redness: