So what happens if a bailout deal is not reached?

poppy10_2

Treadmill

I think The Daily Star sums it up for me...

neverdespairgirl

Jonbvn wrote: »

1. A chocolate fire guard.

Interesting - "chocolate teapot" is the one I'm more familiar with.

Treadmill

"He's as much use as a suck in a game of blow football" is a fave of mine

clobber_2

...as a one-legged man at an @rse-kicking contest

Max_Headroom_3

poppy10 wrote: »

Lots of redness:

But so what?

The world seems to still be spinning this morning...

WTF?_2

Max_Headroom wrote: »

But so what?

The world seems to still be spinning this morning...

The problems will hit home when a big bank goes down taking people's life savings with it. A life of graft and saving - gone. All for nothing.

Then there are the knock-on effects ... credit will probably dry up totally. Even credit cards which many people seem to think are some sort of magical money wand and immune from the laws of economics.

Otherwise sound businesses will go bust because they can't get credit to cover operating expenses while waiting for money owed .... retail will go to the wall ... forget about business expansion. A recession will almost certainly become a depression.

As the economies crash, so expect the value of the currency associated with them to crash also. So your savings, even if the bank doesn't go bust, will buy you less of anything that has to be imported. I wouldn't be surprised if the government pursues inflationary policies to fight the deflationary effects of what is happening - thus producing stagflation where prices of essentials rise but average incomes fall.


A couple of years back, I spent some time travelling in a Latin American country that is officially described as third world yet has plenty of modern infrastructure up to US/European standards too. You can see the sort of thing I'm talking about in action there - a lot of stuff was very 'cheap', anything locally produced or labour intensive, but most of the luxuries we take for granted were way out of locals price ranges and even the 'cheap' stuff was expensive relative to their own incomes.

Meanwhile, the cost of things was always on the up. I saw bus fares rise by about 5% in the month I was there. Credit cards were simply unheard of for the general population (rich people only). Bank overdrafts were a no-no - you kept your bank balance healthy or the bank cancelled your account. Most banks wouldn't even give you an account unless you had a healthy amount to deposit.

Max_Headroom_3

Thank you !!!!!!, that's the most detailed response to the "what if " I've heard, anywhere.

Why will credit dry up though? I totally understand why banks won't lend to each other (concerns about getting the cash back), but why won't those who have the cash (as some must, if there is interbank lending that's being thwarted) lend direct to the public/business, assuming of course they meet sensible criteria?

And surely many many (most?) businesses, whilst requiring operational lending, must have greater assets so are safe to lend to?

This is the bit I don't get. For sure banks who've leant imprudently may/will go down, but they can't all be in that boat.

GDB2222

Max_Headroom wrote: »

This is the bit I don't get. For sure banks who've leant imprudently may/will go down, but they can't all be in that boat.

You're forgetting about inter-bank lending.

BTW, I picked up The Times this morning, with that depressing front page, and I didn't even open it. Quite frankly, I was wondering whether I wouldn't have been better off with the Daily Star.

Max_Headroom_3

GDB2222 wrote: »

You're forgetting about inter-bank lending.

Ah, so what you're saying is even the "fit" banks will be pulled down as the sick banks owe them too much money that won't come back in if they sink?