If Darling saves our Icesave money - my family will all vote for Labour!

northern5

I think everyone should start writing on this forum in large print from now on....

http://www.telegraph.co.uk/news/newstopics/politics/labour/3178318/Gordon-Browns-eyesight-is-causing-concern-among-aides.html

echelon101

Didn't they invent something for poor sighted people.....

northern5

echelon101 wrote: »

Didn't they invent something for poor sighted people.....

They did, but I don't think they meant for the users to be playing about with the economy...

itsmickdundee

mohthom wrote: »

If this were the case then EVERY bank operating in the UK would have an unconditional 100% savings guarantee. Long and short of it - they don't, it's £50,000

They do. It's just our government hasn't said so for two reasons. First, because just in case our country's coffers really are stretched too far, they can easily say "sorry, it's the £50k limit" and second, because if a world economic power like the UK says every penny is guaranteed, it would cause a massive inbalance in the world economy as so much capital would flood into the country. So they haven't said anything other than the £50k limit to be "in line" with other world economies.

mohthom wrote: »

I believe the term imprudent to be wholly usable in this situation. According to the Oxford English Dictionary the meaning is 'incautious.' If I were cautious I would have spread my risk. If I were looking for a large gain I would have gone with the highest rate-paying account. This is not a cautious method, particularly when contravening consensus advice in that any monies over £50,000 are not protected. I would refer to this kind of action as imprudent, incautious and unsafe. I wouldn't say it was reckless (which is what I think you think I mean), but it certainly isn't cautious.

To an extent, I agree about being imprudent enough to have more than £50k in a banking instition in the current financial climate. BUT, I will go back to my previous point - if all Icesavers had been cautious and started pulling their money out, it STILL would have folded (it would have been another run like NR) meaning people would still be in the same situation as there would have been a lot of people who wouldn't have been able to get their money out in time. Perhaps not as many, but the Icelandics would probably still owe billions...

mohthom wrote: »

Northern Rock and B&B are British banks. The first £35,000 was guaranteed for each of these banks (as they were both nationalised before 07/10/08 the guarantee was £15k less). They didn't 'pay back' balances above this - they made the deposits of savers available to them in the normal manner. Does your bank 'pay you back' every time you go to the cash machine?

The "normal manner" - that is there is no beaurocracy or logistics of dealing with a foreign country as in Icesave. If Icesave was nationalised, the money would just be reinstated as it was with NR and B&B. In both cases - Icesave and NR, for example, depositors money was no more - it had been lent out and was not being paid back. In other words, depositors money no longer existed. So as I have said, identical problem, different method of reimbursement.

mohthom wrote: »

I'm not singling out Icelandic savers - I'm singling out IceSavers. There's a huge difference - that being that Icelandic savers aren't having any problems whereas British IceSavers are - because they're NOT Icelandic savers....

My bad with the grammar here. By Icelandic savers, I meant those UK residents who had money deposited/saved with Icelandic banks.

mohthom wrote: »

I hardly call this an argument about nothing! The fact that I have 30 years of economic experience to look forward to (!) means that I've something to worry about, but I think it's a weak argument that chronological experience (you say 30 years . . . ) should make up for logic and reasoning - experience isn't simply having been there before, it's knowing how to cope with what's ahead. The majority of my problems with the OP and other responses in this thread has been one of terminology - in the same way that there's no such thing as 'Interest free,' Alistair Darling and Gordon Brown aren't 'Saving' the money of IceSave depositors, they're redistributing my money (and YOUR money!) to pay them. The only winners are IceSavers who didn't follow the rules/guidelines. The losers are everyone else.

Well no, but I think 30 years of economic experience is a lot better than average Joe who uses "logic and reason"... Terminology has been very confused on these boards, especially concerning Icesave. But then people are not very well educated on financial matters and every Tom, !!!!!! and Harry seems to want his 10 cents worth on these boards. And regarding the redistribution of Icesaver money, please refer to the consequences of not doing so in my previous post.

You seem intelligent. Surely you can understand my very important observation of letting a couple of billion of UK savings just go down the drain... In other words, the bail is a lot better for the UK taxpayer than just letting Icesavers lose their money. Think about the micro and macro consequences..

mohthom

I absolutely see why many may see that bailing out the savers of the failed banks is a good thing, but I do resent that it's my money being used to do it - particularly when the wealthy have their money returned and charities - as it seems today - do not.

if a world economic power like the UK says every penny is guaranteed, it would cause a massive inbalance in the world economy as so much capital would flood into the country.

You mean like it has for NS&I or the Anglo Irish Bank? Or for the newly nationalised Landsbanki?

if all Icesavers had been cautious and started pulling their money out, it STILL would have folded

If all IceSavers had been cautious they wouldn't have placed more than £50k in the bank to start with, which would have meant much less of a problem to sort out. There's debate, is there not, as to whether IceSave (read: Landsbanki) would have folded regardless of the run on the bank (the run was effectively stopped after all) and was purely a function of rampant debt; the folding of the bank was held off (!) by additional depositors, but the difference was surely negligable.

The "normal manner" - that is there is no beaurocracy or logistics of dealing with a foreign country as in Icesave. If Icesave was nationalised, the money would just be reinstated as it was with NR and B&B.

Again, I don't know that I can subscribe to this. IceSave was a savings wing of an Icelandic bank which had debtors as well as creditors. In the cases of Northern Rock and Bradford and Bingley, were the debts not sold off to compensate the creditors? IceSave couldn't support this as it was purely a savings arm of a larger bank. Landsbanki HAS been nationalised by Iceland, but the money of UK savers not repatriated. No financial repatriation had to take place with NR and B&B, unless my understanding is flawed.

I do think that we agree to a large extent (in that neither of us would like to see UK citizens lose out as a result of a foreign bank going under), but I do object to my pound being worth less as a result (as that is surely the result) - the government have stated that all of the money lost in the IceSave affair will be returned (read: remade - as a proportion of the nation's funds - thus diluting the pound) and it has to come from somewhere. It just screams, to me, of the child who lost his pocket money only to have it returned by his parent. The child never learns a lesson (that knowing where your pocket money is and carefully looking after it is a good idea) and will do it again - to the detriment of the sympathetic parent. The risks were laid out, and those who lose are the rest of the British public - who did not decide to take the risk or benefit from its payouts (as those who saved with IceSave shall).

MohThoM

qamwc1

Should not this be viewed from a macro level rather the rather specific micro level of Icesave. A simple analysis to kick it off:

We are "wealthy" if we have a functioning economy.

We can only have a functioning economy (unless you want to move away from the capitalist model) if there is money circulating

Money will only circulate if you lend (i.e save) to your bank who in turn will lend or if you spend.

The "real" economy still has the capacity to function as long as people spend or banks lend money to businesses.

Banks will only lend if they have trust/confidence that the money will come back.

Peope will only spend if they are confident that their savings are safe and that they will get paid their wages at the end of the month.

If there is no lending/spending then the real economy will decline (i.e. recession) and the capacity to make/service things will be lost.

The value of your money will decline as economy which supports it also declines. (Inflation could take off as the same money chases lower output of the economy).

When we are dealing with such inmeasurables as confidence, the legal technicalities or whether taxpayers should bail out "greedy" savers take a back seat. Otherwise all we would be left with is the technicalities and not much else.

Even on a micro level - Icesave was part of the passport scheme which is there to foster the single market of the EU/EEA. Our political leaders (of almost all colours) want us to have this single market so why should savers be blamed for saving with Icesave. When the man on the Clapham omibus sees an advertisment in his "reputable" newspaper and sees this bank in the best buy tables why should he question the integrity of Icesave. After all there have been times when our own household names have topped the best buy tables - does that mean that we should have thought that Nationwide is risky? Do we/should we not expect out government to have the structures in place to protect us including from ourselves. (They do elsewhere - after all everybody complains about the nanny state?)

The taxpayer always pays - paying Icesave savers directly might actually be the cheaper option. Especially in this case it seems the taxpayer will get the money back eventually from the assets of the bank.

mohthom

I don't agree!

Money is a necessary expression (and, to the earner, the manifestation) of resources/work undertaken. You state that there can only be a functioning economy with money circulating - this is simply not true. A black market can function without common tender - people simply trade goods rather than currency. International trade becomes impossible (without a method of guaranteeing the value of goods), but it is possible to operate on a very small scale. Look at Andalusia in the late 19th Century! Look at Medieval England (in which there was little or no lending to peasants)! A society CAN exist without debt.

Do we/should we not expect out government to have the structures in place to protect us including from ourselves.

There's always someone doing the protecting - armed forces service personnel get killed - and it's easy to make it sound like it's a something rather than a someone. Call it a casualty of war if you will, but I'll be referring to it as a needless death. Some things aren't worth protecting - are the depositors of IceSave above the guaranteed £50k amount (above which they were informed was at risk)? Why should my countrymen be killed (metaphorically) for that?

I'm playing at devils' advocate - please don't feel the need to angrily respond, and there's no offense intended toward servicemen/women and their families and friends.

MohThoM

innovate

mohthom wrote: »

I don't agree!

Money is a necessary expression (and, to the earner, the manifestation) of resources/work undertaken. You state that there can only be a functioning economy with money circulating - this is simply not true. A black market can function without common tender - people simply trade goods rather than currency. International trade becomes impossible (without a method of guaranteeing the value of goods), but it is possible to operate on a very small scale. Look at Andalusia in the late 19th Century! Look at Medieval England (in which there was little or no lending to peasants)! A society CAN exist without debt.

There won't be a global economy without money, and it's just about impossible for any developed country to go back to self-sufficiency. "Global" is here to stay, and is just becoming more so.

Debt has been with mankind for centuries - first documented examples in the bible but I reckon debt of one sort or another has existed much before then.

mohthom wrote: »

Some things aren't worth protecting - are the depositors of IceSave above the guaranteed £50k amount (above which they were informed was at risk)? Why should my countrymen be killed (metaphorically) for that?

Why should Icesave savers have been treated any differently from Northern Rock and B&B savers? And RBS and HBOS ones? Do you actually know what the net cost of recompensing the Icesave customers is? Or are you arguing a point of principle (in which case: go back to the start of this paragraph).