Prudence - Why bother?

Buster_Danog

Nick_C wrote: »

I disagree. I would expect people depositing money in an overseas bank to check out the level of cover being offered. In this case, the first c£16K is meant to be protected by the Icelandic Govt. Why should the British taxpayer be expected to pick up the bill if the Icelandic Govt reneges on its promise?

There was a clear identifiable risk.

I presume we're both talking about savers with less than 35k. Can you tell me where the risk was when the Icelandic compensation scheme said it would pay out with the help of other countries if it came to that? If it was so obvious why didn't any government minister identify the fact that this was a lie. Hindsight is great, but I had no reason to doubt the integrity of the compensation scheme or its claims that other countries would assist.

Having said that, I agree that the British taxpayer is not obliged to help, and savers with less than 16k got very lucky - me included.

baby_boomer

I can only start to imagine the effect on house prices and UK business if we operated TonyHamm's banking system :eek:

And we'd certainly not be living a life of relative comfort and communicating like this on the internet if it had operated in the past.

tonyhamm

How do you work out that the internet would not have been created, or peoples standard of living would collapse if the system of banking was made sound?

Its been a disaster with utter lunacy at the top and shocking losses after each and every bubble with this system.
And now we have a bubble so vast, the very pounds you hold may end up like the Icelandic Krona. .

harry_w

Franco78 wrote: »

So how much did the Times donate to Farepak savers when they lost their money, and does the Times also take issue with the average worker paying more tax as a percentage of income than many city fat cats?

It's nice of the Times to say "we told you so" but I don't read the Times. I invested a small amount and had no reason to disbelieve the claims of the Icelandic compensation scheme that other countries would assist them if such assistance were needed. It's simply wrong to say the information was out there for the average Joe on the street. I feel that people who invsted over 35k were responible because they should have been spreading their risk, but beyond that the article is a fallacy - this was not stocks and shares.

The Times, judging by their regular Economics columnist, would rather the poor remain politically apathetic, one of the threats of the Credit-Crunch (now the Banking crisis) is that they might become active and interfere with fats cats and their business:

From The Times
May 1, 2008
Could oil mania be coming to an end?

Speculation has driven up prices - but things could be about to change, some analysts say

Anatole Kaletsky

...there is now only one key uncertainty marring the signs of improvement: the huge increase in energy, food and other commodity prices since the start of this year. This now poses a far greater danger to the world economy and financial system than the correction in US and British housing markets and the related credit losses suffered by leading banks. Commodity inflation is worse than housing and bank deflation for three main reasons.
First, rising prices of food and energy hit poor people hardest and therefore provoke turmoil among groups that would otherwise be politically apathetic, as well as causing greater losses in consumer purchasing power than falling house prices. Secondly, inflation is inherently harder for governments and central banks to deal with than deflation - any politician can cut interest rates and taxes to prevent a financial collapse, but counteracting inflation requires higher interest rates or taxes, which are always more painful to implement and damaging to growth. Thirdly, the countries most exposed to the risks of commodity inflation - China, India and other large consumers of energy and food - are precisely the ones that the world economy now depends on for most of its growth.