Gordon off the pace on bank debts

bubblesmoney

amcluesent wrote: »

>selling more derivates 100s of times more than the true value of they assets they were hedged on<

Contracts for derivatives amount to 100's of $$ TRILLIONS! A house of cards, and now the music has stopped we'll see where the 'value' is! Right now, the only things that matter are :

Food supply, roof over head, gold, guns'n'ammo, yellow-cake. Everything else is fluff.

i never could figure out how some shares (like IT companies and dotcom companies) get sold at hundreds of times the P:E ratio. the entire pricing is based on profits to be milked from further price appreciation. further price appreciation is the only hope of profit ion those shares as there is no intrinsic value in buying those shares at those inflated P:E ratios. very similar to the housing boom where every tom !!!!!! and harry (some of the BTL) bought houses purely with an eye on making profits out of further price appreciation rather than rely on it being a viable venture based on rental income alone. the minute prices fall these inflated investments fall like a pack of cards. higher P:E are due to speculation i feel as there is no intrinsic value (return on investments) other than the hope for capital appreciation based on further speculation.

baby_boomer

Generali wrote: »

Unfortunately things aren't quite that simple [i.e. the banks don't really know the state of their own loans and assets]

That may be true, but it hasn't stopped the Telegraph rightly calling for more openness from the banks about the bad debt they hold.

The Spiegel's revelation that the German banks have only made write downs on 1/4 of their [worst] debts is exactly the sort of dishonesty that destroys confidence in and between banks.

You can always tell when Gordon's in a pickle.

Brown calls for world action on credit crisis - Yahoo link

ManAtHome

baby_boomer wrote: »

You can always tell when Gordon's in a pickle.

Brown calls for world action on credit crisis

Just seen him on the news - apparently our banks are ok, it's just them pesky foreign investments they've been landed with...

Thrugelmir

baby_boomer wrote: »

Sleepy old Gordon wakes up to the real issue a little late

[It's the weekend before the short-selling ban on UK bank shares expires. Talk about policy made on the hoof:rotfl: ]

Yahoo Finance

:idea: "Gordon Brown has demanded banks come clean over their "toxic assets" :idea: amid signs the Government is preparing a second bail-out of the sector. [Liam Halligan has been saying that this is the key issue for about a year.]

The Prime Minister said it was essential to know the true level of banking losses before futher [FONT=Verdana,arial,sans-serif]steps can be taken to kick start the economy.[/FONT]

In an interview with the Financial Times, he refused to rule out full-scale nationalisation or a further injection of taxpayers' cash to restore lending.

Despite shoring up banks with £37bn of public money, many otherwise healthy businesses are still struggling to get financial support.

"One of the necessary elements for the next stage is for people to have a clear understanding that bad assets have been written off," Mr Brown said.

"We have got to be clear that where we have got clearly bad assets, I expect them to be dealt with.".................."

Unfortunately it's anything but clear. The rumour was that the Barclays deputy just stood down because of disagreements within Barclays about the extent of their bad debts.
Perhaps he banks a) didn't know and b) didn't want to fess up all at once because the extent of their incompetence is even more mind-boggling than anyone could have imagined.

And for someone who's invested £billions of our money in these banks, and is making key decisions for our economy, shouldn't he have have insisted on getting the banks' unexpurgated figures for bad debts months ago? :eek:

Yet more spin. A deflection away from the fact that the Government has no idea what to do.

When will the Government accept some responsibility for some of the issues now affecting the UK economy.

Dylanwing

And Gordon will come clean on the off-balance sheet PFI deals?

Generali

1echidna wrote: »

Just as a matter of interest who trades in these derivatives and who will bear the losses?

A lot of derivatives are traded by private sector companies, others speculatively by banks and investment companies.

A simple example of a future that I saw traded was there was a British arm of a US book seller. The UK arm had to make licence payments to the US owner through the year at a rate determined at the start of the year. They used to by a series of GBP/USD futures at the start of the year so they knew how much GBP they had to generate to pay the US parent. It reduced their risk.

The taxpayer will bear any losses for the most part as Governments have decided that private sector liabilities (those of banks for example) should be borne by the taxpayer.

baby_boomer

ManAtHome wrote: »

Just seen him on the news - apparently our banks are ok, it's just them pesky foreign investments they've been landed with...

Here's the quote

Gordon wrote:

"As far as British banks are concerned the greatest problem that we have is international. It is the exposure of British banks to international losses that is the biggest problem that we face."

It looks like a British problem to me! We're going to have to pay for it! And it's Gordon's home grown "regulation" that let the banks be so reckless.

Dylanwing wrote: »

And Gordon will come clean on the off-balance sheet PFI deals?

Steady on. There's only room for so much financial honesty in one year.

If the Tories win the next election, they should commission an independent audit of the nation's finances, including PFI and pension liabilities, to draw a line under the Brown era borrowings and start with a clean slate ( albeit with a millstone round their necks).

Dylanwing

If the Tories win the next election, they should commission an independent audit of the nation's finances, including PFI and pension liabilities, to draw a line under the Brown era borrowings and start with a clean slate ( albeit with a millstone round their necks).

Sadly, I suspect that the Tories will also carry on with PFI as they are also blinkered into believing that the private sector is the answer to all of our woes. Expect a re-vamped version with loads of 'value for money' and 'efficiency' buzzwords, but still allowing the private sector to shaft taxpayers.

bubblesmoney

Dylanwing wrote: »

Sadly, I suspect that the Tories will also carry on with PFI as they are also blinkered into believing that the private sector is the answer to all of our woes. Expect a re-vamped version with loads of 'value for money' and 'efficiency' buzzwords, but still allowing the private sector to shaft taxpayers.

tories started the PFI, but there was a vast difference between what they did and the huge con in PFI done by labour. brown was one of those that criticised PFI when the tories launched them on a small scale but the minute that he was in govt he saw that as a way to launch grandiose projects, shut rnhs hospitals and the like and start PFI hospitals etc, for example they shut 2 nearby hospitals with 500 beds (which already have bed shortages) each then build a PFI hospital as a replacement with 800 beds. no prizes for guessing what happpens with the bed situation once the old ones close and the new PFI one opens. gordon ofcourse gets to hide the enormous wasteful expenditure off the balance sheets as some future govt will carry the huge bill for the PFI long after gordon is off the scene.

tories started pfi on a very small scale fto finance some infrastucture projects. which was a very reasonable thing to do. but this charlatan is doing it on a massive scale to keep his extravagance off the books. this pfi bill is a ticking time bomb for future tax payers especially with so many such projects in the pipeline.

some people (in the know) surely must have made a killing on the share market on some construction shares who were favoured to get the pfi deals. wonder how much richer many of these labour bigwigs got after they got in power.

baby_boomer

Times - Gordon plays the patriotic card on bank lending

The man who for 12 years has sat at the head of the financial regulation system for the UK pretends to be shocked that 80% of UK bank lending went abroad.

Where did he think the banks had been making the £billions that he raked off to the Treasury while he supported the City and praised it for being an international leader :rotfl:

And here's Liam Halligan in the Times reiterating his stance that the banks should fess up

".......this ghastly episode will only end once senior bank executives are forced, under threat of custodial sentence, to FULLY DISCLOSE to one another and the authorities, on the basis of all available evidence, the extent of their sub-prime liabilities.I accept that's not easy. The toxic debts have been sliced, diced and securitised – then sold on many times. Millions of trades must be unravelled, often across international borders.

But this onerous task must be done. Then the losses must be written-off. Only after such purging will the banks begin to rebuild mutual trust – allowing the interbank market to reboot, so restoring the credit lines that are so vital to the broader economy. And all this needs to happen BEFORE more public money is spent recapitalising our banking sector.

I know what I'm saying is drastic. But this is a drastic situation. In the UK and US, in particular, the banks aren't playing ball. They think they're more powerful than our elected officials, and for the last six months they have been getting away with hiding losses and burying mistakes while screwing many billions of pounds out of taxpayers......"