What happens if our country goes Bankrupt?

Generali

Rochdale_Pioneers wrote: »

We went into this crash with debt of 44%, France with 64%.

It depends on what you measure.

The UK has more 'off balance sheet' than France (eg PFI).

Also, France has a larger number of nationalised companies. Their debt is included as part of the national debt but the assets aren't netted off against that.

Conflict

Rochdale_Pioneers wrote: »

We went into this crash with debt of 44%, France with 64%.

Its not the level that it is at, it is the level it is increasing that's getting very worrying. It was already increasing, as a percentage of GDP, but now the EU is forecasting it to increase this year by 5.4%.

As Generali points out though, France is in a better position than almost all of the west. I just used France to show everywhere is in trouble, but the UK is one of the very few who wont ever be downgraded - unless someone in charge really messes up that is.

bubblesmoney

during the argentinian crisis a lot of money 'disappeared' it seems, from what i read. just like seems to have happened with madoff or probably even the 'deliberate' obfuscation of complicated securities and rebundling that happened that regulatory authorities are finding it difficult to unravel.

instead of following all the nitty gritty in the (deliberately complicated) contracts and clearing procedures for these financial instruments, i feel they need to follow the money trail. most of the big money (legal and illegal) is channeled via electronic means now a days. loads of places allow tax havens to profit from money laundering and tax evasion from other countries.

all this money (legal or illegal) needs to go via international clearing houses. these institutions should be first targetted by every countrys authorities. these clearing channels should have their arms twisted with every possible means till the pips squeak and they reveal all their 'off the books accounts' that they use for clandestine money transactions allowing money laundering and tax evasion by the biggies. it is a murky world.

see links on how they run these clandestine accounts sometimes opened just for a single transaction which even the auditors dont find out about since the account is opened and closed in a single day and doesnt go into the books and also the off balance sheet accounts run by many of the worlds banks. looks like many hands seem to be in this murky pie. see links for more info
http://en.wikipedia.org/wiki/Clearstream

Secret accounts and the workings of 21st century economics

just because a bank or institution is liquidated by the administrators doesnt mean money from that bank doesnt operate clandestinely through off the books accounts maintanied and operated even after these companies cease to exist. see quote

Bank of Credit and Commerce International, which, although officially closed in July 1991, continued to operate via Clearstream through unpublished accounts — as did Bank Menatep, involved in the "Kremlingate" (diversion of IMF funds), and owned by Mikhail Khodorkovsky

R!gis Hempel, vice president of Cedel, explained to the Paris Tribunal de Grande Instance how the system of unpublished accounts was generalized, allowing all sorts of illegal operations; Clearstream, during the lawsuit against Denis Robert for "defamation", did not deny it (See below). According to Hempel, some dormant accounts were activated for special transactions: "Such an account can be opened in the morning, used for a transaction, and closed to appear as delisted in the evening,", Backes explains. "Only the guy who gave the order to open it in the morning knows about the transaction. An investigator or auditor would not look at such an account because it doesn't appear on the accounts list."

Among the major companies with unpublished accounts, Backes discovered the Shell Petroleum Group and the Anglo-Dutch consumer-products firm Unilever, one of whose accounts was associated with Goldman Sachs. "By 2000," according to Backes, "Clearstream managed about 15,000 accounts (of which half were non-published) for 2,500 clients in 105 countries; most of the investment companies, banks and their subsidiaries are from Western Europe and the United States. Most of the new non-published accounts were in offshore tax havens. The banks with the most non-published accounts are Banque Internationale de Luxembourg (309), Citibank (271) and Barclays (200) (...) On the April 2000 Clearstream list, there are 37 Colombian accounts, of which only three are published."[8] German multinational Siemens had four non-published accounts, while Cr!dit Lyonnais bank had 23 and Japanese Nomura 12.[10]
Although an investigation of Clearstream was begun in France and Luxembourg, and a European Parliamentary report on money laundering denounced Luxembourg's financial activities, Clearstream continued to use unpublished accounts. According to Denis Robert, in 2001, a year before being bought back by Deutsche Börse, Clearstream managed 330,000 unpublished accounts.[11]

In other words, all financial money flows, legal or illegal, have to pass through Clearstream or Euroclear; the system of unpublished accounts, of which a few (less than 10%) also were found at Euroclear, is the way illegal funds are metamorphosed into legal funds which can be used to buy any financial service.

there isnt much info on the following link but apparently they are a competitor to the one above and as shown in the above quote even they seem to have off the books accounts.
http://en.wikipedia.org/wiki/Euroclear

since london is one of the worlds financial nerve centres it will be very unlikely that londons financial institutions dont have a very big hand in these off the books accounts, especially since the arms trade seems to have used the off the books accounts facilities for obvious reasons. the arms trade has uk as a important base and it is only logical to associate them and the financial system to have devised ways to serve their needs.

Generali

bubblesmoney wrote: »

during the argentinian crisis a lot of money 'disappeared' it seems, from what i read. just like seems to have happened with madoff or probably even the 'deliberate' obfuscation of complicated securities and rebundling that happened that regulatory authorities are finding it difficult to unravel.

instead of following all the nitty gritty in the (deliberately complicated) contracts and clearing procedures for these financial instruments, i feel they need to follow the money trail. most of the big money (legal and illegal) is channeled via electronic means now a days. loads of places allow tax havens to profit from money laundering and tax evasion from other countries.

all this money (legal or illegal) needs to go via international clearing houses. these institutions should be first targetted by every countrys authorities. these clearing channels should have their arms twisted with every possible means till the pips squeak and they reveal all their 'off the books accounts' that they use for clandestine money transactions allowing money laundering and tax evasion by the biggies. it is a murky world.

see links on how they run these clandestine accounts sometimes opened just for a single transaction which even the auditors dont find out about since the account is opened and closed in a single day and doesnt go into the books and also the off balance sheet accounts run by many of the worlds banks. looks like many hands seem to be in this murky pie. see links for more info
http://en.wikipedia.org/wiki/Clearstream



just because a bank or institution is liquidated by the administrators doesnt mean money from that bank doesnt operate clandestinely through off the books accounts maintanied and operated even after these companies cease to exist. see quote









there isnt much info on the following link but apparently they are a competitor to the one above and as shown in the above quote even they seem to have off the books accounts.
http://en.wikipedia.org/wiki/Euroclear

since london is one of the worlds financial nerve centres it will be very unlikely that londons financial institutions dont have a very big hand in these off the books accounts, especially since the arms trade seems to have used the off the books accounts facilities for obvious reasons. the arms trade has uk as a important base and it is only logical to associate them and the financial system to have devised ways to serve their needs.

Sorry to be a bit thick but what do you mean by 'off the books accounts'? I've had substantial dealings with both Clearstream (I had a meeting with them on 12/11/2001 in their offices on the xxth floor of Canary Wharf which was a little disturbing!) and Euroclear and haven't really come across the term.

I know a little about the scandal you're talking about.

Rochdale_Pioneers

Conflict wrote: »

Its not the level that it is at, it is the level it is increasing that's getting very worrying. It was already increasing, as a percentage of GDP, but now the EU is forecasting it to increase this year by 5.4%.

And noone else is spending any money? How many tens of billions have they spent so far on their banks? Or on that 2% stimulous that EU finance ministers agreed to?

You're being deliberately evasive over this rather simple point. We started off with substantially less debt than many of our European neighbours (-48% vs Germany for example) - and yes that includes PFI. Whilst we're looking to add 5% onto that a year for a while, we'd have to do 4 years of 5% increases to reach Germany's old level. And Germany and all the others are increasing their debts at a similar rate to ourselves - half a dozen countries spent north of ten billion on banks last week, and they're all doing a chunky fiscal stimulus (Germany's 2% is about double our package).

So us borrowing lots more isn't even going to catch us up to the levels of debt in these other countries as their debt is also going through the roof. We will end this as we started - in less debt than France, Germany, Italy etc etc.

purch

Sorry to be a bit thick but what do you mean by 'off the books accounts'

I assume it's taking the phrase "Off Balance Sheet", and then misunderstanding what it means, and then spinning it to fit the initial premise.

WTF?_2

Cleaver wrote: »

I like that analogy !!!!!! and it helped my understanding which was along those lines, but I wasn't sure.

So the next question...

Governments presumably know the above, so why do they do it? Is it simply that it gets 'them' out of trouble at the expense of 'us'? The idea of a short term, easy, fix rather than a long term change in policy and the way the country works?

Inflation transfers wealth from the savers to the debtors - eroding savings wealth but also eroding the value of capital debt. The government themselves are a huge debtor.....

Therefore inflation through money printing helps the government get more of your wealth - without the bad PR associated with higher taxes - and in this case will help a lot of debtors off the hook in the process too making them pretty popular with a very vocal section of the population.

Given that the government can essentially produce as much new Sterling as it wants, it isn't too hard to figure out what will happen when we are faced with the choice between deflation (which really punishes debtors) and inflation.

Sir_Humphrey

Vince Cable doesn't think we are going bankrupt. Nouriel 'Uber bear' Roubini thinks we can afford to bail out the banks. All Jim Rogers is interested in is talking the market in his direction.

purch

All Jim Rogers is interested in is talking the market in his direction

Has the man ever said NO to a request for an interview ??

Sir_Humphrey

http://www.telegraph.co.uk/finance/comment/rogerbootle/4340158/Exaggerated-claim-that-were-going-down-the-plughole-must-be-rejected.html Bootle seems to think that Rogers is being OTT as well.

So I don't buy the Rogers view that the UK is going down the plughole. Now don't get me wrong. I am not bullish and I am not complacent. But we are not finished. What's more, we'll be back.

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