Let banks fail, says Nobel economist Joseph Stiglitz

StevieJ

Cleaver wrote: »

I know why you could come to that conclusion, but you're just getting us confused because we use the same font.

What about the silly jokes

Generali

FWIW, I think that any company that is insolvent should be allowed to go bust. I don't see what's different about banks.

The first GBP50k is guaranteed. If people have more than that in any one bank then they know (or should know) they are taking a risk.

Why should my money be used to prop up the savings of unwise rich people?

harry_w

'prop up the savings'?

Negative real interest rates are being used to devalue savings and prop up investments in assets acquired with debt.

There's a difference between savings and investment, one implies the return of value plus interest, the other implies a risk that the return may be positive or negative.

Generali

harry_w wrote: »

'prop up the savings'?

Negative real interest rates are being used to devalue savings and prop up investments in assets acquired with debt.

There's a difference between savings and investment, one implies the return of value plus interest, the other implies a risk that the return may be positive or negative.

Like it or not, saving with a bank carries risk or at least used to.

Saving doesn't imply nil risk.

stevetodd

But if banks were allowed to go bust wouldn't the mere possibility of this actually cause the remaining non nationalised banks to go under as people immediately withdrew and put their money into NR. Also if this was to be done surely it would have been best to do it before the Gov sunk billions into banks which would now go under and that money would be lost.

Generali

stevetodd wrote: »

But if banks were allowed to go bust wouldn't the mere possibility of this actually cause the remaining non nationalised banks to go under as people immediately withdrew and put their money into NR. Also if this was to be done surely it would have been best to do it before the Gov sunk billions into banks which would now go under and that money would be lost.

Yes it would have been better to do it before now.

As any good poker player will tell you, it doesn;t matter how much you've put into the pot already, it's what you put into the pot from now on that's important.

Wookster

Generali wrote: »

Why should my money be used to prop up the savings of unwise rich people?

But its not just unwise rich people that suffer.

Look at the fallout from Lehman's collapse - that was cataclismic.

How would you ensure that the clearing system remains intact if the banks aren't around to perform it?

(Perhaps semi state owned banks need to go through an exercise of hiving off the various bits of their operations according to their risk profiles. This might at least bring some confidence back into some of their operations).

Really2

Lets face it most savers in the good times had their money in account earning way over the BOE base rate.

That was money they earned off debt..
The truth is the bail outs are to rescue savers not the people in debt because if the banks fail the debt can be sold.

People have become just as greedy with savings interest as they have with any other miracel money assets (HPI anyone)

Look at the "savers of the world" unite post

All assets are devaluing not just ones purchased on debt.

Don't forget that there was a two way pressure on the way up cheaper and cheaper credit and savings with a higher and higher return.

stevetodd

Generali wrote: »

Yes it would have been better to do it before now.

As any good poker player will tell you, it doesn;t matter how much you've put into the pot already, it's what you put into the pot from now on that's important.

Exactly! and so much has been put in now that the Gov has to call (put more in) for the pot odds, rather than fold

Generali

stevetodd wrote: »

Exactly! and so much has been put in now that the Gov has to call (put more in) for the pot odds, rather than fold

It's just not true. The banks could sink the Government. There is a lot more bad news out there.