Peston: Lloyds to repay £4billion

CLAPTON

Surely if the share issue is a success .. i.e. either all the shares are taken up or even better the tax payer is left with shares with a instantly re-saleable value of more than 38p, then it's cost the tax payer nothing to underwrite the issue or even made a profit.

If it had been commercially underwritten at substantial cost, then the taxer (as we own half the company) would have been out of pocket and I'm sure there would be lots of negative comments on this thread saying how incompetent the government was not to underwrite it itself.

So why so negative about it?

Generali

CLAPTON wrote: »

Surely if the share issue is a success .. i.e. either all the shares are taken up or even better the tax payer is left with shares with a instantly re-saleable value of more than 38p, then it's cost the tax payer nothing to underwrite the issue or even made a profit.

If it had been commercially underwritten at substantial cost, then the taxer (as we own half the company) would have been out of pocket and I'm sure there would be lots of negative comments on this thread saying how incompetent the government was not to underwrite it itself.

So why so negative about it?

I think you're confusing different things.

The British taxpayer is providing a service for nothing (presumably) to Lloy.... that would cost money if they went to a commercial provider of thiat service. That should be seen as a part of the bailout cost when it comes to the final reckoning.

As always with underwriting anything, you don't know the cost until the end of the process - that's why companies and individuals pay an insurance premium!

I am negative only that the Labour party will cynically ignore things like this when they try to claim a great success in nationalising and then privatising banks at 'only' a many billion pound loss.

This bank bailout is a disaster disguised as a triumph.

CLAPTON

Providing the underwriting service at commercial rates means that the tax payers pay half anyway as we own half the company (approximately)

the taxpayers being the underwriters means it costs nothing unless the shares crash to less than 38p and may actually produce a profit.

I can't see why that's a bad thing except of course from the point of view of the commercial underwriters.

In fact I have put my money where my mouth is here as I have taken up the 38p offer and am not shorting the shares.

Have to wait until Monday/Tuesday to know whether the government has been astute or not.. presumably if the shares crash out it will be Darling / Browns fault and show what muppets they are and if it's a financial success, credit will be given to the BoE/Treasury.

I also await lots of posts about how under priced the deal was in due course.

tomterm8

CLAPTON wrote: »

Providing the underwriting service at commercial rates means that the tax payers pay half anyway as we own half the company (approximately)
.

Um, no, if Lloyds TSB pay the treasury the commercial cost of underwriting the share issue, it doesn't cost the taxpayer anything. You're just moving money around between a national industry and the government.

Whereas, by not charging the commercial rate, you are giving the non-government shareholders a free gift, which really does cost the government money.

Generali

CLAPTON wrote: »

Providing the underwriting service at commercial rates means that the tax payers pay half anyway as we own half the company (approximately)

the taxpayers being the underwriters means it costs nothing unless the shares crash to less than 38p and may actually produce a profit.

I can't see why that's a bad thing except of course from the point of view of the commercial underwriters.

In fact I have put my money where my mouth is here as I have taken up the 38p offer and am not shorting the shares.

Have to wait until Monday/Tuesday to know whether the government has been astute or not.. presumably if the shares crash out it will be Darling / Browns fault and show what muppets they are and if it's a financial success, credit will be given to the BoE/Treasury.

I also await lots of posts about how under priced the deal was in due course.

Again, you're missing the point.

The cost of underwriting a deal at it's end will always net to zero as all the costs are known. That's why people underwrite up front!

AIUI, the Government isn't charging Llo..... underwriting costs. That means 2 things:

- Non-Government shareholders are getting a taxpayer paid-for lunch
- When the sums are done at the end of this, Socialist [Richard] heads are going to be able to claim that the cost of the bailout was less than it was.

The costs of the bailout should be accounted for properly. It's your bloody money !!!!!!! Don't you care how it's spent? If you don't then clearly a lot of people do hence the massive defeat that appears to have been inflicted on Labour at the Local elections.

Labour have (net) successfully defended fewer than 40% of the seats they held and precisely 0% of the Councils. The only reason Labour isn't getting rid of Brown is because nobody else is prepared to lead the party into the bloodbath to come.

I've been saying until recently that I hoped Labour win the next election. TBH I don't think it's so important now. I think they've destroyed their chances of forming a Government for decades. The Left are a pathetic joke (pace Foot etc). The Right of the party (or Progressive Left or whatever piece of pointless political jargon you want to use) have just destroyed themselves.

The biggest Party Political problem the UK faces right now is who's going to oppose the Tories nationally?

mewbie_2

Can I just put the mewbie man in the street view? Whatever money is changing hands it is very likely that some of it is my money, pinched by the Govt., lost by the banks, whatever - and I don't really care whether Peter gives Paul my money, or Paul gives Peter my money. I'd really rather they just gave my money back to me.

tomterm8

Generali wrote: »

I've been saying until recently that I hoped Labour win the next election. TBH I don't think it's so important now.

I kind of disagree, you only need to look at America to know that the democrats have taken on so many problems that they are really getting damaged by the mess Bush left them.

If you wait, say, six months the recession is likely to temporarily end. The underlying problems, however, have not been solved. Call an election and Labour will lose. But the policies any government are going to have to implement after the election will be brutal... and I suspect that if the tories win, they are inevitably going to damage them.

Give it five years, and lots of spin, and the myth of the nasty party can easily be reborn.

Generali

tomterm8 wrote: »

I kind of disagree, you only need to look at America to know that the democrats have taken on so many problems that they are really getting damaged by the mess Bush left them.

If you wait, say, six months the recession is likely to temporarily end. The underlying problems, however, have not been solved. Call an election and Labour will lose. But the policies any government are going to have to implement after the election will be brutal... and I suspect that if the tories win, they are inevitably going to damage them.

Give it five years, and lots of spin, and the myth of the nasty party can easily be reborn.

Well it's a bit more complex over there as you have 2 elected houses plus the Presidency (executive). In the UK you vote for all three in one so the Government has nowhere to hide.

All the way through the 1980s when Thatcher was being villified all the Tories had to do was bring up the IMF and the Winter of Discontent and the voters ran back into their arms.

CLAPTON

Generali wrote: »

Again, you're missing the point.

The cost of underwriting a deal at it's end will always net to zero as all the costs are known. That's why people underwrite up front!

AIUI, the Government isn't charging Llo..... underwriting costs. That means 2 things:

- Non-Government shareholders are getting a taxpayer paid-for lunch
- When the sums are done at the end of this, Socialist [Richard] heads are going to be able to claim that the cost of the bailout was less than it was.

The costs of the bailout should be accounted for properly. It's your bloody money !!!!!!! Don't you care how it's spent? If you don't then clearly a lot of people do hence the massive defeat that appears to have been inflicted on Labour at the Local elections.

Labour have (net) successfully defended fewer than 40% of the seats they held and precisely 0% of the Councils. The only reason Labour isn't getting rid of Brown is because nobody else is prepared to lead the party into the bloodbath to come.

I've been saying until recently that I hoped Labour win the next election. TBH I don't think it's so important now. I think they've destroyed their chances of forming a Government for decades. The Left are a pathetic joke (pace Foot etc). The Right of the party (or Progressive Left or whatever piece of pointless political jargon you want to use) have just destroyed themselves.

The biggest Party Political problem the UK faces right now is who's going to oppose the Tories nationally?

true I am missing the point
in fact I don't understand

: what you mean the costs of underwriting...'net to zero'
: i don't understand what AIUI

: I dont understand why NOT spending my taxpayers money should be a great concern of mine (even if LLoyds shareholders gain an advantage that costs the taxpayer nothing... unfair to commercial underwriters of course)

: I don't understand what 'Socialist (Richard)' means either

etc...

Generali

CLAPTON wrote: »

true I am missing the point
in fact I don't understand

: what you mean the costs of underwriting...'net to zero'
: i don't understand what AIUI

: I dont understand why NOT spending my taxpayers money should be a great concern of mine (even if LLoyds shareholders gain an advantage that costs the taxpayer nothing... unfair to commercial underwriters of course)

: I don't understand what 'Socialist (Richard)' means either

etc...

Ok. Another Socialist who doesn't get it.

Perhaps the point can be driven home in this way:

LINK

This is what the people of Huntingdonshire think of the Labour Party:

Candidate .....................Party.......................... Votes
Reynolds, Kevin Antony Conservative ....................2553
Pegram, Dennis Roy .......Conservative ...................2307
Hodge, David Frederick .Liberal Democrat ...........1543
Waters, Robin Sherwood. Liberal Democrat .............1412
Jug, Lord Toby .The Official Monster Raving Loony Party 566
Allen, Richard John .....Labour...................................... 362
Richards, Angela Louise ..Labour ...............................343