Is it getting scary again?

MacMickster

michaels wrote: »

If we really are looking at financial market meltdown pt 2 and stockpiling beans again I wonder if Dopester has got another dog yet to help us maintain our protein intake?

At this moment I have a Collie on the boil and a few Yorkies in the oven.

Generali

Degenerate wrote: »

By regulating their activities.

What sort of regulation precisely?

Degenerate wrote: »

They could not have taken billions of pounds in ordinary British and Dutch saver's deposits without the facade of deposit protection that their brothers (quite literally) in the Icelandic Government afforded their activities, whilst simultaneously enabling them to use the passport scheme to avoid regulation in the jurisdictions they were operating in.

Before 2007 who took seriously the idea that savings banks would/could go bust in the UK? This site didn't and nor did any newspaper of which I am aware.

Degenerate wrote: »

No benefit? For years in the run up to the crash, a nation with little to offer other than fish was winner or runner-up in the HDI surveys of living standards. You think this is a coincidence?

I suggest you look at the Icelandic aluminium industry. It is rather more lucrative than a few fish fingers.

worldtraveller

Really I've never believed that the "scary" has gone away at all since the last credit crunch & recession. Scary has largely been illusioned away by Governments with smoke & mirrors. We are at the stage when it's just coming to a head again, but this time around it's going to be a lot more difficult to keep the ogres in the caves.

IMHO QE (if they call it that!) in both the U.S. & UK, amongst others, is a definite later this year/early next, as nearly all economies are slowing again. The UK was probably in negative growth, or a hair's breadth away in Q2 and I would be surprised to see anything more positive in Q3. The UK Government growth forecast (last revised) of 1.7% during 2011 is frankly still !!!!ing in the wind!

Degenerate

Generali wrote: »

What sort of regulation precisely?

Well, for instance, they could have stepped in back in 2006 when the Icelandic banking system was already in crisis:

http://www.ft.com/cms/s/0/8e6212aa-b949-11da-b57d-0000779e2340.html

And prevented their schoolmates/cousins running the banks from abusing the passport scheme to bail themselves out with foreign saver's money:

http://www.metro.co.uk/money/59795-10-000-a-month-open-icesave-accounts

They knew what they were doing. The Icelandic goverment basically sanctioned this financial raid to avoid facing up to their problems at the time.

Before 2007 who took seriously the idea that savings banks would/could go bust in the UK? This site didn't and nor did any newspaper of which I am aware.

What's your point here? The deposits were supposed to be guaranteed.

I suggest you look at the Icelandic aluminium industry. It is rather more lucrative than a few fish fingers.

Not lucrative enough to deliver the benefits the Icelandic people had during the good times. That was down to their financial shenanigans.

Generali

Degenerate wrote: »

Not lucrative enough to deliver the benefits the Icelandic people had during the good times. That was down to their financial shenanigans.

Not so. According to the Icelandic Government, all financial intermediation in 2006 (ie the boom years) was worth ISK126,669,600,000 and GDP was ISK2,402,276,600,000. That means that the entire financial sector including insurance, credit cards, mortgages and pensions was worth about 3% of GDP (link)

The manufacturing sector was over 3 times bigger at ISK383,445,200,000 including fish finger production. The Icelandics have an advantage when it comes to making energy intensive things like aluminium as they have abundant cheap geothermal energy.

For 2006 in the UK, the profits of financial services corporations alone accounted for £50,942,000,000 of her GDP £1,299,622,000,000. That is about 3.8% of GDP. (link). From memory, financial services are about 10% of UK GDP.

LydiaJ

Generali wrote: »

How could they stop them? The banks were privately owned companies taking deposits abroad. It seems pretty unreasonable for a company in another country that you receive no benefit from is allowed to run up unlimited liabilities in your name.

Well, who "allowed" those liabilities to be underwritten by the Icelandic government? The Icelandic government were perfectly well aware that deposits were being made on the understanding that they were protected by the Icelandic government. Nobody forced them to offer that protection. If they realised they were underwriting more debt than they could safely repay, they should have told those private companies to get on with their private activities without any guarantees or passport schemes or whatever.

Generali wrote: »

Before 2007 who took seriously the idea that savings banks would/could go bust in the UK? This site didn't and nor did any newspaper of which I am aware.

I did. Not that I worried about it excessively, but when I wanted to put my money somewhere where it would earn 6% interest, and found Icelandic banks were the place to get that kind of rate, this site told me that Kaupthing was part of our UK FSCS whereas Icesave was guaranteed by the Icelandic government. I decided which I'd rather trust and put my house deposit (well, £35k of it) in Kaupthing. When everything collapsed, the UK government sold my deposit to ING, and I withdrew it a few months later without hassle.

worldtraveller

The economist Adam Posen yesterday accused his fellow Bank of England policymakers of leaving the country heading towards economic "tragedy" by failing to implement another round of monetary stimulus for the weakening economy.

Mr Posen, an external member of the Bank's Monetary Policy Committee, urged colleagues to "do the right thing" – to look beyond fears about rising inflation and return to a programme of quantitative easing that might breathe new life into the stalling economic recovery.

The Independent

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worldtraveller wrote: »

a programme of quantitative easing that might breathe new life into the stalling economic recovery.

Might? Could happen, I suppose, but we don't seem to have many precedents.

IronWolf

Generali wrote: »

Not exactly. I think that letting Lehman's go bust was the right decision and the bailouts were wrong. Why, for example, should the taxpayers of Iceland pay back money that was lent by the British middle-classes to banks that were registered in Iceland?

I wouldn't expect my neighbour to pay back my debt if I can't pay off my credit card. Why would my neighbour expect me to pay back the bank's debt to him?



To repeat my catchphrase, if the solvent keep bailing out the insolvent they become insolvent. Italy, Spain, the USA, the UK: it's all the same.

I don't think you realise what would have happened if governments hadn't bailed out their banks. There wasn't any choice about it, it was either bailout or quite literally, anarchy.

Arguably not bailing out Lehman brothers made the situation a whole lot worse. It would have cost about $30bn to bailout Lehman, the resulting bailouts of other banks due to the ensueing crisis in the debt markets has cost far more than that.

michaels

I guess if you had not made an example of one bank there would never have been any impetus to reform and move away from the position of banks making profits but tax payers picking up losses and choosing a non-deposit taking bank for that example was better than it being say RBS or citibank.