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Systemic Insolvency, Liquidity Problems
Comments
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If you prefer a system which believes in running to the benefits offices as soon as you suffer a small change in circumstances, fair enough.
That's my concern too. Beware the law of unintended consequences. We've already seen what impact tinkering with the pension system has had on contributions. Imagine what could happen if people don't see saving in a bank is safe and worthwhile. You'd get a raft of people suggesting stupid stuff, like only investing in commodities. Oh, hang on a minute...Please stay safe in the sun and learn the A-E of melanoma: A = asymmetry, B = irregular borders, C= different colours, D= diameter, larger than 6mm, E = evolving, is your mole changing? Most moles are not cancerous, any doubts, please check next time you visit your GP.
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On the basis that Governments are by and large democratically elected to collectively meet the needs of all in the society, they then govern, then shouldn't all be expected to be "looked after".
We expect that Government too look after us in the broadest sense and ensure justice.
In this case the Governments failed to regulate the banking system adequately, for reasons best known to them, to ensure they conducted fair and prudent business.
As savers we deposit money with a regulated establishment and it expect it to be looked after safely. We savers are not investors in the business, mere depositors. Our deposits oil the wheels of commerce by facilitating carefully risk assessed lending.
Governements have a duty to ensure those mistake are repaired and those who trusted these organisations are not left high and dry.
To wipe out 25/35% of people wouldn't engender any trust whatsoever the the current democratic system
Of course we could have just stuffed it under the bear skin and we wouldn't have moved on from the stone age."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »On the basis that Governments are by and large democratically elected to collectively meet the needs of all in the society, they then govern, then shouldn't all be expected to be "looked after".
We expect that Government too look after us in the broadest sense and ensure justice.
In this case the Governments failed to regulate the banking system adequately, for reasons best known to them, to ensure they conducted fair and prudent business.
As savers we deposit money with a regulated establishment and it expect it to be looked after safely. We savers are not investors in the business, mere depositors. Our deposits oil the wheels of commerce by facilitating carefully risk assessed lending.
So they have a duty to ensure that mistake is repaired and those who trusted these organisations are not left high and dry.
To wipe out 25/35% of people wouldn't engender any trust whatsoever the the current democratic system
Of course we could have just stuffed it under the bear skin and we wouldn't have moved on from the stone age.
Agree with you, but think the highlighted bit may raise a few eyebrows.
Who would you suggest?0 -
I'll try to simplify things for you.
These people wanted their savings back:
As the bank concerned was unable to repay, the money came from this lot:
As you can see, they gave the shirts from their backs.
that does give a different complexion on the matter;
I'm not sure whether this was adequately covered in my economic text books.0 -
I expect my savings to be safe if the govt make an explicit promise eg under 85k rule, if they withdraw that promise I may make alternative arrangements
On the other hand the bailing out of savers in the likes of Icesave when the savings/funds were outside the remit of this promise was not a good idea IMHO. 'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I expect my savings to be safe if the govt make an explicit promise eg under 85k rule,
We as taxpayers are paying for this "insurance" cover.
Nationwide published its 2011 results this week. 25% of pre tax operating profit was effectively paid to the Treasury in the the form of Financial Services Compensation Scheme and Bank Levy.
The Treasury is still in deficit from the Icelandic bailout. So we don't need further savings institutions defaulting.0 -
Thrugelmir wrote: »We as taxpayers are paying for this "insurance" cover.
Nationwide published its 2011 results this week. 25% of pre tax operating profit was effectively paid to the Treasury in the the form of Financial Services Compensation Scheme and Bank Levy.
The Treasury is still in deficit from the Icelandic bailout. So we don't need further savings institutions defaulting.
We as people pay for everything whether that be by private transaction, exchange of labour, barter, taxation.
At least if it is out of pre tax profit they don't pay tax on it. What is corportaion tax these days, about 24% isn't it?;)"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
That 'insurance' cover is surely what keeps the flow of money going? I had a minor inheritance, not enough to buy a house at the mo, not even enough for a deposit, but enough to act as a buffer against adverse conditions in between jobs. I am saving it for a time when I might need it, so I can avoid hardship.
If this 'insurance' didn't exist, I'd keep cash under the mattress. This means it is deflating faster, less money in 'the system' so interest rates higher for borrowers, more mortgage defaults, etc. But by guaranteeing my cash is safe with the bonus of a bit of interest, I will lend it to a bank/the system and the money gets to do some work and keep interest rates lower or get lent to businesses to generate jobs/tax.
Multiply that by say 60% of the population with some positive cash position.
Frankly, the 'insurance' is cheap for the difference it makes.0 -
grizzly1911 wrote: »We as people pay for everything whether that be by private transaction, exchange of labour, barter, taxation.
At least if it is out of pre tax profit they don't pay tax on it. What is corportaion tax these days, about 24% isn't it?;)
But "we" complain that lenders aren't making funds available for mortgage and that savings rates are too low.
We are now paying for the past. Until this is dealt with far more difficult to move forward.0 -
Thrugelmir wrote: »But "we" complain that lenders aren't making funds available for mortgage and that savings rates are too low.
We are now paying for the past. Until this is dealt with far more difficult to move forward.
I am not convinced that funds aren't available for good risks. I wouldn't want banks lending if there isn't an odds on chance they will get repaid. There will always be some failures I accept.
I have seen many small businesses and start that ups that aren't necessarily viable apart from in the minds of the owners. That was in the relatively good times.
If LTVs and gearing are wrong then caution should prevail in these market conditions IMO.
No doubt further devaluation and regular managed write offs against profits, in the medium term, will give some light at the end of the tunnel."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0
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