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EU undermines banks

Normally when a bank is looking too shaky, the State bails out the creditors in order to maintain confidence in the banking system. Because we know what happens when that confidence evaporates.

The EU doesn't like this. It wants to haircut the creditors.

http://www.bbc.co.uk/news/business-18333240

Considering the woeful state of the balance sheets of most banks, which are only kept afloat by the belief that the State wouldn't allow them to fail, this is disastrous.

Expect the credit rating agencies to start slashing.
"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis

Comments

  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    Iceland allowed their banks to fail

    Ireland didn't allow their banks to fail

    and just look what happened
  • oldvicar
    oldvicar Posts: 1,088 Forumite
    The changes will not be introduced before 2018.
    ..........
  • pqrdef
    pqrdef Posts: 4,552 Forumite
    CLAPTON wrote: »
    Iceland allowed their banks to fail

    Ireland didn't allow their banks to fail

    and just look what happened
    Yes. People still put their money in Irish banks.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    The changes will be introduced in 2018. A time when most banks will have been bailed out, and you'd hope things would be at least sorted.

    In the meantime, they can fleece the taxpayer for as much as they require.
  • oldvicar
    oldvicar Posts: 1,088 Forumite
    pqrdef wrote: »
    Yes. People still put their money in Irish banks.

    ...and Spanish ones ;)
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    pqrdef wrote: »
    Yes. People still put their money in Irish banks.


    I must say I don't know the current state of either countries banks and to what extent the public will keep money in them or to what extent business will keep money in them.

    The main issue to me is not the health of the banks but the state of the peoples of these countries.

    Most of the discussions seem to talk about the banks, very little about unemployment or growth of their economies.

    Have the Irish people benefited from bailing out their banks?
    Have the Icelandic people benefited from not bailing out their banks?
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    pqrdef wrote: »
    Yes. People still put their money in Irish banks.


    well
    it so happens that the telegraph today has an article on Iceland and Ireland

    it seems that Iceland's credit rating has been upgraded from BBB- (junk) to BB+
    and have been able to borrow $1bn sovereign bond
    growth of 6% (presumably from a low base) and unemployment of over 7%
    not good but not too bad either
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