£66bn the taxpayer is unlikely to see again...bank bailouts

coastline

http://www.bbc.co.uk/news/business-17229519

or..

http://www.bbc.co.uk/news/business-17195562

chewmylegoff

StevieJ wrote: »

Have you not read the full article?

Well yes, the longer the govt holds the shares the greater the chance of making a profit is (due to inflation if nothing else), although obviously the profit calculation won't reflect the time value of money or the fact that the govt has been paying interest on the money it borrowed to bail the banks out.

chewmylegoff

Basically it all comes down to whether RBS and Lloyds can sort themselves out, clean all the skeletons out of their cupboards, and start making serious profits. If that happens then the govt stands a good chance of recouping its investment. But given the state of the two banks, especially RBS, it is difficult to imagine that happening any time soon.

GeorgeHowell

A loss is not a loss until it is realised. So the government should hang onto the bank shares, indefinitely if necessary.

grizzly1911

GeorgeHowell wrote: »

A loss is not a loss until it is realised. So the government should hang onto the bank shares, indefinitely if necessary.

Truthful accounting would show it as a contingent liability or a doubtful debt - so I guess we will never see it.;)

GeorgeHowell

grizzly1911 wrote: »

Truthful accounting would show it as a contingent liability or a doubtful debt - so I guess we will never see it.;)

You are quite correct, in accounting terms some of it should be portrayed as a loss -- though I'm not sure government accounting follows the normal conventions. In real terms it's not a loss until you sell at a loss.

sabretoothtigger

making a profit is (due to inflation if nothing else)

Inflation is not profitable, share prices will rise I agree but its not going to make us any richer unfortunately. I'll post an old Zimbabwe article below
The problem is bond prices do not rise properly with inflation, none of the QE is index linked ? Mervyn's pension is index linked, he takes care of his own

Daedalus wrote: »

Do we get dividends?

Yes we got dividends at one point. They'll not be giving them to tax payer though, gov needs that to pay its debt interest

PaulF81 wrote: »

This is why qe will not cause inflation. The inflation has already happened.

Inflation is in the price of what we've paid. So QE buys a bond worth 100 for a price of 120.
The worst case scenario is to get back 100 only. The inflation occurs from the loss of QE value.
So if we assume we lose 20% of all QE which is 375bn thats about how much inflation occurs I think.

The bank bailouts were smaller and I think losing 20% is not going to happen.
The big thing is inflation helps reduce bank debt value, over time they are more able to operate on present income vs past debts.
I agree on Basel 3 and the economy probably will reduce bank profits and so on but their debt will lessen, presuming they stop repeating the same mistakes that led to it

A final point would be the banks hold gov debt as security, if thats subject to massive loss of value like housing debt then it is a repeat except without a house as security ?!

Its definitely a house of cards and that system collapsing is the only way to justify talk of hyper inflation and zero value to shares in banks, a complete failure, etc
Its possible but I think unlikely

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[url]http://news.bbc.co.uk/1/hi/business/2542445.stm[/url]




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johnny_storm

It doesnt matter, they would have only wasted it on something else we have no interest in.

asturdy2

for them to be profitable they need to find a new way to rip people off i.e ppi insurance, mortgae swap rates ect ...

Hoopie1

Graham_Devon wrote: »

This was supposed to be profitable, according to some, especially politicians and some (shall we say) optimists.

These people, and the National Audit Office.