Banks stealing our savings

jimjames

Tafia wrote: »

Didn't they swipe our interest without our permission?

Not that I'm aware of? Which bank has taken interest off your account that they said they would pay?

I still get paid interest on my bank account. When the base rate is 0.5% I think 1% paid on current account balance is actually not a bad return.

You also seem to be forgetting the other side of the coin, interest on mortgages has dropped massively too. Paying £500 when previously was £900 pm is far better than any interest on my savings.

Tafia

jimjames wrote: »

That has already happened. The BoE and Govt will lend the money to the scheme to pay back.



Theft is taking something without permission of the owner. You lend your money to the bank and can get it back at any time so where is the theft? A theoretical risk of not getting money back in the UK does not equate to the exaggerated title of this thread.

Didn't the Cypress banks want to take money from their depositors without the permission of the owner? Hasn't the Bank of England given itself permission to do the same thing here if the report I mentioned in the OP is correct?

Tafia

jimjames wrote: »

Not that I'm aware of? Which bank has taken interest off your account that they said they would pay?

I still get paid interest on my bank account. When the base rate is 0.5% I think 1% paid on current account balance is actually not a bad return.

You also seem to be forgetting the other side of the coin, interest on mortgages has dropped massively too. Paying £500 when previously was £900 pm is far better than any interest on my savings.

As I mentioned, it takes seven savers to fund one borrower so those savers are being severely disadvantaged to help you pay your mortgage. Is that fair? Is that right? Is that not the redistribution of wealth?. Now what does that smack of?

You also seem to be forgetting that some of us older folks have savings and were wise enough to pay off our mortgages early. I recall paying around 15% interest on the mortgage we obtained to extend our home. When the rate fell, we kept paying the higher payments and paid off the mortgage in 14 years instead of 25. In the early years of a mortgage, it doesn't take a lot of extra cash to knock a year of the mortgage term as most of the early payments are interest and very little comes off the capital.

Tafia

dunstonh wrote: »

Yet it managed with all the failures so far.

Although the Govt had to step in with RBS and Lloyds because they were too big to fail.

And the "government" gets its money from???

jamesd

Tafia wrote: »

Didn't the Cypress banks want to take money from their depositors without the permission of the owner? Hasn't the Bank of England given itself permission to do the same thing here if the report I mentioned in the OP is correct?

Please stop making false claims about what the plan proposes.

It specifically contradicts that claim, saying in part "Under both the U.S. and U.K. approaches, legal safeguards ensure that creditors recover no less than they would under insolvency ... The Banking Act also provides the U.K. authorities with a bespoke bank insolvency procedure that fully protects insured depositors while liquidating a failed bank’s assets".

Insured depositors are all consumers and small business depositors with deposits that are covered by the FSCS, who get paid out up to the FSCS limit if a bank becomes insolvent.

And no, the Bank of England didn't grant itself those powers. The Banking Act is an act of Parliament, passed into law by our elected representatives.

The paper you're discussing is describing something different from what was done in Cyprus. Taking money from bond holders, not depositors. Bonds being a form of investment, something different from term deposit savings accounts.

The person you've linked to is an employee of a small banks' advocacy group who made false claims about what the plans would allow, presumably for the purpose of furthering her group's agenda.

Tafia wrote: »

As I mentioned, it takes seven savers to fund one borrower so those savers are being severely disadvantaged to help you pay your mortgage. Is that fair? Is that right? Is that not the redistribution of wealth?. Now what does that smack of?

The low interest rates are a major part of what is preventing a rapid crash in property prices that would do serious financial damage to boomers who think they have a secure asset in their homes. There's a cost in interest paid to get that protection, which is harming younger buyers by keeping property prices higher than they would otherwise be.

A senior economist recently called the baby boomers "the greedy generation" because in his opinion they have arranged things to their benefit, with the bills being paid by the people in their children and grandchildren's generations. Things like this government's plan to pay more in state pensions to boomers while cutting pensions for the following generations.

Yes, it's fair and right to reduce the inter-generational transfer from following generations to baby boomers by having some of it go the other way in reduced debt costs for those younger generations.

If you don't think that there are large transfers of wealth to the boomer generation from the following two, you should do some learning about the subject before replying, lest you show similar lack of knowledge or understanding on this topic to that in your original post. You might start by noticing that the older people own most of the assets (in their pension funds, pension benefit entitlements, properties and investments) while younger people own most of the debt (in their mortgages and unsecured borrowing).

Tafia wrote: »

You also seem to be forgetting that some of us older folks have savings and were wise enough to pay off our mortgages early. I recall paying around 15% interest on the mortgage we obtained to extend our home. When the rate fell, we kept paying the higher payments and paid off the mortgage in 14 years instead of 25.

It was not wise to pay off a mortgage at rates as low as those around today, it's something that makes someone poorer.

Inflation is also a particular help to mortgage holders and other debtors and the time when you were experiencing high interest rates was also a time of high inflation that greatly and quickly reduced the real (purchasing power) value of the mortgage debt.

While it's tough for a while, such times of high inflation are a great boon to the mortgage holders who can keep up.

Tafia wrote: »

And the "government" gets its money from???

Taxes, revenues from bond sales, interest revenue from the businesses it owns parts of after rescues, potential profits from selling them later (a form of risk arbitrage) and rescue loans it's provided, inflation, and debt term arbitrage among other things.

It'll probably continue to make an overall profit on the rescue deals unless a political decision is made to deliberately take a loss.

At the moment a fair bit is coming out of the pockets of retiring boomers, who are getting poor annuity rates because the annuity companies are buying UK government bonds at record high prices. Fortunately it's not necessary to buy annuities, so retirees are usually not forced to participate in this.

Hopefully you did know that the rescue loans have been making a profit for the government, some of which was recently transferred and used to reduce the national debt.

talexuser

I must say I rather feel aggrieved by this new "divide and rule" tactic of blaming baby boomers for present difficulties. Did we all run the banks that failed? It seems to me banks invented new vehicles to sell to each other, inventing profits and paying bonuses on pieces of paper with no real asset worth. When the house of cards came tumbling down, governments had to step in so private debt became public debt. The banks have a catalogue of immoral or criminal activity, each one called a new "scandal", yet no one at the top gets prosecuted or goes to jail. Now we are all paying the price by the age of austerity (Trident replacement! HS2! subsided mortgages to keep house prices high!!) and it is the baby boomers fault for having lived through the 60s, 70s and 80s with better public services and final salary pensions?

jamesd

Baby boomers didn't cause the failure. That was mainly a combination of US banks, US law and US mortgage payers and lending standards, along with assorted regulatory failures. But the choice of rescue methods here, like low interest rates, was in part to protect property values, from which people in the boomer and previous generation benefit from most because that's where the highest property values tend to be. Just because older people tend to have bigger places and no mortgage any more, until it comes to time to downsize.

It's easy to look at the low interest rates and grumble but it's worth remembering that the choice was low interest rates or a big drop in property values.

It is worth trying to recognise whether we're collectively taking or giving money to earlier or later generations when it comes to trying to judge whether something is fair or not, though. Overall the generation retiring now and for the next decade or two is getting a better deal than the one the following generations will get and it'd be good to do some more redistribution the other way so those of us who're living in the time of peak burden on those following generations might have confidence that in our dotage the bills don't cause riots in the streets and tax protests because we've imposed an unfair burden. At the moment the plans are for there to be a large increase in taxes on the following generations to pay for the boomer generation pensions - a result of much more generous state pensions and a smaller following pair of tax paying generations, combined with insufficient immigration to make up the difference.

evenasus

jamesd wrote: »

A senior economist recently called the baby boomers "the greedy generation" because in his opinion they have arranged things to their benefit,

talexuser wrote: »

I must say I rather feel aggrieved by this new "divide and rule" tactic of blaming baby boomers for present difficulties.

So am I!

I'd like someone to tell me how 'I' and others of my generation (born in the 40's) contributed towards the financial mess the country is in.

Did I borrow beyond my means? No I didn't.

Did I ever take out credit, apart from the mortgage, No I didn't.

Have I ever owed anyone money, again apart from the mortgage (long since paid off) No I haven't.

Is it my fault that house prices have risen so ridiculously high? No it isn't.

I personally hope house prices fall drastically, so as to enable the youngsters of today to buy a house.

jimjames

Tafia wrote: »

Didn't the Cypress banks want to take money from their depositors without the permission of the owner? Hasn't the Bank of England given itself permission to do the same thing here if the report I mentioned in the OP is correct?

Your post says THEFT. Not possible, but actual. Nothing of the sort has happened in the UK.

I think you might have a problem if the courts tried to prosecute someone for theft if all you had was a suggestion that they might consider taking something at some unspecified point in the future with no evidence to actually prove it.

talexuser

jamesd wrote: »

a result of much more generous state pensions and a smaller following pair of tax paying generations.

Ok, but that is the fault of politicians who do not plan for the national long term good, but only selfishly for the next election, kicking cans down the road until panic measures are necessary. Frankly I don't believe taxpayers are getting anywhere near their money back from the bailouts when you take the whole economic activity slump into account.