Ripped off?

[observer]

Remember how we tax-payers baled out the Banks? Well it seems our chances of getting our money back, plus a tidy profit, appear to be receding into the distant future. The Banks don't seem to be making sufficient profits, so our share won't be worth much. Now we've got a sovereign debt crisis looming globally, which should make the Banking crash look like a minor bump. Oh the joys of global capitalism!

[asperity]

I said at the time that we shouldn't have bailed the banks out, they should have been left to sink or swim without the taxpayer being forced to pay for it. I seem to remember you being one of the ones who disagreed with me at the time Obs.

[asperity]

And I'm not alone:

 

"The UK has been hit hard because the banks took on enormously large liabilities in foreign currencies. Should the British taxpayers have to lower their standard of living for 20 years to pay off mistakes that benefited a small elite?" he said. "There is an argument for letting the banks go bust. It may cause turmoil but it will be a cheaper way to deal with this in the end. The British Parliament never offered a blanket guarantee for all liabilities and derivative positions of these banks" - Joseph Stiglitz, 2009, Telegraph

Failing banks should be allowed to go under and asking the taxpayer to prop them up shows capitalism has 'gone wrong', according to the Bank of England deputy governor. In the bad times, banks' losses should be absorbed by their creditors and investors, not by the taxpayer, Paul Tucker has told the BBC. Tucker said that banks had to incur the losses when things went wrong. Paul Tucker 2011

Economic conditions may turn out to be far worse than in previous recessions, including the Great Depression at the beginning of the 1930s. Everybody seems to think that, thanks to the government's monetary and fiscal interventions, this recession will come nowhere near the 1930s slump. However, I think it might be far worse – and precisely because of the interventions. Marc Faber 2009

Two powerful Republicans on Sunday called on Barack Obama, US president, to let some big banks fail instead of propping them up with public money. Richard Shelby, the top Republican on the Senate banking committee, warned that the US would end up following the same path as Japan, which suffered a lost decade of economic growth by tackling its banking crisis too slowly, unless some big institutions were allowed to fail. "Close them down, get them out of business. If they're dead, they ought to be buried," Mr Shelby told ABC News. "We bury the small banks. We've got to bury some big ones and send a strong message to the market." FT, 2009

Iceland President Olafur R. Grimsson, in an interview with Bloomberg, said his country was much better off because it refused to bail out the banks and allowed them fail. "The difference is that in Iceland we allowed the banks to fail," Grimsson said. "These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks." LaRouche 2010

And here's Barclays' £6.5m bonus boy Bob Diamond:

 

On too big to fail:“It’s very important that we allow banks to fail. It’s very important that no taxpayer money is ever again used to bailout banks that have failed. And that’s why we are working on how we can ensure that banks are able to fail and are able to be wound down.”

On whether he would ever accept a government bailout:“No I think that’s exactly the plan we are working on. Is how do we create a capital structure, and how do we provide a resolution and recovery plan that is credible with our regulators so if the worst happened, they are comfortable that they can wind down the institution.” Wall St Pit 2011

[observer]

Still disagree with you Asp! Our banks were "too big" to be allowed to fail - and I'm still waiting for them to be broken up and distance placed between the High Street element and the casino antics of Canary Wharf. What I didn't agree with at the time, was the Government taking on liabilities for "toxic" debt, which will have to be written off. Interesting that while even the US economy (the paragon of capitalism) has now lost it's xxx rating; China, with a command economy (but no human rights!), appears to be most successfull.

[Stallard12]

The reason that the US economy is depressed at the moment, is that capitalism is under attack by elements on the left, including the White House. All intent on promoting a socialist type economy. Investors, industrialists and small businesses are unwilling to invest or expand until the threat of higher taxes and

draconian regulation is under control. That should be at the end of 2012. The failure of Congress to reign in gov. spending is the reason for the concern of the bonding agencies, nothing to do with capitilism. The much maligned George W Bush left office with a deficit of 10.2 trillion dollars, President Obama has raised that in just two years to 14.5 trillion, most of which is owed to China. The Bush administration were considered rash for spending 1.8 Billion dollars a day, Obama is spending 4.2 Billion dollars A DAY. The reason for the recent debacle in Washington was the President demanding permission for unlimited spending and borrowing and the right "saying no!, we need to go the other way". When you look at Ireland, Greece, Spain, Italy, Portugal, the Old USSR, it's not hard to see that when the gov. gives away 'freebies' at twice the rate that it can raise revenue, there will one day, be a reckoning. China was going nowhere until it turned to a western style, capitilistic economy, now it's expanding faster than any other country. South Korea too.

 

I promised myself that I would never comment on politics, apparently I failed, but for the last time. Everyone has their own ingrained opinions and as Robert Burns said "A man convinced agin' his will, is ner' convinced at all." So arguing is pointless really.

[asperity]

Well put Stallard.

 

Obs, you got the solution you argued for at the time and it hasn't worked, so you're in no position to complain.

[observer]

Errm nope; I supported Vince Cable's idea that the Banks should be broken up and made smaller (which hasn't been done), so they could be allowed to fail in future (especially the investment banks). Niether did I support the idea of taking on the toxic elements of the debt. One just has to hope, that the Government waits until they're in profit before privatising them, rather than selling them at a loss. As for the US: havn't we been here before Stallard? The great depression; and wasn't it Government intervention (the "new deal") and WW2 that got you out of it? As for US cuts: I havn't heard the T-Party calling for massive reductions in spending on the military, foreign wars, overseas aid, or the CIA - just cuts in benefits to your own seniors, those in ill health and the poor - while the rich enjoy a relatively tax free enviroment - after all, arn't we "all in it together"!

[asperity]

You and saint Vince make a lovely couple Obs. Always right about everything, never mind what you actually said at the time.

[Stallard12]

I said I wouldn't, but what the heck. One last time..... The first thing to establish is that you have to reduce spending. The bond company has just degraded US bonds, because not enough bugetary cuts were made in the latest agreement. The Republicans wanted 3 Trillion, they were forced to accept 8 Billion. With the Adminstration spending 4 Billion a day... There is no magic wand to let things stay as they are, and end up with a balanced budget, so something has got to give. The US currently spends 60% more than it takes in in revenue - is that healthy? When you're talking of hacking several Trillion dollars out of the budget, there are only four places that you can do it, Medicade, Medicare, Defense and Social Security. The rest of the subsidies etc., (which should go) would provide only a drop in the bucket. Drastically cutting the entitlement programs is the only way to fiscal responsibility. Nobody likes it and if there were any other way, we would all be very happy.

Having said that, let's get something straight, nobody has said anything about harming the poor, or hurting the senoirs etc, that is pure bs from the left, who have an aversion to any budget cutting. If they can't argue sensibly against the facts, start smearing and scaring, it's all they've got left.

The Republican 'suggestions' for Social Security do not affect anyone over 55, all present benefits remain grandfathered. The major change would be to raise the retirement age to 67 from 65. Changes to Medicare and Medicaid would all be in the form of loop hole closing and eradicating waste and abuse. Patients would see no difference. Unfortunately, the left is hamstrung with ideology and prefer to use it to smear Republicans. The fact is, that unless something is done, these programs will all go bust in the next twenty years and nobody will get anything.

You're right, we are not all in this together, 51% 0f the American people, pay no income tax at all. Jobs are desparately needed and the only people who can create jobs are 'the rich people'. Does it make sense, at a time like this, to punish them with selective taxation just for being successful?

 

That's it folks, I'm outa here.

[observer]

I don't disagree with the broad premise, that "the books" have to be balanced; but there are two factors in this equation - spending and revenues. The right are refusing to increase revenues through higher taxes on the rich, so it's all about cuts. As in the UK, the right believe by some article of faith, that growth will somehow spontaneously occur - but I beg to differ - we have to grow our way out of this, and ironically that requires an economic stimulous. As for the Reganomic notion that "the rich" will somehow trickle down their wealth through spending is frankly nonesense, as they are a limited number and can only consume a finite amount, throughout history, absolute wealth has always been inversly proportional to abject poverty. More money in the pockets of the majority, would stimulate demand thus creating jobs.

[Cleopatra]

Why all the cutbacks? If there is not enough money to go round - print more!

[observer]

.. to the point where a loaf costs a £100 and your wages are being brought home in a wheel barrow? The Euro Zone countries btw are not allowed to devalue. The short term solution in the past, was to borrow - EG. The German Weimar Republic borrowed from the Yanks to pay back WW1 reparations to France and the UK in the 20s, which created a mini recovery; they also printed more money until it was worthless; this ultimately gave rise to the Nazis taking over; who in turn borrowed from the Yanks to fund a massive re-armament programme and build their autobahns, and ultimately led to WW2. Question is now, who do we "borrow" from? The Chinese own around a third of US debt - what happens if the Yanks default? It's a smoke and mirrors situation, and (the right are correct in this) brought about by Countries, indeed everyone, living beyond their means. Gov spending has to be reined in, question is what type of spending? At the same time, revenues have to be increased by higher taxes (of the rich) in order to pay off the debt and provide some scope for an economic stimulus for growth and employment.

[Stallard12]

God ! I can't help myself !!!!! Honestly, for the third time - last one!! You seem like a reasonable man Observer, at least you get the important part. Especially about the effects of default. Italy is the biggest problem right now, it's a far bigger economy than Greece and I'm afraid that passing the hat ain't going to be enough. Expert opinion is that there is a 70% chance that Italy will actually go under. They won't be able to pay the police force or the firemen or provide even basic services. Everyone's savings will go straight down the toilet. If they are followed by Spain and Portugal, watch out. So at the moment the US should not be the No 1 topic. At the end of the day America has tremendous natural resources, including oil, so are not likely to become Italy.

 

The problem with raising taxes under this Administration, is that the money will not go to solving the debt situation, it will be used to increase the 'giveaway' programs and thereby perpetuate the problem. I said yesterday that 51% of the people at the lower end of the scale pay no income tax at all, while 2% of the population (the rich folk) presently pay 80% of the entire tax bill. How often can you go to that particular well before they all move to Switzerland? We need them, cos we need jobs.

 

The Tea Party is not an organization, it's a group of resposible, ordinary Americans, who balance their own budgets and credit cards and think that the government should do the same. They are not Republican or Democrat, but because their values are conservative, they align more easily with the Republican party. I support the Tea Party's goals and so do all of my neighbors and we are not 'terrorists! The standing up of responsible citizens, to demand a more responsible government, is an idea that is hard to argue with and is a big threat to the Democratic values - ergo, the smear campaign. They supported several candidates in the last landslide election and those candidates went to Washington determined to change the way business was done. A great example of old political thinking came from Democratic Senator

Durbin, who said "If these new representatives think that they can come to Wahington, stand on their principles and keep their campaign promises, they are mistaken. We have never done it, so why should we let them!".

[observer]

As I said, I'm not disagreeing with the broad principle that the books have to be balanced, and spending should not exceed revenue. However, some Gov spending is essential to the maintainance of a stable society (EG Emergency Services)- so it depends what and where you want to cut? Correct me if I'm wrong, but doesn't the US have the highest Defence budget in the World? As for revenues, this old threat, that "the rich" will skip overseas to avoid taxes is rather worn out, as they do exactly that anyway with their tax avoidance scams - unfortunately imo, we don't have Governments prepared to close the loop holes and reel in the money. Certainly in the UK their is enough private wealth to pay off our national debt 10 times over - it's just not being tapped.

[Lt Kije]

Stallard12

 

Obama, had no choice but to spend when the banks crashed, Bush would have had to do the same, as most of the developed World economies did :!: :!: :!: , and the reason for the debacle in Washington was down to the tea party movement, Which are on the right of the republican party.

[observer]

Thought the reason for the debacle in Washington, was a $14trillion national debt, that they have to address?

[Lt Kije]

Keep up Obs

[observer]

"reason".

[Peter T]

Lib-Dems and Labour don't worry about small details like that obs.

[Lt Kije]

The reason for the debacle, was the Republican Tea Party movement, only wanted a temporary solution, ie for one year, which would have brought it back in an election year, Now thats what you call playing politics.

[Bazj]

The reason for the debacle, was the Republican Tea Party movement, only wanted a temporary solution, ie for one year, which would have brought it back in an election year, Now thats what you call playing politics.

 

just like signing off a shed load of pfi and spending commitments in the month before a general election; knowing you were going to be beaten and thus putting even more burden on the new administration when they have to cancel them all because there is no money??..... now who would do such a thing?

[Lt Kije]

I thought PFI's were a Tory idea, I think you will find it was Norman Lamont, also I will think you will find the Tories did exactly the same thing just before they left power in a vain attempt to stay in power, much as the Labour party did. But what happened in America was of a different class. Because if America defaulted their would have been massive repercussions around the world, not just for their economy.

[Bazj]

That maybe so.... the idea in principle isn't a bad idea; they were just not thought through and gave too much to the private sector. Look at Whiston hospital; virtually bust and repayments over the next 50 years isn't it?

[Lt Kije]

I think they were a terrible idea, we are just mortgaging future generations, As I said it was a tory idea, but Labour used them a lot more than the Tories ever did, how will people build hospitals in the future when they will still be paying for the ones we have now, The next generations are going to have a big enough tax burden paying for the old.

[observer]

THE "reason" for the Washington debacle Kije, was a sudden realisation that a $14trillion US debt (a third of which is owed to China); doesn't make for sensible book keeping and will eventually lead to a default if not addressed. This was then made worse by a failiure of "the politicians" to come up with a rational programme in the National interest, rather than partisan interests. The T-Party were playing Party politics and ruling out tax increases, whilst ruling in severe cuts; and the Democrats were in denial about the need for austerity.