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State owned banks


asperity
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2008 was the start of the banking collapse was it not? The point is that all the calls for the state to take over the banks may not be such a good idea.

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Not sure what your getting at Asp? The German State owned Banks, like private sector Banks, gambled in the global market. So the problem isn't that they were "State owned", but that they were allowed to do what all the other Banks were doing at the time, which raises questions about the degree of State control over them.. Thus it's a question of a)supervision and regulation and B) creating a clear fire wall between high street banking and speculative investment banking. :unsure:

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Why don't you read the article Obs instead of jumping in with your usual anti-banking rhetoric?

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The article takes a bit of reading Asp:

Seems that the German state owned banks, prior to 2005, were able to offer loans, guaranteed by the Government, at low rates of interest. This doesn't seem a bad idea to me ?

This Government guarantee was withdrawn in 2005 under pressure from Brussels. From then on the banks seemed to have been edged into more speculative areas to raise funds for lending.

to my mind if a bank goes insolvent, it should go bust.

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Problem with state owned and state backed banks is just that - they can't go bust without taking the whole country with them. If a state backed bank makes bad loans and loses all its money the taxpayer always becomes the guarantor of last resort.

 

Businesses which become insolvent should go bust, and their directors and senior managers should be barred from holding any further directorships or management positions for a period of years dependent on the scale of the bankruptcy.

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Errm, were Northern Rock and RBS etc State owned, when they got salvaged by the tax-payer? Problem was/is, they were allowed to get "too big to fail" and were involving high street funds in their speculative investment arms. So, the lesson is, keep them small through anti-monopoly regulation, then they can be allowed to fail. :roll:

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Who decides when a bank is "too big to fail"? Politicians? They are part of the problem, not the solution :twisted:

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None of the banks were "too big to fail". Deposits of up to £85,000 per person were all covered by the FCS. and banks had assets sufficient to cover the vast majority of their liabilities. The shortfall was certainly FAR less than the amount of money the taxpayer has pumped into bailouts and QE.

 

So it would have been MUCH cheaper to let them fail.

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Strange, throughout it all, I don't recall one TV economist argueing that they should be allowed to fail, in fact quite the contrary. Personally, I would prefer private sector companies were allowed to fail, which is why they need to be kept smaller (thus providing more high street competition) and totally divorced from the speculative investment arm of the finance industry. :unsure:

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Economics not a strong point for you then Asp :wink:

 

 

I'm solvent, what about you Lt Kije?

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Strange, throughout it all, I don't recall one TV economist argueing that they should be allowed to fail, in fact quite the contrary. Personally, I would prefer private sector companies were allowed to fail, which is why they need to be kept smaller (thus providing more high street competition) and totally divorced from the speculative investment arm of the finance industry. :unsure:

 

Maybe the TV economists all saw a fair bit of personal profit in dragging the financial mess out for as long as possible?????

 

Personally, I don't have a problem with banks having investment arms. If they don't then they can't offer depositors the same returns on their savings. As long as the banks pay their dues into the FCS or something similar (basically an insurance premium which probably needs to be based on the insurers assessment of an individual banks level of risk) then any size of bank can be allowed to go bust without depositors or taxpayers losing out.

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All that has happened with the bank bailouts though is:

 

1) the government has given the banks loads of our cash......

 

2) the government then tells the banks they have to carry larger amounts of money in reserve to stop this all happening again

 

3) the banks have taken all of our money and stashed it away

 

4) the banks continue to rip off the public and won't lend to business of individuals even though they are sat on billions of our own money

 

5) The banks have continued to pay huge bonuses funded by our money

 

They should have been allowed to fail and all senior bankers should have been hung from the top of canary wharf

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