Do the banks deserve state protection?

[treelover]

Er, what country is this, Sweden?, its certainly not the UK, the welfare state is being dismantled at a breathtaking speed.

nd anyway, the prevailing ideology simply isn't an ultra-minimalist one. There's entrenchment and cross-party support for an enormous state sector, robust employment and minimum wage law and a comprehensive welfare safety net.

 

[likesfish]

one bank goes down they all follow and we are in a world of poo

 

[Fruitloop]

Fuck it, lets try it and see what happens.

 

[Maurice Picarda]

Er, what country is this, Sweden?, its certainly not the UK, the welfare state is being dismantled at a breathtaking speed.

It's not having any less spent on it, overall.

I'd agree that it's being run increasingly inefficiently and wastefully. That's partly because of a ridiculous prevailing philosophy that internal structures which ape free markets are the best way to run public services. It's also partly because of the breathtaking naivety of Noo Labour apparatchiks when faced with powerpoint presentations from professional service providers.

Ok, in some areas, like old age pensions, it's looking difficult to scale up to the volume of provision that was achievable in the mid twentieth century. And in other areas, like social housing, there has clearly been a pulling back from public provision. But we're still within the normal distribution of social spend for EU countries, and we're not spending any less as a share of GNP.

 

[agricola]

Following todays 50billion bale out, do the banks deserve state protection?

Isn't it just socialism for the wealthy?

What would the consequences be if they hadn't got bailed? What would the net effect on the working classes be?

What other ways could that 50billion have been spent that would still protect jobs and the economy, without lining banks pockets?

Economics is a mystery to me, hence all the questions. Any answers?

No, they do not deserve it. The hypocrisy when it comes to disciples of the free market demanding state intervention when it comes to their own skins is so obvious it needs no futher mention.

Northern Rock is not in a hole because of any external financial pressures, its in a hole because its board ran a company where risk-taking was encouraged by an extremely generous bonus scheme, which led staff at most levels to deliberately take on excessive risk for personal reward, which has - when the sub-prime market in the US (which had the same basic cause - greedy financial types getting bonuses for signing up mortgage holders who could not pay back their loans) tanked - left the state with no option but to bail them out to an unprecedented figure, or let them go to the wall and take a financial and - more importantly - a big political hit (given how Brown's credibility is hanging by the thread of his supposed financial competence, it would be a big hit indeed).

The problem with bailing them out is that it doesnt challenge either the issue of confidence in the markets (people will still know that much of that particular sector is not to be touched with a barge pole, as an unknown amount of it is worthless) or of the deeper malaise within the City with regards to individual/corporate greed and the almost unregulated nature of business transactions - as has just been shown on News 24, when a City insider claimed that Northern Rock was a good, well run business but it was ruined by the actions of the FSA / Bank of England, and that nationalization was a horrible idea (because taxpayers shouldnt have to foot the bill for the company, despite the fact that they are, erm... currently footing the bill).

If the FSA could learn from the US experience and actually crack down on the worst offenders, it would have a hugely beneficial effect.... but I doubt this will happen anytime soon, unless the problems at NR are far more serious than is widely known and billions of pounds of taxpayers money end up lost.

 

[urbanrevolt]

Do banks deserve state protection? No. But our savings, pensions and mortgages do. If the private sector can't protect them they should be nationalised under democratic control with no protection for the profits of the rich.

 

[kyser_soze]

But our savings, pensions and mortgages do

Why? If I want my money to grow at a rate faster than my neighbour by depositing it in a higher risk investment (say, getting an additional 1% on interest in savings account), why should the state guarantee my risk?

I make the point because while the government should have offered depositor claim WRT NR, on the whole government backed or insured banking is a Bad Idea - witness the appalling cost to the US taxpayer of bailing out the S&L companies in the late 80s/early 90s, via FISLIC. By guaranteeing everyone's savings up to $100,000 and allowing the S&Ls to do stuff outside of savings and loans (i.e. savings and morgages), the US taxpayer ended up with a $1trillion bill which is still being paid.

Besides, there already is a govt backed bank - NS&I. There is some merit in the idea of a basic state bank which deals with savings, unsecured and secured loans and current banking which anyone can have an account with, but it will never be able to offer more...and quite honestly, it's my money, I shouldn't be restricted in what I can do with it. If I loose it all, unless I've been defrauded, it's basically my fault for not paying attention to the riskier product I've invested in.

 

[zoltan]

Im sad to say, Greed is the driver that makes people hoy their cash into higher risk stuff

whether people go into this with their eyes open is another matter entirely

want security ? - then NS&I will give you as much security as its possible to have - anything outside this means accepting a higher level of risk - implicity or explicitly.

theres not for nowt in this world

 

[treelover]

In the Guardian today, their senior financial reporter is saying this is the 'most extraordinary story of my career' and that we may be in for very troubled times indeed.


Counting on trouble

We do not yet know the full effects of this banking crisis. I do know that it's already the most extraordinary story of my career
Deborah Hargreaves

December 13, 2007 5:00 PM | Printable version

As a longstanding financial reporter, it is not often that I find a story truly surprising. Even big corporate developments often follow a familiar pattern. But the run on Northern Rock is something I never expected to see in my career. In all the clamour about the future of Northern Rock, it is easy to forget just how unusual this was. A bank run in a developed economy like the UK is - or was - unheard of.

http://commentisfree.guardian.co.uk/deborah_hargreaves/2007/12/as_a_longstanding_financial_re.html

 

[urbanrevolt]

Why? If I want my money to grow at a rate faster than my neighbour by depositing it in a higher risk investment (say, getting an additional 1% on interest in savings account), why should the state guarantee my risk?

I make the point because while the government should have offered depositor claim WRT NR, on the whole government backed or insured banking is a Bad Idea - witness the appalling cost to the US taxpayer of bailing out the S&L companies in the late 80s/early 90s, via FISLIC. By guaranteeing everyone's savings up to $100,000 and allowing the S&Ls to do stuff outside of savings and loans (i.e. savings and morgages), the US taxpayer ended up with a $1trillion bill which is still being paid.

Besides, there already is a govt backed bank - NS&I. There is some merit in the idea of a basic state bank which deals with savings, unsecured and secured loans and current banking which anyone can have an account with, but it will never be able to offer more...and quite honestly, it's my money, I shouldn't be restricted in what I can do with it. If I loose it all, unless I've been defrauded, it's basically my fault for not paying attention to the riskier product I've invested in.

May be- but we're clearly not talking about speculation so much as the assets of tens of thousands and potentially millions of working class people-

if someone wants to invest in private portfolios or whatever- sure that should not be protected. I can honestly say I've never (knowingly) met any such person but I'm sure they exist- however, this point is aimed at ordinary working class people.

On the whole I'm against the right of people to 'invest' in this way anyway as it implies supporting a capitalist economy.

I think pensions, savings and homes should be protected against the risks of the market- not the private profits of the greedy.

 

[jæd]

In the Guardian today, their senior financial reporter is saying this is the 'most extraordinary story of my career' and that we may be in for very troubled times indeed.

A journalist over-hyping an event in an attempt to generate interest...? Say it is isn't so...! And if it is "most extraordinary story of my career" she hasn't been working for long...!

 

[kyser_soze]

In the Guardian today, their senior financial reporter is saying this is the 'most extraordinary story of my career' and that we may be in for very troubled times indeed.


Counting on trouble

We do not yet know the full effects of this banking crisis. I do know that it's already the most extraordinary story of my career
Deborah Hargreaves

December 13, 2007 5:00 PM | Printable version

As a longstanding financial reporter, it is not often that I find a story truly surprising. Even big corporate developments often follow a familiar pattern. But the run on Northern Rock is something I never expected to see in my career. In all the clamour about the future of Northern Rock, it is easy to forget just how unusual this was. A bank run in a developed economy like the UK is - or was - unheard of.

http://commentisfree.guardian.co.uk/deborah_hargreaves/2007/12/as_a_longstanding_financial_re.html

Meh. There's loads of this bollocks about at the moment...fucks sake, there hasn't been a run on a bank in the UK for about 150 years prior to the twats at NR, which was also primarily fuelled by breathless and horribly inaccurate reports in the press.

With a few exceptions (none of whom write for the Guardian), the reporting of the credit crunch has been almost universally awful.

May be- but we're clearly not talking about speculation so much as the assets of tens of thousands and potentially millions of working class people-

if someone wants to invest in private portfolios or whatever- sure that should not be protected. I can honestly say I've never (knowingly) met any such person but I'm sure they exist- however, this point is aimed at ordinary working class people.

On the whole I'm against the right of people to 'invest' in this way anyway as it implies supporting a capitalist economy.

I think pensions, savings and homes should be protected against the risks of the market- not the private profits of the greedy.

Well if you're a socialist you should be against banks, savings, mortgages and money as a means of exchange anyway. What you seem to be missing here is that w/c people with savings put their money into NR because it was paying a better interest rate than other banks; why was it able to do this, because profits from it's mortgage arm were higher because of it's higher risk credit strategy.

ANY investment is speculation if it's done with the aim of making more money that you put in, be that a NS&I savings account with Premium Bonds or some ultra obscure hedge fund that deals in multiply traded derivatives based on an algorythm that in another time might be used to send someone to Alpha Centuri.

 

[urbanrevolt]

One of my friends has a mortgage with Northern Rock? Should I denounce him?

 

[kyser_soze]

Yeah you should if you're sticking by your principles. Denounce him now, loudly and in a public space like the Metro Centre in Sheffield.