The bank bail out

[MK Shrimper]

Listening to 5 Live this morning to a guy called Max Keiser, financial whizz and a severe critic of the way the banks have been bailed out across the western world. Now usually financial matters bore me rigid, but this guy spoke some incredible sense.... the main one that stuck out to me was that if the US Government had paid off everyone's credit card debt, mortgages and loans in the US it would have cost $11 Trillion.
The current encumbent US government bailed out their banks to the cost of $23 Trillion! Where the f**k has that $12 Trillion dollars disapeared to?
Also, could the same have happened here? Pay off everyone's debts and we've suddenly got money in our pockets to go out and buy shizzle to revive the economy.

 

[Mad Cyril]

Listening to 5 Live this morning to a guy called Max Keiser, financial whizz and a severe critic of the way the banks have been bailed out across the western world. Now usually financial matters bore me rigid, but this guy spoke some incredible sense.... the main one that stuck out to me was that if the US Government had paid off everyone's credit card debt, mortgages and loans in the US it would have cost $11 Trillion.
The current encumbent US government bailed out their banks to the cost of $23 Trillion! Where the f**k has that $12 Trillion dollars disapeared to?
Also, could the same have happened here? Pay off everyone's debts and we've suddenly got money in our pockets to go out and buy shizzle to revive the economy.

I'm not saying the bailout was the right thing to do but....

If there was no financial services sector to speak of in this country how many people do you think would be using trains?

 

[MK Shrimper]

I'm not saying the bailout was the right thing to do but....

If there was no financial sector to speak of in this country how many people do you think would be using trains?

Why would the financial sector end? People would still need banks, more than ever in fact if there is cash back in the system.

 

[steveo]

Pay off everyone's debts and we've suddenly got money in our pockets to go out and buy shizzle to revive the economy.

Where's the best place to get shizzle at the moment?

 

[MK Shrimper]

Where's the best place to get shizzle at the moment?

Just off the M66 near Shazbat.

 

[osymandus]

I'm not saying the bailout was the right thing to do but....

If there was no financial services sector to speak of in this country how many people do you think would be using trains?

AS MK syas only the current version of it would . Its about a form of stability really . Those that benifit from it dont want it to change out of control. IF any system collapses it will always be replaced .

The near theoretical values of money being banded around mind shows the real value of cash sadly (i.e they make it up as they go along !)

 

[Mad Cyril]

AS MK syas only the current version of it would . Its about a form of stability really . Those that benifit from it dont want it to change out of control. IF any system collapses it will always be replaced .

The near theoretical values of money being banded around mind shows the real value of cash sadly (i.e they make it up as they go along !)

I hope Ron doesn't use this gambit when he is in front of the beak today.

 

[osymandus]

I hope Ron doesn't use this gambit when he is in front of the beak today.

Should have said the banks and goverments there really shouldn't I ;)

Mind you walking in and producing a white fiver and denouncing our leaving teh gold standard as the fall of western civilisation ,may get us off on insanity grounds !!!!

 

[Yorkshire Blue]

Listening to 5 Live this morning to a guy called Max Keiser, financial whizz and a severe critic of the way the banks have been bailed out across the western world. Now usually financial matters bore me rigid, but this guy spoke some incredible sense.... the main one that stuck out to me was that if the US Government had paid off everyone's credit card debt, mortgages and loans in the US it would have cost $11 Trillion.
The current encumbent US government bailed out their banks to the cost of $23 Trillion! Where the f**k has that $12 Trillion dollars disapeared to?
Also, could the same have happened here? Pay off everyone's debts and we've suddenly got money in our pockets to go out and buy shizzle to revive the economy.

What about the rest of the world? Or would the US not want to trade with anyone?

 

[MK Shrimper]

What about the rest of the world? Or would the US not want to trade with anyone?

Trade would surely increase exponentially as people would have more money in their pockets to buy things that are made overseas and stimulate a world wide economy. The scheme that Keiser was advocating would benefit the entire world, not just the miniscule minority who control the worlds finances.

 

[Yorkshire Blue]

Trade would surely increase exponentially as people would have more money in their pockets to buy things that are made overseas and stimulate a world wide economy. The scheme that Keiser was advocating would benefit the entire world, not just the miniscule minority who control the worlds finances.

The scheme they used benefited the entire world and not just those who control the world's finances.

It would be interesting to see how much trade would take place without a banking system.

 

[MK Shrimper]

The scheme they used benefited the entire world and not just those who control the world's finances.

It would be interesting to see how much trade would take place without a banking system.

Keiser wasn't advocating the end of the banking system just a much fairer system where substantially less public money was paid out. For example, where did that missing $12,000,000,000,000 end up?

 

[Yorkshire Blue]

Keiser wasn't advocating the end of the banking system just a much fairer system where substantially less public money was paid out. For example, where did that missing $12,000,000,000,000 end up?

Er, haven't I already point out the global nature of business? There's more to the world than the US.

 

[steveo]

This is going a bit off topic. I thought the discussion would be more Shizzle based.

 

[MK Shrimper]

Er, haven't I already point out the global nature of business? There's more to the world than the US.

The US credit debt was $12 Trillion and the US banks were bailed out to $23 Trillion. I'm not sure the US taxpayer would be thrilled to know they're bailing out non US banks.

 

[Yorkshire Blue]

The US credit debt was $12 Trillion and the US banks were bailed out to $23 Trillion. I'm not sure the US taxpayer would be thrilled to know they're bailing out non US banks.

They didn't bail out non US banks. They bailed out US banks.

US banks conduct business all over the world.

 

[BalmainShrimper]

It's an interesting concept - but the world of derivatives and hedge funds is very murky and has been completely unregulated up till now, so tracking down the actual debt is going to take years....

A friend of mine has a Phd in this stuff and runs a hedge fund. He says while poor US folks defaulting on their mortgages made the news stories, that was only about 5% of the problem. It's really about the practice of packaging debt and selling it on as effectively an asset, without regulation, many times over. Complete house of cards.

 

[Mad Cyril]

It's an interesting concept - but the world of derivatives and hedge funds is very murky and has been completely unregulated up till now, so tracking down the actual debt is going to take years....

A friend of mine has a Phd in this stuff and runs a hedge fund. He says while poor US folks defaulting on their mortgages made the news stories, that was only about 5% of the problem. It's really about the practice of packaging debt and selling it on as effectively an asset, without regulation, many times over. Complete house of cards.

Also credit default swaps which were used to 'insure' derivitave products against default.

Unfortunately this was another unregulated market and companies like AIG were able to 'insure' huge sums with very little capital and were found out when things started going wrong.

 

[Sussex Shrimper]

The global financial system is dependent upon neverending, exponential growth. With the amount of new money entering circulation - I believe it accounts for about 3% of growth, but don't quote me on that - relatively small, the rest has to come from neverending, exponential growth in debt. The banking industry will always come up with new wheezes and explanations for why it's all perfectly sound and nothing we should be worried about, but from my not particularly authoritative perspective they all look increasingly like attempts to disguise a system that is rapidly becoming unfit for purpose in the Emporer's new clothes.

There's an interesting piece outlining some of the principles far better than I have here:

http://www.chrismartenson.com/martensonreport/exponential-money-finite-world

 

[Yorkshire Blue]

It's an interesting concept - but the world of derivatives and hedge funds is very murky and has been completely unregulated up till now, so tracking down the actual debt is going to take years....

A friend of mine has a Phd in this stuff and runs a hedge fund. He says while poor US folks defaulting on their mortgages made the news stories, that was only about 5% of the problem. It's really about the practice of packaging debt and selling it on as effectively an asset, without regulation, many times over. Complete house of cards.

I'm not sure I'd call it a house of cards because a house of cards suggest that it is something without substance, but what you are talking was actually backed by substantial assets. The problem was not so much with these assets defaulting but that confidence fell out of the bottom of the repackaging market.

This was than exacerbated by investors not fully realising what they were exposed to and people panicking. The government/regulators then lacked sufficient levers to intervene to correct the market.

Personally I'm far from convinced that regulation is the answer. In my experience the regulators don't really understand what the banks are doing with their more innovative products. Given this, it is difficult to see how they can effectively regulate the business. In practice, regulations just lead to tick-sheets that don't really achieve much and people just find alternative, more complicated ways to circumvent it.
Even without regulation, the banks would take action to ensure they had a better idea of what exactly they were exposed to, in light of their experience this time round. Their own systems are likely to be more effective IMO than any government/regulator imposed system.

FWIW hedge funds are much less regulated than the banks.