Are we forcing the banks out of the UK as HSBC considers moving overseas?

[Vague_Boy]

and seize all their assets

 

And the legal basis of that would be.....?

[Rowan22]

Possibly, the time has come for business to put up or shut up. If they don't want to pay, ship them out, banish them of the british citizen and seize all their assets

 

Nicely said I agree. The trouble is that most people don’t morally place human welfare above property rights. Property rights are the obsession of yes that's right the richest people in the country. Why not sell some of the Royal families land holdings. They are after all the largest land owners in the U.K closely followed by the church. Where are they in this "tough time" "we're all in together"!

[Rowan22]

And the legal basis of that would be.....?

 

Not legal of course not. You wouldn’t expect the robbers to make up laws which could be used to thwart them would you? No not legal, but a moral right which should, overturn the twisted legality that allowed Barclays top three execs to receive twenty six million pounds in bonus payments!

 

People before property.

[Vague_Boy]

Interest paid is proportional to the risk taken.

Banks make their money from 'the spread' - the difference between the interest paid to the depositor and the interest charge to the borrower.

 

That used to be the case before commercial banks decided to act like investment banks and started speculating in exotic financial instruments like derivatives.

 

Commercial Banks Heading for Huge Derivatives Losses- Credit Crisis Turning into Credit Armageddon [dated 2008]

 

Which is one of the reasons many of our high street banks were so badly affected by the US sub-prime crisis. They were too heavily invested in CDOs and the like.

 

 

If you are risk-averse then you have to accept lower interest rates ... interest is the premium for risk.

 

Unfortunately that ignores the role of a central bank in setting interest rates (the Federal Reserve in the US, the Bank of England here).

 

Interest rates are normally higher than the rate of inflation to some degree. At the moment, interest rates are abnormally low, which means that most savings accounts are losing money.

 

With RPI at 5.1%, an account giving say 2% after tax is in effect a negative interest rate of -3.1%. Savers are actually losing money as inflation erodes the value of their savings.

 

That's not "risk averse", that's theft.

 

Inflation Is Theft

[Rupert_Baehr]

As somebody else pointed out in an earlier post, most of the 'money' held by banks is electronic money. A bit difficult to seize that and it can be moved quickly.

 

Banks do own buildings (which are probably worth a fair bit) but if the British Government (or the British people ) were to start seizing the assets of banks, then the banks would simply apply to the courts overseas to seize British assets to compensate them. It's a big world - and like it or not, there is a lot of international trade. Many UK companies have significant assets overseas - assets which can not be moved rapidly.

 

If the UK started seizing the assets of foreign companies (and as soon as a bank has moved out of the UK and registered elsewhere it is a foreign company) then the UK would become a global pariah.

 

Nobody would trust the UK, no foreign entity would want to risk having assets in the UK seized by the British government and the Pound would become practically worthless.

 

If the exchange rate fell to, say, £3.00 = US$1.00, what would that do to the price of a litre of petrol? Or a tonne of wheat? Or a Kilo of Egyptian green beans?

[Rowan22]

As somebody else pointed out in an earlier post, most of the 'money' held by banks is electronic money. A bit difficult to seize that and it can be moved quickly.

 

Banks do own buildings (which are probably worth a fair bit) but if the British Government (or the British people ) were to start seizing the assets of banks, then the banks would simply apply to the courts overseas to seize British assets to compensate them. It's a big world - and like it or not, there is a lot of international trade. Many UK companies have significant assets overseas - assets which can not be moved rapidly.

 

If the UK started seizing the assets of foreign companies (and as soon as a bank has moved out of the UK and registered elsewhere it is a foreign company) then the UK would become a global pariah.

 

Nobody would trust the UK, no foreign entity would want to risk having assets in the UK seized by the British government and the Pound would become practically worthless.

 

If the exchange rate fell to, say, £3.00 = US$1.00, what would that do to the price of a litre of petrol? Or a tonne of wheat? Or a Kilo of Egyptian green beans?

 

This system works or not, because people subscribe to the values which perpetuate it. If we decide that enough is enough they will change. We have just become too faint hearted to challenge their brainwashing.

 

The new "oligarchs” are no less callous or indifferent than the old. And in many ways are more scary as they use and believe the rationalisations which attempt to "justify" people who are homeless and on the brink of catastrophe over the edge.

[websters gue]

Bob the banker Diamond doesn't look like he's going anywhere.

http://www.telegraph.co.uk/finance/comment/damianreece/8367177/To-Barclays-shareholders-Bob-Diamond-is-worth-every-penny-of-his-6.5m-bonus.html

[Rupert_Baehr]

That used to be the case before commercial banks decided to act like investment banks and started speculating in exotic financial instruments like derivatives.

 

Commercial Banks Heading for Huge Derivatives Losses- Credit Crisis Turning into Credit Armageddon [dated 2008]

 

Which is one of the reasons many of our high street banks were so badly affected by the US sub-prime crisis. They were too heavily invested in CDOs and the like.

 

I've argued previously (in other threads ) for more regulation of the banks. Those arguments haven't changed.

 

'Derivatives' should (IMO) be scrutinised closely - but they are not. Both the British and American governments are more than happy to accept income from financial traders, but neither seems to be willing to accept that - ultimately - they are responsible for whatever goes on within their jurisdiction.

 

Unfortunately, many people are greedy. I suggest that, notwithstanding your comment about commercial banks speculating (which should've been controlled by the government - or by a government-overseen agency) Interest can - and should - be considered as 'the premium for risk'.

 

A few years a go a number of councils invested heavily in Icelandic bonds. The interest rates were very high ... because the bonds themselves were bloody dodgy! (I'm not sure what councils were doing building investment portfolios- but that's another subject.)

 

When those bonds collapsed, the investors starting bleating about how "Life is unfair! We've lost our money, that shouldn't be allowed!"

 

IMO, they should've been held personally responsible and they should've sued their 'advisors' personally to help recoup the losses.

 

Unfortunately that ignores the role of a central bank in setting interest rates (the Federal Reserve in the US, the Bank of England here).

 

Interest rates are normally higher than the rate of inflation to some degree. At the moment, interest rates are abnormally low, which means that most savings accounts are losing money.

 

With RPI at 5.1%, an account giving say 2% after tax is in effect a negative interest rate of -3.1%. Savers are actually losing money as inflation erodes the value of their savings.

 

That's not "risk averse", that's theft.

 

Inflation Is Theft

 

As you say, interest rates should indeed be above the rate of inflation. If they are equal to or lower than the rate of inflation, then the suggestion is that there is no risk in lending money (which is only the case where the loan is backed by the 'full faith and credit' of the national government) or (even less likely) there is a financial [or other] inherent advantage in lending money. - Which is patently ridiculous. (If you ignore that fact that if the money is loaned to somebody else, nobody can come into your house and steal it from under your mattress.)

 

Stagflation is (IMO) quite likely and the present 'interest rates lower than inflation' situation has a similar effect on personal wealth.

 

The British government wants to keep interest rates low to 'encourage' businesses to borrow money to expand, but eventually interest rates are going to have to rise and - as you said - interest lower than inflation is (almost) theft.

 

Thinking back to the mid - late 1970s, I took out a mortgage (in 1976) for £7,500. I bought (together with two other people) a one-third share in a house which cost £22,500.

 

My friends said to me: "£22,500 for a bloody house! - You must be mad!" Initially, my monthly mortgage payments took up most of my pay, but inflation soon took care of that. Had house prices not risen (and that house is now worth something like £300,000) then general inflation would've done something to reverse the house price inflation which had occurred during the previous 5 years.

 

If you remember that period (I used to get monthly pay raises in some sort of attempt to keep up with inflation) then you may remember that there were one or two 'investments' which (more than) kept up with inflation.

 

In the late 1970s, 'English Oak' (furniture) appreciated by something like 2,500% pa. I had a sideline (my wife[at that time]'s business dealing in pine furniture.) Prices rose at a ridiculous rate and although we didn't make a fortune (we didn't have much to invest) inflation certainly didn't erode the money we put into that.

 

In 1977, I could buy a '2+2' chest of draws (2 big draws at the bottom, 2 small draws on top) 'in the rough' (painted, unstripped with wooden handles) for £2.00. After we'd stripped it, polished it and fitted brass handles (another £2.00 investment and about 6 hours work) we could sell it for [maybe] £15 - £20. Well-worth doing.

 

2 years later, I was paying £80 for that same chest of draws in the rough.

 

Financial instruments aren't the only form of investment.

 

I'm now retired. I like the UK (I've family and friends living there) but I wouldn't consider retiring there. House prices are ridiculously high (and show no signs of falling to a reasonable level) and most other prices seem to be leaping upwards, too.

 

I'd hesitate to recommend a 'good investment' to anybody, but if you know you're going to need something within the next few years and you've got the cash to pay for it - and it will last until you need it without requiring excessive maintenance/storage costs - buying now might be a good investment, because the interest you will get on a 'safe' or 'low-risk' investment may well be far less than the price+ tax rises.

[Rowan22]

Bob the banker Diamond doesn't look like he's going anywhere.

http://www.telegraph.co.uk/finance/comment/damianreece/8367177/To-Barclays-shareholders-Bob-Diamond-is-worth-every-penny-of-his-6.5m-bonus.html

 

Yes Pal it's nice work if you can get it!

[Rupert_Baehr]

If you're as good as he is, he might be willing to give you his job.

 

Of course, if you're only as good as Fred Goodwin, Barclays might not be interested.