Bankers/Rich/Poor/Bailouts

[*_ash_*]

Most people on this forum seem to think that the world has ended because of the bank bailouts.

 

 

(under the Labour government)

 

 

 

What do people think would have happened if they hadn't done this?

 

---------- Post added 27-03-2013 at 04:48 ----------

 

I know under the rules, I should post an opinion. So:

 

I think they had no choice but to do it. As the eurozone one by one countries are collapsing and being bailed out, I can't help but think that we did well staying out of it.

[epiphany]

Don't be fooled by their PR driven rhetoric. The top banks spend millions lobbying parliament every year for these reasons.

 

The government could have just as easily used the bailout money to compensate those who lost out from the collapse and they would have moved their money to more responsible, ethical and stable banks. Something people should do anyway, but it takes a wake up call like this to give them a prod.

 

I believe when a business fails, it should be allowed to fail. Its assets should be properly liquidised in the market place and, more importantly, business and consumers should learn from its failure. That's one of the fundamental ways in which economies (should) evolve.

 

By bailing out failed institutions, and especially banks, you are sending the message that they can take all manner of risks and the tax payer will protect their assests. It is literally socialising the risk and privatising the profit and stinks of crony capitalism rather than a free and open market.

[Supertramp]

Don't be fooled by their PR driven rhetoric. The top banks spend millions lobbying parliament every year for these reasons.

 

The government could have just as easily used the bailout money to compensate those who lost out from the collapse and they would have moved their money to more responsible, ethical and stable banks. Something people should do anyway, but it takes a wake up call like this to give them a prod.

 

I believe when a business fails, it should be allowed to fail. Its assets should be properly liquidised in the market place and, more importantly, business and consumers should learn from its failure. That's how economies (should) evolve into being more efficient.

 

By bailing out failed institutions, and especially banks, you are sending the message that they can take all manner of risks and the tax payer will protect their assests. It is socialising the risk and privatising the profit and stinks of crony capitalism rather than a free and open market.

 

Yay! Somebody who understands it is not the free market's fault.

[epiphany]

Yay! Somebody who understands it is not the free market's fault.

 

Of course not. A free market would have punished banks for taking such irresponsible risks.

 

But the big banks need the nanny state (which is why they spend £££ protecting their interests in parliament). They need that tax payer safety net and state granted corporate privilege.

 

And we give it to them like ****ing muppets.

[Staunton]

Yay! Somebody who understands it is not the free market's fault.

 

Think again!

 

Here's that little story I have been telling. I call it Once Upon a Sub Prime.

 

Once upon a time there was a young couple, Randall and Mary Joe. They were so much in love, and very soon those wedding bells were ringing out across town. And once they were married, Randall and Mary Joe decided they wanted a place of their own. So they drove down Main Street one fine morning to see Bill at Small Town Finance to fix themselves a home loan. Bill satisfied himself that the couple had good prospects - Randall had a steady job down at the service bay, fixing punctures and replacing worn tires, and Mary Joe had herself some part time work at Wendy's. And Bill knew Mary Joe's pa too, from way back in high school. So Bill was sure they were a real steady couple - which was important because Small Town Finance were in for the long haul. Ya see, if Small Town Finance lends out, well the way they see it is that they have a real interest in Randall and Mary Joe's little venture. Well, papers were signed and hands were shaken, and everyone was happy. Randall and Mary Joe got their loan and bought a little place they could call home, Bill kept an eye on those repayment cheques, and life was sweet as ma's apple pie.

 

But then one day the corporates moved in. They put the heat on Bill – sure he was a nice guy, but you know fellas like that, old timers, they just don't cut it these days.

 

Meet Bud, the new boss!

 

Pretty soon Bud was selling home loans right across town. He didn't care if his customers had jobs or not, he wasn't troubled none if they was flat broke, because he got a big fat commission on every loan he sold. And Bud wasn't one little itty bit concerned if his customers defaulted, because the new business model in Small Town Finance didn't dependent on repayments coming in. No sir! Those debts were parcelled up by the Wall Street players and sold on to unsuspecting institutions on the global market, with a nice 'tripple A' rating from their friends down at Standard and Poor's for good measure. And when the debts go bad, who cares? Bud's got his big place down by the lake, and the local sherrif, he 's busy these days, helping the bailiff evict all those poor suckers who fell for Bud's smooth-talkin' sales pitch!

 

Randall and Mary Joe, they're still doing good. They have two little ones now and they are both of them in school. Randall became manager down at the tire franchize last fall, and he's still keepin' up with those all important monthly payments on the home loan.

 

Mary Joe volunteers Wednesdays and Fridays at the church, helping out with the soup kitchen. Town looks pretty run down now, with too many defaulted houses standing empty, and so many stores running closing down sales.

 

Randall saw a report on Fox News about how the big bad government had forced those innocent little Wall Street banks to lend to poor folks and caused the crash. But he met Bill by chance down on Main Street a few weeks back. Bill just scratched his ear and said 'Ya know Randall, Fox News just tells ya lies!'.

 

Pointing at a foreclosed house, all boarded up and forlorn looking, Bill shook his head. 'No, Randy, take it from me. The banks did this!'

[Supertramp]

Firstly it was Bill (Clinton) who pressured the banks into sub prime lending. Secondly the market would soon correct itself.

[epiphany]

Staunton, that's a lovely story, but the situation you described would only be worsened by the promise of state granted bailouts and protecting the banks' assets using tax payer's money.

 

This is exactly what happened with the great government sponsored finance houses in the US - Fannie Mae and Freddie Mac. Because they essentially had unlimited backing from the tax payer, they could "afford" to lend to anyone.

 

In a free market, banks would not permit unbridled lending because their risk would be fully privatised. They would be more risk averse, in other words. Oh there may be a couple of irresponsible lenders at first, but the market would soon learn what happens to such businesses.

 

That's really the whole point here - we need to let the market evolve so that lessons can be learned. Government bailouts send the wrong message, prop up undesirable institutions at the expense of us all and stunt the evolution of the market.

[L00b]

What do people think would have happened if they hadn't done this?

Only the fittest organisations would have survived, i.e. those with safer/more conservative lending/banking practices and reasonably well-capitalised at the time, with borderline cases being the target of aggressive takeovers.

 

i.e. what has always happened, and continues to happen, in any walk of business life aside from banking (in free market economies, that is).

 

The UK bailouts were a cop-out by Labour, (IMHO-) ideologically worse than whatever the LibCons have done to date (because of what Labour supposedly 'stands for'...and certainly according to their rethoric since the general elections).

 

I guess Brown simply did not want to exit his premiership as the PM who let millions of persons see their deposits wiped out (nothwithstanding applicability of Gvt garantees).

[Staunton]

Firstly it was Bill (Clinton) who pressured the banks into sub prime lending. Secondly the market would soon correct itself.

 

Poor old Randall allowed himself to get mightily confused by Fox News and the mainstream media. But I am confident that most people here in Sheffield can see straight through such right-wing nonsense.

[Junior1986]

The Bankers are greedy scum of the earth leeches if it wasn't for them morons our once great country wouldn't find itself in the terrible mess it's currently in.

 

The Tories should have clobbered them! but we all know Cameron and Osborne won't don't do that to there fellow rich chums! the Torie scum will continue to let them get away with extortionate bonuses whilst laughing in the faces of millions of hard working families up & down the country it's an absolute disgrace.