Government takes control of Lloyds

Discussion in 'Politics' started by dong20, Mar 7, 2009.

  1. dong20

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    "The Government has taken a controlling share in Lloyds after pumping more public money into the banking giant.

    The taxpayer will 'insure' £260 billion of the bank's potentially "toxic" assets and up its ownership of the bank from 43 to 65 per cent - or 77 per cent including non-voting shares.
    "

    Government takes control of Lloyds - Yahoo! News UK

    So HMG, now have a de facto controlling interest in three (if one counts HBOS/Lloyds merger) of the five 'big' high street banks at a taxpayer underwritten cost of over £550 Billion (close to 35% of national GDP!).

    The true figure in relation to these banking bailouts will end up at least double, perhaps even three times this figure - once the full balance sheets are ... 'transferred'.

    A de facto state owned majority position in high street banking - from a state which now has insufficient resouces to secure that position ... makes the 'Fred the Shred' pension fiasco look like a rounding error ... a situation from which the pension hoopla was intended to divert our attention (a la HH).

    Combined this with BoE rate cut leaving it little or no room for maneuver, QE about to kick in ... what could possibly go wrong ...

    I'm just glad I don't bank with any of them.
     
    #1 dong20, Mar 7, 2009
    Last edited: Mar 7, 2009
  2. houtx48

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    big deal we have AIG
     
  3. dong20

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    It's not a competition. :rolleyes:
     
  4. dongalong

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    "2.5. Will the UK need to devalue in order to join the euro?
    Very probably. Indeed, although sterling's level is not one of the five tests as such, it seems that the level will have to play an important part in the decision. There are suggestions that there would need to be a fall of about 30% against the euro. Though there would also be a fall against the dollar (in which most commodities are priced). There would then be a risk of inflation, and we would not be able to use interest rates as a corrective, unless by chance the EU bank thought that what was necessary to correct our particular situation was also suitable for the rest of the euro zone. The best situation would be for the euro to strengthen while the pound retains its value against foreign currencies. If the fall in sterling took place prior to joining, the necessary measures to deal with the resulting inflation would move Britain further away from the euro zone average."


    I found this question and answer about the UK adopting the Euro written a few years ago. All this money being printed will surely weaken the Sterling's value and perhaps create the perfect conditions for convincing the UK population that adopting the Euro is the solution to all our problems.
     
  5. dong20

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    Unlikely, the persuading part I mean - well ... actually both parts. On the QE theme - you do realise that no actual money is being printed? QE is a 'paper' excercise excecuted electronically. Many people don't is all.

    On the Euro, I can see the logic; potentially stop a potential freefall of Sterling etc. It's a cogent argument and it may work - but consider also that history has shown the very 'flexibility' of Sterling can work to the UK's benefit. In this case perhaps sharpening, but also shortening the current recession compared to many in the Euro Zone.

    The current economic correction was necessary and while I am in favour the Euro I'm actually glad [although only with the benefit of hindsight] that the UK didn't join in 1999 because the country would be in an even deeper pit that it is now had we done so. Joining the Euro now may benefit the UK, but it's a risk. Retaining Sterling [for now] is I believe a lesser risk.
    That said, I still think it's the UK's best long term interests to join eventually, and even considering the foregoing, to do sooner rather than later.

    Given that Labour have almost certainly lost the next election perhaps they may go for it in a[nother] last gasp effort. If they were to so in the face of what would be massive (and I mean massive) public opposition and the situation went base over apex or even had a neutral effect - it would likely render Labour unelectable for years, decades even.

    Even it worked a treat I imagine they'd still be villified by a huge part of the electorate out of sheer spite - I refer her to the X% too stupid to understand much of anything beyond tabloid headlines and soundbites. Sadly, they remain a force to be reckoned with - once every five years or so anyway.
     
  6. dongalong

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  7. houtx48

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    i think the united states has enough on their plates right now without try to bailout the rest of the world. i.e. the brits
     
  8. dong20

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    I agree, but - firstly the 'Brits' don't comprise the rest of the world and secondly, where exactly did I or any other poster in this thread ask for a US 'Bailout'? That's right - no-one did. :rolleyes:
     
    #8 dong20, Mar 8, 2009
    Last edited: Mar 8, 2009
  9. Jason

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    You have seriously understated the case. The level of public opposition would start with civil disobedience and a general strike. It would escalate rapidly from there.

    Britain has a strange relationship with Europe. We like our holiday in the Med. But we are emphatically not European. We are prepared to be friendly with the foreigners who live over the Channel, but we are not them. We joined the Common Market to trade, and while we were taking a nap the politicians created the European Union, without our agreement. The bridge too far would be the Euro. Even if the Euro is going to avoid major problems (will Greece, Portugal, Italy, Ireland, Spain all stay a part of it?) we don't want it. The argument is not economic but tribal, and not up for discussion.

    If there were a referendum on leaving the EU it is likely that Britain would vote to leave. The decision would be made on emotion not reason. In the middle of the present economic woes the logic would be that another economic problem is neither here nor there.

    If the Conservatives are worried about their poll rating in the last few days before the next general election all they need is a speech which suggests leaving Europe and they will win by a landslide.

    Whatever happens I hope Labour are out of power for at least the rest of this century. The last Conservative government included individual politicians who behaved badly - and surely the next Conservative government will have the same problem. By contrast the present Labour government has government sins. They lied to us about WMD in Iraq. They seem implicated in the use of torture. They have restricted civil liberties. They give honours for donations to the Labour party. They take donations through intermediaries. Ministers fiddle their expenses and don't resign. The Speaker is a partisan burke who dishonours his office. They have arrested an opposition politician who embarrases them. They have created a society with an out of control benefit culture. Labour should be finished, and I hope they are - lets have the Lib Dems as the official opposition.
     
  10. midlifebear

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    Dumb question, I know, but I assume then Ireland is not part of the UK because they use the Euro? I know. Dumb, dumb and possibly completely daft. But I thought I might ask.
     
  11. dong20

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    Well, perhaps. But then I did use the adjective massive, twice and bolded it for emphasis. I didn't suggest specifics of any opposition because that would be mere supposition. The repercusions could include those which you suggest, but then they may not. That there would be opposition seemed a reasonable certainty however, so I chose to leave the speculation out.

    Indeed, but that relationship is more pronounced in England that it is in the other components of Britain. Further, I think the rampant xenophobia of the 80s and 90s has diminished, as reason has overtaken irrational fear of losing 'national sovereignty' to 'Johnny Foreigner'. Britain is also far more multicultural than twenty years ago. Not that that hasn't created issues in itself, but it is the case.

    Well, Britain joined what was the then 'Common Market' for a variety of reasons, trade being one. I'm not sure I entirely agree with your assertion about the EU having been created without the agreement of the British people - I don't recall them being consulted to offer, or withold it. That's not quite the same thing.

    Well, I beg to differ as it most clearly is up for discussion and has been for several years now.

    I think it might be a close call, but I doubt such a referendum would result in a vote to leave. Britain cannot survive on her own - I think enough people realise that to overcome what amounts to national nostalgia for what - a [supposed] period of greatness that hardly anyone alive can remember?

    Well, that's easy to say but until the election is called, manifestos published and policies weighed against the prevailing economic situation it's just more speculation. A vocal anti-European stance is part of what doomed the Tories to such an extended period of political weakness.

    There were of course many other factors, but campaigning on such a nationalist platform would only serve to take them one step [back?] toward parties such as the BNP and their ilk. I think they have learned that lesson well enough not to make such a mistake, at least I hope they have.

    Unlikely, and IMO such sentiments are undemocratic, as well as flying in the face of not only history, but British political culture. A strong oppostion is an essential component of any 'democratic institution', and extended periods in opposition tend to render political parties impotent, thus undermining the process.

    I think that's a matter of interpretation, all Governments lie and all contain politicians who behave badly. The current Government is no exception, it has long extended it's welcome and will likely be consigned to the oppostion benches before too long.

    You draw an intertesting distinction between the sins of individual politicians and those of a Government 'collectively' - at what point does the former become the latter - one bad minister ... two ... ten?

    Yes, the present Government has done these things but taking an objective viewpoint what Government has not perpetrated the same or similar actions? Certainly, the specifics vary in both scale and detail but are you seriously suggesting that (for example) Conservative politicians are above such things as 'expenses fiddling', refusing to step down in the face of scandal or accepting 'questionable' donations for parliamentary influence? What Home Secretary has not sought [to some degree or another] to subvert the judiciary to short term political will - quite often acting unlawfully in the process.

    For someone who only recently created a thread bemoaning Governmental overreaching, I find it surprising that such basic political realities should be so conveniently ignored to make a politically motivated judgment.

    If so, then I'd have to believe you're letting your political bias' cloud your judgement and/or memory, ar in denial or simply misinformed. In terms of the current administration - and to inject a little irony - Tory Sleaze was another of the key factors that saw Labour elected in 1997 - if you recall? Thatcher was forced to step down for [in part] her increasingly autocratic style and disregard for both process and public opinion - Blair should have met the same fate but he got lucky.

    Take an in depth and objective Look at the last dozen or so administrations and you will find plenty of skeletons in all their closets.
     
    #11 dong20, Mar 8, 2009
    Last edited: Mar 8, 2009
  12. dong20

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    Northern Ireland is part of the UK. The Irish Republic is an independent sovereign nation.
     
  13. midlifebear

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    Thank you, Dong20, for your patience. I suppose I could have resorted to looking up those facts myself, but I'm quite fascinated with Brits (of whom many are good friends and the funniest, most entertaining people I know) and the constant bantering I hear among them regarding the Euro and the (Pound) Sterling. I'm afraid my entire experience thus far with the UK has been restricted to being held hostage for hour upon endless hour in the foreign traveler's duty-free terminal at Heathrow from which no man, woman, or child can escape except a via a tightly held ticket for a connecting flight to Europe, Africa, Middle East, Scandinavia, etc.

    Someday I'll request a British Airways ticket that gives me several weeks to see portions of this mythic kingdom of which I hear so much about.

    Now, back to your original programming.
     
  14. Jason

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    Chill out man! :wink:The construction "For someone who X I find it surprising that Y" could be read as patronising. This board is a support group, ie you're supposed to be really really nice to people. Much of my post was in jest - however big you think problems would be if the Euro were introduced I think they will be bigger. And yes I had a dig at Labour - in case you didn't get the message I'll clarify - I think they are the worse thing to have happened to Britain since the Black Death. (And that's also a joke!)

    On a serious note I appreciate that Scotland has different views on the EU as does to some extent Wales. NI polarises views down its sectarian split. My straw poll is the chat at the English gym I go to, which pretty much reflects readers of the Sun (the ones whose votes will determine the next election result). There is no pretence at sensible discussion about the pros and coms of EU/Euro - rather EU/Labour/Brown/The French/The Scots are being lumped together as the bad guys. The favoured plan is to put all the debts of the Scottish banks RBS and HBOS on a Scottish balance sheet and force Scotland to become independent. We would exile Brown to Scotland. We English could put in a long pipe and pump North Sea oil to Newcastle. :tongue:
     
  15. Guy-jin

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    Well, of course. What did you expect?

    The non-existent credit that has gone bad has to be bought up by the government so that it becomes backed by something other than thin air and promises.

    Namely, the country's GDP.

    This is completely unsurprising and is not going to be the last time it happens in the near future, I'm sure of that.
     
  16. Drifterwood

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    Sadly, there is no alternative to the Government owning insolvent Banks. The question is whether this will stem the tide to deflation and depression. I personally doubt it.

    Deflation is a self-fulfilling prophecy. As asset values fall, existing debt leveraged against those assets increases in real terms. The debt becomes more and more toxic. Classically banks have to stop lending to shore up their own balance sheets and call in debt as fast as they can. Everything grinds to a halt and actually gets thrust into reverse.

    What you are seeing in the UK is the pre-planned response to a depression scenario. Everyone should watch very closely, because whilst the UK is more exposed than almost anyone else to the Banking Sector, if we go down, everyone else will follow to one degree or another.
     
  17. dong20

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    Are not Governments themselves a leading source of 'thin air and promises'?:biggrin1:

    Don't misunderstand this thread, it wasn't intended to express surprise at events. I'm not surprised, and truth be told I saw this coming a long time ago. I expected what has happened to have happened, perhaps not quite so severely, but close enough.

    Backing a massive acquired national debt with the GDP also runs a risk of being backed by thin air and promises, but since the true national debt already far exceeds GDP, one might argue - what does another multiple matter? Maybe folk will pay up and all will be well ... haha!:cool:

    I know, and this thread is somewhat tongue in cheek - in the sense that while I understand the dynamic, I don't like where it will likely lead. Add to this the level of competence demostrated by Brown [et al] so far and I must repeat ... what could possibly go wrong!
     
  18. Drifterwood

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    IMO Brown is culpable in being swept along with the euphoria of easy money. Now we have to deal with the reality of difficult money. I can't see that he will survive even if his pre depression policy is correct. It's perversely ironic that he was loved as a chancellor even though his policies or lack of have fuelled the antithesis whilst he will be damned at a time when his current policies are probably correct. Such is politics when people have more urgent concerns.
     
  19. dong20

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    I agree, although not that it's yet time to use the term 'depression'. That said, I'll admit the current recession has the potential to earn that title.
     
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