Be Excellent To Each Other

One core point to understand here is that governments don't create money, the UK government doesn't create sterling, the US Government doesn't create the dollar, the vast majority of 'money' the world over is simply created as debt by private banks, and immediately lent to individuals/businesses/governments.

We didn't come here for a lecture on cheese.

Central banks with a degree of political independence from short-termist politicians who fuck the economy to win elections is not the bad thing you are painting it as. At least bankers have a vision that extends beyond the next political term.

And it's not a "private bank" in the manner you imply, anyway. The Fed's board of governors are all presidential appointees, for example, and the Bank of England's senior management are all appointed by the Crown. Central banks are also not for-profit institutions; they typically charge only nominal interest on the bonds and T-bills they issue. As such, they are structured to provide no incentive to increase debt.

Do you actually have an alternative to modern capitalist economics to propose that hasn't already failed in the real world (note this excludes Communism), or would you like some cheese to go with that whine?

We didn't come here for a lecture on cheese.

And central banks lending money at nominal interest, are you having a laugh? Have you seen what Greece and Portugal are paying on the bond markets for loans, have you seen what's happening to Ireland? This is a nation being laid to waste to satisfy the profits of banks.

As for The Fed, the banks own the White House, so 'presidential appointees' are effectively bank employees.

Now the ECB has offered loans to Portugal

You think that (say) Sir Philip Hampton, Chairman of NatWest, has more say in who holds power in this country than (say) billionaire tyrant Rupert Murdoch does with his Empire Of Ruthless Shit?

Personally, I'd have let the fuckers go to the wall, pick up the pieces afterwards and have 'National Savings' mortgages and all savings up to, say £100k, indemnified by the State. This would have been vastly cheaper and better than what we did do, and it would've set a useful precedent for the future.

Didn't the state make (or is due to make) an absolute fortune on the bailing out of the banks?

Didn't the state make (or is due to make) an absolute fortune on the bailing out of the banks?

Personally, I'd have let the fuckers go to the wall, pick up the pieces afterwards and have 'National Savings' mortgages and all savings up to, say £100k, indemnified by the State. This would have been vastly cheaper and better than what we did do, and it would've set a useful precedent for the future.

They have in the states. Don't think the deal was quite so well managed over here.

Not yet - there's a chance that they'll make a profit when they sell off the shares, but that's probably not going to be a bonanza profit.

They have in the states. Don't think the deal was quite so well managed over here.

Originally expected to cost the U.S. taxpayers as much as $300 billion,[1] by December 16, 2010 the Congressional Budget Office (CBO) estimated the total cost would be $25 billion,[2] although Treasury Secretary Timothy Geithner argued that the final cost would be still lower. [3]

This is significantly less than the taxpayers' cost of the savings and loan crisis of the late 1980s. The cost of that crisis amounted to 3.2% of GDP during the Reagan/Bush era, while the GDP percentage of the current crisis' cost is estimated at less than 1%.[4]

While it was once feared the government would be holding companies like GM, AIG and Citigroup for several years, those companies are preparing to buy back the Treasury's stake and emerge from TARP within a year.[5] Of the $245 billion invested in U.S. banks, over $169 billion has been paid back, including $13.7 billion in dividends, interest and other income, along with $4 billion in warrant proceeds as of April 2010.
[6]

AIG is considered "on track" to pay back $51 billion from divestitures of two units and another $32 billion in securities.[4]

They tried that once; the deflationary spiral resulted in the Great Depression. 20%+ unemployment for a decade and such severe deprivation that there were bare-knuckle street brawls over barrels of waste food scraps. Still, the middle classes made it through alright. Good plan!

Really? I thought TARP was still not fully repaid yet? (I know they did reasonably well in the GM IPO, mind you)

They tried that once; the deflationary spiral resulted in the Great Depression. 20%+ unemployment for a decade and such severe deprivation that there were bare-knuckle street brawls over barrels of waste food scraps. Still, the middle classes made it through alright. Good plan!

On a related topic, for anyone who believes that banking is evil, money is fiction, the gold standard is truth, we never landed on the moon, etc the story of the Brazilian real is fascinating.

Craster can probably tell you more, to be honest . Protectionism played a small part on prolonging things (along with tax rises), but the bank/stock collapses were much worse in terms of their effect on the economy (which would have been magnified many times over if we'd let the banks go to the wall in 2008).

(there's other theories that blame it all on the Fed's control of the money supply, and the amount of time it took for countries to come off the gold standard as well - turns out that the earlier you went to fiat money in the 30s, the better you did)

There were multiple causes for the first downturn in 1929. These include the structural weaknesses and specific events that turned it into a major depression and the manner in which the downturn spread from country to country. In relation to the 1929 downturn, historians emphasize structural factors like massive bank failures and the stock market crash. In contrast, economists (such as Barry Eichengreen, Milton Friedman and Peter Temin) point to monetary factors such as actions by the US Federal Reserve that contracted the money supply, as well as Britain's decision to return to the Gold Standard at pre–World War I parities (US$4.86:£1).
Recessions and business cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a normal recession or 'ordinary' business cycle into an actual depression is a subject of much debate and concern. Scholars have not agreed on the exact causes and their relative importance. Moreover, the search for causes is closely connected to the issue of avoiding future depressions.
Thus, the personal political and policy viewpoints of scholars greatly colors their analysis of historic events occurring eight decades ago. An even larger question is whether the Great Depression was primarily a failure on the part of free markets or, alternately, a failure of government efforts to regulate interest rates, curtail widespread bank failures, and control the money supply. Those who believe in a larger economic role for the state believe that it was primarily a failure of free markets, while those who believe in a smaller role for the state believe that it was primarily a failure of government that compounded the problem.
Current theories may be broadly classified into two main points of view and several heterodox points of view. First, there are demand-driven theories, most importantly Keynesian economics, but also including those who point to the breakdown of international trade, and Institutional economists who point to underconsumption and over-investment (causing an economic bubble), malfeasance by bankers and industrialists, or incompetence by government officials. The consensus among demand-driven theories is that a large-scale loss of confidence led to a sudden reduction in consumption and investment spending. Once panic and deflation set in, many people believed they could avoid further losses by keeping clear of the markets. Holding money became profitable as prices dropped lower and a given amount of money bought ever more goods, exacerbating the drop in demand.
Secondly, there are the monetarists, who believe that the Great Depression started as an ordinary recession, but that significant policy mistakes by monetary authorities (especially the Federal Reserve), caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression. Related to this explanation are those who point to debt deflation causing those who borrow to owe ever more in real terms.
Lastly, there are various heterodox theories that downplay or reject the explanations of the Keynesians and monetarists. For example, some new classical macroeconomists have argued that various labor market policies imposed at the start caused the length and severity of the Great Depression. The Austrian school of economics focuses on the macroeconomic effects of money supply, and how central banking decisions can lead to over-investment (economic bubble).

Wiki:

So 64% of the government's stake has been repaid, and it's managed a 8.1% rate of return on that to boot.

That's a further $82bn, putting the repayments at $252bn, $8bn more than was lent out in the first place.

So, yeah. I think it's fair to say that TARP has worked out well.

To summarise, then; things are bad. I mean, REALLY bad. The current system switches from boom to bust no matter how many clever sods tinker with it. We could abandon the whole system and start from scratch, but that would prolly make things even worse than they are now, so we don't really have any choice but to let the clever sods keep tinkering with it. And the people who've got control of most of the money are almost always going to come out of whatever happens still controlling most of it and paying themselves huge salaries, so if you're clever enough, get on the gravy train while there are still a few seats left.

The country has to rebuild itself economically and socially. It has to develop a good, long-termist capitalism with innovation, investment and engaging the people at its heart. But that in turn requires preconditions. The value system that underpins good capitalism is fairness – proportional reward for proportional contribution. Fairness does not happen spontaneously; it needs a web of supporting institutions, regulations and processes, ranging from effective competition policy to access to university that is based on merit rather than family wealth; from taxing inherited and undeserved fortunes to massive investment in social mobility.

I could've written that quote word for word. It, pretty much, encapsulates all that I believe in and have been spouting for years.

It also explains my utter contempt for bankers and lawyers. There was nothing fair or proportionate about bailing out failed, corrupt banks to the tune of hundreds of billions of taxpayer pounds/dollars and nor did this even remotely resemble Capitalism, let alone a 'good' or 'fair' version of it.

As for 'old money', I'd tax the fuck out of them too.

"I still fail to see why an investor would want to agree to extend maturities rather than get paid back in full and on time," said Jenkins. "If the choice is extend or default then it could be argued that it is not a voluntary decision and certainly the rating agencies will regard it as a default."

It does sound that the Greek government has been running an inefficient, barely sustainable system for years,

Why can't the Eurozone just tell the banks to fuck off though? They shouldn't have lent so recklessly in the first place, tough shit.

This is right back to my original point though, who runs countries, who runs the entire European Union? And it's not the governments, it's the bloody banks.

Why would France and Germany want their banks, who employ many thousands of people and generate massive amounts of money in taxes, to fail because they're holding vast amounts of debt that Portugal, Greece and Spain can't afford to repay?

Luckily for the UK we have the Tory party to jump in and fix that every decade or so!


<ducks and runs>

Why can't the Eurozone just tell the banks to fuck off though? They shouldn't have lent so recklessly in the first place, tough shit.

Why would France and Germany want their banks, who employ many thousands of people and generate massive amounts of money in taxes, to fail because they're holding vast amounts of debt that Portugal, Greece and Spain can't afford to repay?