A second bailout?

Polly and Alice's mum

Didn't Our Dear Leader say that the Paulson plan was not the way to go?
Is this a flip-flop?

Merda taurorum animas conturbit

Oh dear, the first massive nuclear strike hasn't done the job. Time to launch a second wave of missiles.

What was it that that American general in Vietanm once said about "destroying the village in order to save it".

Damien Vaugh

I sense that there is a growing frustration that the prudent savers and businesses will be absorbing the toxic debts of others.

While I can see the wisdom of investing taxpayers revenue into public infrastructure that will benefit everyone I dont follow the logic of taking from Peter to pay Paul in the manner discussed.

The reason banks are not lending is not from lack of cash but from parcity of applications for loans from those they judge capable of repaying those loans.

I would like to hear more from the banks, especially those who have been bailed out to find out what the truth is behind the low lending before advancing more to them. What gurantee is there that this is getting the best bang for our bucks?

Also there are £540 trillion of derivatives contracts in existance of which 5% will have to be settled according to Prof Nail Ferguson. Is the taxpayer going to have to absorb these toxic debts also?

GeoffH

A second 'bail-out'?

They never learn.

Neither the US or Gordon Brown fully appreciated the Swedish model from which they both took inspiration.

Both could only be bothered to cobble together a scheme that was half of what worked for the Swedes.

If Darling goes back for a second bight and cobbles together the 'bad bank' half of the Swedish model, it may well be too late.

Wight Tory

For goodness sake! Why are the media taking on GB's words, its a RECESSION not a downturn (which is unpicking the hem of trousers that have been taken up in the past) The Tory commentators need to say the R word at every opportunity, it isn't talking down the economy, it's being truthful...

Disillusioned

We are slowly turning a bad situation into an unmitigated disaster. John Redwood has it just about right with his latest blog post. http://www.johnredwoodsdiary.com/2009/01/03/another-package-to-save-the-world/

Our economy isn't going to die of the disease. It's going to die of the government's "cure".

This financial crisis is truly terrifying and I don't think we've even reached the end of the beginning.

Ian C

They can keep pumping money into banks all they like. Unless and until someone makes them right off their toxic debt - i.e. making them tell their shareholders how much is there, the banking system will not unlock. You only have to go back to Japan in the 1990's to know this.

When that eventually happens, banks will begin to lend again - to each other and thence to Jo Public provided they have enough capital (unlikely). By then Jo will anyway be flat on his back gasping for air. But noone knows today how much capital it will take because noone knows how much needs to be written off in each bank's case.

According to one senior banker there is about $0.8trn toxic stuff that we know has been written off by worldwide banks and there may be as much as £3trn in total.

The UK banks are among the biggest in the world so have a disproportionate share of this relative to UK Plc (a bit like Icelands total deposits relative to its economy).

Not a small local difficulty that the British Gov't can deal with without masses of help from elsewhere - and all the important countries followed Gordon over the cliff with his inadequate re-capitalisation plan - a classic case of cart before horse, although part of the eventual solution.

Much hangs on what Timothy Geithner does after 19th January. Until then, we all have to wait. Go back to sleep Mr Darling.

Jim

And the money is coming from where........?

Dave Page

'Taking from Peter to pay Paul' indeed -- I have been saving for years (money earned, not borrowed) for a deposit for a house and I have seen the interest from those savings reduced to zero by this govt., I am £8k a year worse-off as a result of their meddling in the market, monies that go straight into deferring the mortgage payments of those with £400k loans who'd like a couple of years off from their obligations.

This wretched govt has ruined this country.

Einstein'sghost

It is a sign of stupidity to continue to carry out the same actions in the expectation of a different outcome.

Andy

Effectively the money comes out of thin air since it isn't backed by anything... GBP is a fiat currency running in a fractional reserve system. AFAIK monetary inflation is around 16% p/a -- see boe M4 figures -- yet the economy is shrinking, so eventually this money will feed it's way into higher prices.

Susan Hill

Jim.. exactly what I was going to say. What billions ? I was in hospital visiting a friend the other day. Nurse came to take Blood Pressure. Sphyg. didn`t work. After 3 tries she said ' we have of these on this ward of 26 patients and it`s broken. I ask for a replacement. They tell me there`s no money.'
So how come we`ve suddenly got billions for the banks ? Or are they just going to do a Weimar Republic cum Zimbabwe hi-jack of the printing presses ?

Don Erskine

But there is no bust. Gordon abolished them. And Gordon saved the World, and the banks, he told us so. So they don't need saving again, surely?

I saw through that charlatan years ago. I'm glad I sold my house in 2006 (when I thought the bubble would burst) - a little early perhaps, but if can spot a bubble, why couldn't Gordon?

Because he was 'doing nothing' when doing something might have saved us.

The best boost to the UK ecomomy would be an election to rid us of these clowns.

Martin Emery

I can tell you how this will end. This government will eventually sag at the knees and keel over, killed by high finance. They are morally and intellectualy bankrupt. In the final analysis, interest rates are set by the market - not by pot-less govenments. I give them a year until it all comes crumbling down. Dead men walking.

john martin

I Am Truly Sickened!
Am i the only one who thinks that super-gord trying to buy labour back into power with MY AND MY CHILDRENS MONEY on a spurious theory is immoral?
To allow him to do it once could be considered carelessness...twice....well words fail me.

Trevor

Great solution to problems created by too much debt. Do everything possible to create yet more debt!

Given our purchases (of consumer goods and services and of assets) were unsustainable and based on debt, the only way to solve this is to allow unemployment to rise and asset prices to collapse to a sustainable equilibrium! Welcome to capitalism.

Instead, our solution is to try and keep employment and asset prices at levels that should never have existed in the first place, thus preventing a clear out of the system (to find the said equilibrium).

What worries me is that Gordon Brown held off holding the election in late 2007 as he thought it would get better to wait. Some visionary, and the lack of economics is frightening!

Not only are these "solutions" kick in the teeth of the prudent (the ones who did not believe "this time it is different"...and knew it really meant "give my commission you mug"), but a pat on the back for the bankers with little in the way of stick.