Saturday, 6 August 2011

This time, let the banks fail

This time, let's not make the same mistakes that Brown and Balls did - an ineptitude that will cost a generation to repair. No bank is too big to fail. 
"The UK has been hit hard because the banks took on enormously large liabilities in foreign currencies. Should the British taxpayers have to lower their standard of living for 20 years to pay off mistakes that benefited a small elite?" he said. "There is an argument for letting the banks go bust. It may cause turmoil but it will be a cheaper way to deal with this in the end. The British Parliament never offered a blanket guarantee for all liabilities and derivative positions of these banks" - Joseph Stiglitz, 2009, Telegraph
Failing banks should be allowed to go under and asking the taxpayer to prop them up shows capitalism has 'gone wrong', according to the Bank of England deputy governor. In the bad times, banks' losses should be absorbed by their creditors and investors, not by the taxpayer, Paul Tucker has told the BBC. Tucker said that banks had to incur the losses when things went wrong. Paul Tucker 2011
Economic conditions may turn out to be far worse than in previous recessions, including the Great Depression at the beginning of the 1930s. Everybody seems to think that, thanks to the government's monetary and fiscal interventions, this recession will come nowhere near the 1930s slump. However, I think it might be far worse – and precisely because of the interventions. Marc Faber 2009
Two powerful Republicans on Sunday called on Barack Obama, US president, to let some big banks fail instead of propping them up with public money. Richard Shelby, the top Republican on the Senate banking committee, warned that the US would end up following the same path as Japan, which suffered a lost decade of economic growth by tackling its banking crisis too slowly, unless some big institutions were allowed to fail. "Close them down, get them out of business. If they're dead, they ought to be buried," Mr Shelby told ABC News. "We bury the small banks. We've got to bury some big ones and send a strong message to the market." FT, 2009
Iceland President Olafur R. Grimsson, in an interview with Bloomberg, said his country was much better off because it refused to bail out the banks and allowed them fail. "The difference is that in Iceland we allowed the banks to fail," Grimsson said. "These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks." LaRouche 2010
And here's Barclays' £6.5m bonus boy Bob Diamond:
On too big to fail:“It’s very important that we allow banks to fail. It’s very important that no taxpayer money is ever again used to bailout banks that have failed. And that’s why we are working on how we can ensure that banks are able to fail and are able to be wound down.”
On whether he would ever accept a government bailout:“No I think that’s exactly the plan we are working on. Is how do we create a capital structure, and how do we provide a resolution and recovery plan that is credible with our regulators so if the worst happened, they are comfortable that they can wind down the institution.” Wall St Pit 2011


Anonymous said...

These seem to be the same sort of people that were begging Brown etc. to bail them out a couple of years back...

So maybe they have found another way of fleecing us, that doesn't involve a so-called bailout...

The drawback with that method is that they have to make too many guarantees to the mafiosi that bailed them out (using our money... natch).

Liberista said...

banks and central government are accomplices in the grand scam of the systematic robbing people of their wealth. there is no way government will let the banks fail. they are two sides of the same medal, if one goes down the other follows.

Well done Gordoom Brown said...

Well, you just may get your wish this week after Italian and Spanish bond holdings are marked to market.

I would not be surprised to see a panic run on the banks soon, followed by default, followed by ka-boom. The casino banking has been disastrous, banks cannot even estimate their liabilities nowadays with so many derivative products held as "assets".

Anonymous said...

a panic run on the banks - but dont you say that letting the ban go bust would be good - so why permit a run on the bank.
Glad to hear that iceland has full employement and everybody is content.

Bob Diamond's secret method? said...

Well done Gordoom Brown...... said...

Anonymous- "so why permit a run on the bank." I see you subscribe to the idea that the banks "own" your money.

Enjoy the decline, and say hi to Gordoom.