Bye, Bye, Billions

Pack up all my cares and woe,

Here I go, singing low, bye, bye, billions.

Looks like the billions of UK taxpayers money that was used to 'bail out' the banks has gone down a black hole and will never be seen again.

http://www.bbc.co.uk/news/business-20354133

Was the decision to give our billions to the banks the right decision, or should the banks have been allowed to fail?

I think it was wrong to bail out the banks in the way it was done. After all we live in a capitalist society. Instead the government could have given firms money to invest in growth etc, directly. Many millions of pounds as found it's way into salaries of executives etc, but hardly any has gone to companies needing help to grow and recruit workers.
Also the government could have used that money for a massive house and infrastructure building programme.

Brown/Darling were trying to do the right thing in bailing out the banks,, but they were wrong not to make sure the banks lent to businesses etc and to make sure they did not keep paying massive salaries for failure.

They were right to pump lots of money into the economy, otherwise the financial situation would have been far worse, many more businesses would have gone out of business and many more would have lost their jobs etc.

The above of course are only my opinions, but there are a lot of very good economists who think the same.

I do not think a lot of good economist would agree either. It has only delayed the inevitable and there is no sign things will get better. Only propping up the rich but it will all come crashing down in the end.

My guess is that as it becomes increasingly obvious that the billions have gone, and will not re-appear, economists and the public may become more critical of the decision to bail the banks out, and want to know who has that money now. Especially if the banks continue to say they cannot lend to business, saving and pension rates remain low, and inflation starts to rise. We will see in the next few years. If the economy starts to make money, people may forget about the bank bail out, but it's still not clear it did much good.

teamplayer2 wrote:I do not think a lot of good economist would agree either. It has only delayed the inevitable and there is no sign things will get better. Only propping up the rich but it will all come crashing down in the end.

Well the USA did what Brown/Darling did, introducing lots of fiscal stimuli, and many world wide economists agree that was the best way to go. What most do agree with though is that more government controls of the money "lent" to the banks should have been put into place. Of course though both the UK and US failed to properly stop tax avoidance and both failed to make the ones who can afford to pay, pay more taxes, more so in the US.

cyfrifia wrote:My guess is that as it becomes increasingly obvious that the billions have gone, and will not re-appear, economists and the public may become more critical of the decision to bail the banks out, and want to know who has that money now. Especially if the banks continue to say they cannot lend to business, saving and pension rates remain low, and inflation starts to rise. We will see in the next few years. If the economy starts to make money, people may forget about the bank bail out, but it's still not clear it did much good.

Agree. The billions went to the bank's shareholders and executives. Like I said, the biggest failing was bailing out the banks and not controlling them. Really every pound that went in should have been buying shares in those banks.

To allow to fail or to do nothing would have brought about a total financial collapse of the banking and money markets throughout the whole world. Nobody would have escaped the backlash as those institutions are all tied in together in one form or another. A world depression is something none of us would have survived without very serious consequence. The Depression of the 1930's would have been like childsplay to a total collapse of the Western democracies and the knock-on effects. What was done was absolutely vital and absolutely necessary. Anyone saying differently has an Axe to grind - economists - don't make me laugh - professionals - another cause for titillation. You place too much store and too much confidence behind such titles. Take Greenspan for example (somebody should and lock him in a very dark place for a very long time) and the stupidity he displayed as he graciously admitted he had got it all wrong - head of the FED - head up his arse would be an apt description. We fell victim to corporate and individual chicanery - and we will now pay the price for 'trusting' people too much. Will it happen again. Yes. At some time in the future. The methods may be different but the end result will be the same. Meanwhile - hunker down and get on with it. Worse things happen at sea. I know. I was there.

Atlas wrote:To allow to fail or to do nothing would have brought about a total financial collapse of the banking and money markets throughout the whole world.

Does, or did, the entire world bank money system rely entirely on British Banks?

You don't hit one country's bank institutions with a fatal blow without a domino effect around the world. It does depend on 'which' country as to the overall effect but as London was and still is the financial capital of the western democracies such would have been a disaster. The withdrawal of Barclay's offer to buy up Lehman Bros (something the American Treasury desperately sought and were most upset about when they pulled out) shows just how intertwined international finances have become. Lehman's collapse brought about the imminent collapse of AIG which then the Fed (together with the American Banks) had to hold up and re-finance to prevent a total American domino effect from happening. We were (and are still not) very popular with the Americans over that. It's easy to make knee-jerk remarks about doing this or doing that. But you should first do your homework before taking any 'actions' which may come back at you and bite you in the bum. The removal of 'proper' controls and the casino effect instituted by the financial systems as a consequence brought about that most popular of human reactions to money - GREED. When greedy men feed without strict allocation the results will always be catastrophic. And the masses will pay.

Atlas wrote:You don't hit one country's bank institutions with a fatal blow without a domino effect around the world. It does depend on 'which' country as to the overall effect but as London was and still is the financial capital of the western democracies such would have been a disaster.

The billions given to the banks in a hurry, and apparently without proper arrangements to make the banks function for the UK economy probably did help to dampen international collapse, but left the UK weak.
Please Mr. International Bankster, we would like to see some of our billions again, or at least some return on them, if at all possible.

It left the whole of the western world 'weak' - and led to the present malaise you see in Greece, Spain, Portugal, Ireland etc etc. When confidence goes the whole structure wobbles with the money people grabbing the first lifeboat. Until that confidence returns we will not make any fundamental progress. Even could the banks return 'all' the billions (which they cant) it will still take some years to get anywhere near the standards of living that some people were experiencing in the 'noughties'. Probably 2020 onwards if things go the way they should. Meanwhile you can help yourselves by doing a proper days work (if you have any), by spending not saving (to promote jobs) and NOT borrowing (unless for worthwhile enterprise). The main thing - stop being negative. It actualy makes things worse.