Thursday, 9 October 2008

Emporer's New Clothes type question...

OK so the US has bailed out the banks to the tune of $700 billion, the UK has put up #50 billion to invest in ours, Ireland has guaranteed unlimited protection for savers in Irish banks and Iceland has just nationalised one of its biggest banks.

My question is, where is all the money coming from?

How much money do we actually have in the kitty - and how much have we now got left? Basic housekeeping type questions which I haven't yet heard anyone ask.

How long before the countries themselves go bankrupt?


Anonymous said...

Someone actually questioned this last night on LBC, funny how the Government have come up with all this money, yet, when someone in this country needs medical help the Government don't appear to have the money to pay for the neccessary treayment and they have to wait, likewise how come the Government can't come up with the money for the homeless and poverty stricken people of this country?
So yes where is the money coming from, will every bank in the UK reduce interest charges to their customers? I have a sneeky feeling not, so all the extra money collected will go back to the Government to cover the billions of £'s used, yet again the general public will be ripped off by the Government again, and they in turn will say "OH, what a wonderful job we have done" hmm


Stephen said...

It's ok. Gordon Brown said that he would do all that it takes to shore up the confidence in the markets.

I mean, if the billionaires aren't managed carefully, they might just throw their toys out the pram and declare that they have no confidence in the system any more.

Then where would we all be?

Excuse me when i say that this country is positioned to get one hell of a screwing.

Its not all doom and gloom however. For those who already know how to get one hell of a screwing - they should do well. It is those who only know how to live the high life - that are going to feel it hard.

Anonymous said...

Ah, this is the clever bit.

Where do you think most of the money has gone? Most of the liquid funds have fled to traditional security including government debt. It has never been so easy and cheap for the government to borrow.

So... the government is borrowing the money to buy into the banks. Of course they may make a turn on the investment as long as they aren't forced to exit early. But sadly I suspect this is exactly what will happen especially when the EU look at the scheme. After all is this not a state subsidy?

What will be interesting is whether it will be included in our national debt figure as the gross amount (i.e. £50Bn) or the net amount (i.e. the £50Bn minus the value of the shares) i.e. £0Bn. I suspect the latter!