Friday, 8 August 2008
'Calamitously Stupid'
That's the forthright verdict of the BBC's Robert Peston on the behaviour that got our banks into the pretty pickle they're now in. Dazzled by the prospect of ever-rising profits and bonuses, they pursued a policy - or rather a behaviour pattern, as there wasn't enough thought involved to make it a policy - of 'calamitously stupid lending' until it blew up in their faces. This wouldn't matter if they were just businesses doing something stupid, getting burned, paying the price and learning the lessons. They don't have to pay the price - we do, this time in the form of a brutal credit squeeze - and they don't learn the lessons, as will be proved a few years down the road when they next stampede into 'calamitously stupid' herd behaviour. No government can afford to let a bank go under, nor even force it to pay the full price of its stupidity and greed. And the worst of it is, of course, that it's our money they're mucking about with. What on earth are banks for, if this is what they do with our dosh? I suppose their safes might be relied on for storing the gold which seems to be the only thing worth having these days - but I'm not sure they could even be trusted with that...
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But of course we can let them pay they price. Northern Rock should have been allowed to go the wall. Deposit insurance would have looked after the vast majority of depositors and its assets, in the form of all those mortgages, could have been sold for whatever price they could get for them. Meanwhile the shareholders would have been cleaned out. The reason that didn't happen was political: Labour was not prepared to pay the price in the North East.
ReplyDeleteSo State Supported Capitalism 1 - Free Markets 0.
For 10 years now we have been lectured by the Scotsman newspaper on the merits of the Edinburgh financial services mob, good honest industry led by upright clean living men / women of honour, in particular the RBS head Dellboy, Fred whatisname has been hailed, on a daily basis as a model of intelligence and prudence. Bollocks, he's the same greedy, hookey little scroat as the rest of his obscene breed. All coming home to roost now, off with their heads. And their snotty nosed managers, all Blackberry and bottom of the range three series with the badge removed, you know who I mean. You've started me off again Nige, oh yes you have.
ReplyDeleteNice day at the beach today though, azure skies, oyster catchers, cold Guinness and crab sandwiches.
Sounds lovely Malty - should have stayed there. The world's just too annoying...
ReplyDeleteAnd of course you're right Recusant - would they have rescued Southern Rock? Would they heck...
ReplyDeleteNige, not even the old Midland bank in Sutton high St.
ReplyDeleteRe RBS, just heard a good 'un on the BBC Scotland Evening news. "RBS, of course are still safe, savers money is secure, as is BORROWERS," fool that I am for asking, if you've borrowed off 'em and presumably spent it and not yet repayed it? Only the BBC could come up with a lulu like that.
Don't trust banks. I don't. Well, I mean, I don't keep my money in a sock under my mattress, but I do have a very healthy skepticism about banks/bankers. Their greed here in the U.S. is why the housing market is crashing and people are losing their homes. They loaned money when they should not have; now people with quite good credit will find it hard to get a loan. Hub and I have *excellent* credit, but could not refinance our house recently because we are both self-employed. Is that stupid, or what?
ReplyDeleteExtremes again. Loan money to anyone or, at the other extreme, no one. Well, no, I take that back. Banks have always been happy to loan money to those who don't need it.
Exactly right susan, treat your bank manager like the neighborhood pedo and you can't go wrong, why not keep the dosh in grannies chest?
ReplyDelete