Banks

[jazzactivist]

What do you think of all this latest news about continuing losses and problems in the banking sector? Every day there is more doom and gloom. I feel quite torn about it, as on the one hand I think that all banks should be nationalised and owned by the government anyway, as it just isn't safe to leave our money in the hands of unregulated, greedy capitalists. On the other hand I don't agree with governments using taxpayers money to bail out failing businesses, and all of us know that we are taking a risk when we place our money with them. However, as someone with savings that I don't want to lose, I am thankful for the approach that the government is taking. I have deliberately put my savings into small, mutual building societies and do feel a bit of glee that the large banks are now being exposed for their mismanagement and lies, but I also know that most savers are like me with low to moderate amounts and it would be disastrous for that many people to lose our savings... What's your experience / view?

[souter girl]

Thinking about a sock under the bed, frankly! The thing is, it's us "little" people who get shafted every way - many of these city bankers have already trousered their 5 or 6 figure bonuses from last year or are so rich that it doesn't really make any difference - what's one less Lear jet or second/third home or skiing holiday? But what about our pensions? And if these banking types were to lose it all, that's the price they pay for having a high-risk and high earning job. I suppose it is us as taxpayers who are actually footing the bill - so we lose out again?

[keepersdaughter]

I feel very frustrated at this whole business. The person put in charge of handling the 7 trillion $ bailout has appointed some of his wall street cronies, the very people who orchestrated the mess in the first place, to handle the money the government has handed to them. The whole business of all these CEOs is it's an old boys network, they each sit on each others boards and approve each others bonuses and retirement packages etc. I don't understand how they are allowed to get away with this daylight robbery. My OH works for a major US airline. The employees all had to take big pay and benefit cuts, plus work longer hours on the 'promise' from management that that was the only way the airline could not go bankrupt and survive. The CEO and other senior management have rewarded themselves with yearly multi million dollar bonuses that were earned on the backs of employees. The worrying thing is I think this is just the tip of the iceberg, the trickle down effect will probably start to show in the coming months. I really don't know what the answer is, you keep hearing so much conflicting opinion, but no-one seems to really know what's going on.

[Rustic Pumpkin]

whatever your standing, yesterday someone being interviewed (don't ask who) said if you're worried about your savings take them out of where you're at and put them into Northern Rock. I think it was meant to be a glib throwaway remark, but it certainly makes you think.

[jazzactivist]

I think the person is right, Rustic, as a government bank is always likely to be more secure than one based purely on commerce, as other interests dominate beyond profits. However, even Northern Rock has now withdrawn some of its high interest accounts to stop the rush of new customers! Even though I am with small building societies, that never got involved in sub-prime mortgages or buying other banks' debts (I checked), it is still insecure as to which financial institutions are going under. One minute they are publicly saying that all is fine with them and trying to attract custom, and the next day their shares are dropping and they are asking for government support. Today's news about Iceland bank is a bit worrying, as we tend to think that Scandinavian countires are more financially secure. I agree with souter girl that we might all be following our grannies' advice soon and putting it under the mattress - if we can get our money out of the banks...

[dragonfly]

I am not to worried about my savings as the government has garanteed all savings up to £35.000 per person and I have much less than that.

I would love to see someone brought to justice for this mess.

[Katelb]

I am not unduly worried about our savings either dragonfly for the same reason,but like you I really 'some heads should roll',yet somehow,those responsible always seem to wriggle out of any blame or punishment.

[Primrose]

My Chemo brain really has not left me because this money problem has tested me to the limits.

We are under the Savings Protected Threshhold, even if they were unexpectedly owned by the same company.

However, it has just dawned on us a Small pension will be paid out to my OH in December. It has a value, but that is not what you are paid out either in the way of Cash Sum plus annual pension or Annual Pension only.

Now if that is also owned by the Savings banks we have - is that Total Value, even though it is not paid out on date of retirement counted in the current protection of 50k?

By the way I know you can go off to an Independent Advisor and pay for this service, out of savings, but I am sure they don't know what to advise and more than us now.

Am I being a bit slow here or has anyone got thoughts on this as to whether Savings and Pensions are treated differently?

[dragonfly]

kate they probably have made £millions and disappeared with it and the tax payers will pick up the bill.

[jazzactivist]

Primrose, as far as I have heard, and I am no expert at all, savings and pensions are being treated differently. There was a phone in on the Radio 4 You and Yours programme and someone asked that question. Apparently, they are regulated by different systems. Maybe check out the Radio 4 website or Guardian Money website to see if you can glean any more info.

[Rustic Pumpkin]

What gives even more cause for concern is the announcement on this morning's news bulletins that around 20 county councils in Wales and England have invested substantial amounts of money in the now failed Icelandic banking system.

Where is this all going to end? Without wanting to scaremonger, is this the prophesised collapse of the international monetary system?

[Clunkshift]

I have managed not to rant until now but I hate the world of finance and regard them as a bunch of shameless and heartless gamblers.
I do not have any shares and have sold all shares that I have ever been allocated, because I fundamentally disagree with how they are traded.

If an investmant is made in any business there should be a minimum term for the investment of say, one year, and if the investor wishes to sell the shares any sooner, they should only be allowed to sell back to the company that they have invested in.

To sell shares that you don't own, or buy one day and sell the next, is simply gambling with other people's livelihood.

In the early 1970's BSA-Triumph Group owned many engineering companies in the midlands and employed tens of thousands of people. They made a bid to take over Manganese Bronze Holdings, which owned Norton-Villiers and other engineering companies and was in financial trouble.
One day, someone did a "bear run" (short sold) on the BSA-Triumph shares and devalued them so much overnight that on the next day, the failing Manganese Bronze Group took them over instead!
The net result was good companies closing down, good workers losing pensions and many thousands out of work - just so some city slicker could make a quick killing on the stock exchange.

It is immoral and I would like to see all short term "investment" outlawed.

Councils are as much to blame as anyone else, if they had made real investments in local enterprises, we would all be better off.

I'll go and fume quietly again now.

Clunk x.

[Rustic Pumpkin]

Clunk, don't go off and fume on your own! Fume away as much as you want!

What you said about gambling with the livelihoods of others is something I tried to say but couldn't find the right words so left it out of my post. You are right, they have jeopardised our future and the way in which our public services will be provided in the future. Fewer police, perhaps? Or monthly garbage collections? Recalling free public transport from the elderly and disabled? Higher priced, lower quality school meals? Cut backs in maintainence?

And, can we perhaps expect to learn that other service providers have invested in Icelandic banks?

[jazzactivist]

I totally agree with you, Clunk and Rustic. The short selling of shares is just dodgy dealing and, as you have pointed out, can have a hugely detrimental and long term effect on industry and ordinary people trying to make a living. I don't have any stocks and shares either, as I disagree with the idea of futures trading - where commodities are worth a fictional amount determined by the stock market, rather than the real value of it. Although perhaps now is the time to start investing in local or fairtrade alternatives? I am concerned that our government now seems to be panicking and throwing huge amounts of money at the problem to bail out banks and try to safeguard ordinary savers' money. Now there is this problem with local authorities losing money. Will it ever be enough and where is all this money suddenly coming from? I remember when Barings Bank collapsed in the 1990s and Highlands and Islands Council had all of their money invested in it. There was no big bail out then, and the Council lost lots which was ultimately made up from raising Council Tax plus lots of hidden local charges, making H&I the most expensive part of Scotland in which to live.

[Rustic Pumpkin]

Yes, Jazz, I think a lot of people are asking where from and how has all this money suddenly been found. Does this mean that for years this money has been there and we have been suffering needlessly with poor service provision to the major services such as the NHS, schools, policing and other essential things. I'm sure this list could be very, very long indeed.

I feel, perhaps, that this major bail out has stemmed from the magnitude of the situation Barings was, after all, just one bank. This is just about every bank and every person and every corporation and business is seriously affected. I'm not saying that the Barings episode wasn't serious, just that the scale of things is very different with this.

[jazzactivist]

I think that you are right, Rustic Pumpkin. The scale of this situation seems enormous. The Barings problem was created by one man and his cohorts anyway, and the bank's other directors should have picked up on it, and there was no way that H&I Council could have predicted that they would lose money so suddenly. However, it has still really affected local services for years. Perhaps it is that advanced capitalism is at long last collapsing, which might be a good thing in the long term, but in the short term it affects a lot of people and the worst is that no-one seems to know what will happen next.

[keepersdaughter]

I'm a bit in the dark here, can anyone give me a link or tell me what's been happening with the Icelandic bank?.

[dragonfly]

The chancellor said that they are going to borrow the money that they are giving to the banks, I don't think they already have it. If they are borrowing it then they will have to pay interest on it surely. And where are they borrowing it from as the banks don't have it and most businesses are struggling.

I work at a factory that employs 410 people. All the overtime has been stopped and they have been told there will be no redundances this side of Christmas but they don't know about after. All the temps (about 20) have been finished. My son's girlfriend has been fired from her job because they couldn't afford to pay her. This is hitting people very hard.

[lesleyhannah]

To sell shares that you don't own, or buy one day and sell the next, is simply gambling with other people's livelihood.
Clunk x.

Clunk, I do agree with you, but it's not only bankers. Property 'developers' were doing the same thing - buying property to 'tart up' and sell at a huge profit - they were also gambling with people's lives and livelihoods. Where I live such developers pushed up the price of property till it was way out of the reach of people without a pile of capital behind them. Some of the new-build flats were bought before they were finished, and then sold at an enormous profit.

I'm scared by all the news - no longer able to work, I fear my pensions will very soon be insufficient to keep me. However, if the result is that city gamblers can no longer pick up obscene pay-offs, and that houses once more are within the reach of ordinary families (and that houses stop being investments and go back to being homes) then there may, just possibly, be a silver lining to the clouds.

Clunk, hope you're keeping well,

[Clunkshift]

Lesley,

Thank you I am annoyingly well at present, it is now just over a year since my operation and I guess I am getting used to some odd feelings and twinges, but nothing that stops me from being a general nuisance at work and home though.

It is good to hear from you and I hope that means that all is well with you (credit crunch excepted)

Clunk xxx.

[lesleyhannah]

Delighted to hear you're well, Clunk. If that's you in your avatar - and if it's a recent picture - you look extremely healthy. It puts everything else into perspective doesn't it? And even if the bankers may be messing with our financial futures, the sun has been shining down here in Surrey, and the world still looks beautiful.
Lesleyx