Is Britain heading for chapter 11 ?

[NitroNutter]

This makes no economical sense at all.

The banks have more issues at hand than the simple fact they are short of funds.

Why are they short of funds ?

Because today there is far more countrywide debt mainly due to sub prime and non-standard mortgages and loans of both secured and non-secured terms, of which there is a grossly increased risk of defaulters. This can also lead to the assumption there is probably a vastly reduced ratio of savings:loans so the banks have in effect little to no money left to lend any one including each other.

The other side of this coin is many markets including the property market which is the largest portion of the country's economy is now so grossly over inflated due to recent relaxed lending criteria to such an extent the banks have took the property market beyond the level the average person can afford, meaning they do not only have a lack of stock or products to sell (cash at hand to lend to any one including each other), they also have at a clear risk of vastly reduced new custom in the short term.

The only way throwing 50 billion of tax payers money into the banking system can benefit some of the taxpayers is if that helps the bank close the differential interest gap between its rates and the lower BoE's rates, what it wont do is bring in new custom, or make funds available for new business.

How can it be conceivably considered this is a viable solution to the problem, the problem which gave very clear signs several years ago that the markets were already in need of checking and is looking drastically tearful now for many, with acts like this, its only a recipe for far more tears and misery in the future, tears which will not be shed by the governments and banks but the people.

Normally banks use savings and investments to generate funds to lend for further investments, most of the savings portion are the property of the general taxpayers who usually get some form of return, the truth is the banks no longer have sufficient of these savings to hand in terms of liqud cash to support any further lending for any over inflated or highly saturated markets, so now the government is proposing to support the banks with taxpayers money, which I am sure most taxpayers would agree, they would have prefered to have this sudden new found tax wealth as their own savings.

This pretty much means every westernised bank not just english banks are in a position not far away from northern rock, or bears & stearns etc.

When a company has litle new custom, a vastly increased set of defaulting existing custom, a tide of custom completing their terms and no funds for the rainy season, chapter 11 is just about a done deal, however here we are talking not just about a company but the enitre westernised banking industry.

[Osem]

The banks have been making vast profits for years and it's no accident that bankers are amongst the world's most generous hosts when it comes to politicians and the like.

I don't therefore see why they should be allowed to get off the hook now their dodgy dealings and totally irresponsible lending practices have come back to haunt them.

In the short term, the BofE needs to act firmly and decisively by to stabilise things or we could all lose out massively in a total collapse of the financial sector. However the entire cost to the taxpayer of doing that must be recouped by whatever means are necessary, including, possibly, the sort of windfall tax which was used against privatised utility companies in the late 1990's.

[NitroNutter]

But this is not the way to stabalize a false and grossly overvalued market, banks have put it into this area and cannot be trusted to not simply swallow up most of these funds and return cap in hand many times till the lull is over which may well be a long one.

The right place to direct this funding would have been to make it available to the various social housing organastions for those who wished to not lose their home and start again, the housing organisation gets first refusal to purchase the home at its devauled price before full repossion orders are sought, the MIG company takes up the slack to the banks as it would have anyway which would probably be a reduced liability under these circumstances as courts cost etc can be removed from the equasion, people in their homes get to stay in them as tennants or partial tennants with the possibility to buy back later when the markets have become somewhat more corrected. I dont see any other fair way to try and stabalize what has already crashed but just has not suffered the full impact of the shock yet.

Meanwhile the banks will post losses etc and will certainly have to do some cost trimming during this lull.

I really cannot see any moral substance to the propping up of potentially fraudulent 'long trading' beneficiaries in the way that has been done so far. Why should a potential 1.2 million families who could face a reposession and eviction in the near future from their hard worked for homes simply becuase of the way the banks have behaved in the last 5 years or so.

[SMHarman]

Well being as C.11 is a US Financial Restructuring (financial restructuring under chapter 11 of the US bankruptcy code) and these companies would be using UK law such as the IA'86 and EA'02 and be put into insolvency.

http://en.wikipedia.org/wiki/Bankrup...uptcy_chapters
http://en.wikipedia.org/wiki/Adminis...8insolvency%29

/Pedant mode off

[papa smurf]

the banks have it sussed ..privatise the PROFITS and NATIONALISE the depts ,its a win win solution

[RizzyKing]

Yep good ol joe public gets rightly shafted again i do hope the news they got what they wanted didn't cause too much champers to spill.

[Osem]

Well we shouldn't forget that a fair proportion of good old Joe Public has had it's part to play in this debacle by spending money it didn't have using loans based on notional house values to buy new cars, holidays etc etc. These people deluded themselves that the housing market was a one way street to guaranteed riches and were only too happy to live now and hopefully pay later out of their never ending paper profits.

The people I feel sorry for are not those described above but:

a) Those (especially on low incomes) who've worked hard to buy property and who will now have to pay more for their mortgages.

b) Those who are trying to get mortgages for the first time

c) Those who've been prudent, saved money (possibly on which to live) and are now seeing their investment returns significantly reduced.

All are now suffering through no fault of their own.

[RizzyKing]

Osem be fair it was the banks and their reckless business approach that led to so many people spending money they didn't have. Banks gave out the loans even though some of the people that had loans were borderline on being able to repay them. It's the banks again that dished out credit cards like they were penny chews and encouraged people to apply for them.

Same banks that year in and year out were conducting a non-sustainable business model paying ridiculous bonuses to certain employee's and have enjoyed a high old time for the last decade at least. Now the brown stuff has hit the fan and the good times have slowed if not stopped they go bleating to governments they are hypocrites and maybe joe public was stupid\naive to believe them but thats about it.

Let them now earn their 6 figure bonuses by working their way out of the mess they played a massive part in creating rather then expecting someone else to bail them out.

[Osem]

Both were culpable in my view - not necessarily equally though. Some people were all too ready to spend cash they didn't have.

[budwieser]

Originally Posted by RizzyKing

Osem be fair it was the banks and their reckless business approach that led to so many people spending money they didn't have. Banks gave out the loans even though some of the people that had loans were borderline on being able to repay them. It's the banks again that dished out credit cards like they were penny chews and encouraged people to apply for them.

Same banks that year in and year out were conducting a non-sustainable business model paying ridiculous bonuses to certain employee's and have enjoyed a high old time for the last decade at least. Now the brown stuff has hit the fan and the good times have slowed if not stopped they go bleating to governments they are hypocrites and maybe joe public was stupid\naive to believe them but thats about it.

Let them now earn their 6 figure bonuses by working their way out of the mess they played a massive part in creating rather then expecting someone else to bail them out.

" it was the banks and their reckless business approach that led to so many people spending money they didn't have. Banks gave out the loans even though some of the people that had loans were borderline on being able to repay them. It's the banks again that dished out credit cards like they were penny chews and encouraged people to apply for them. "

We were bombarded with loans from LLOYDS TSB and they always put up the credit limit on our cards and our overdraft, we were stupid to use them but you put your trust in banks, don`t you? we`ve just about kept our house. We have a 26 year mortgage now
We`re still paying the loans back and we will be for about 10
years.................... our house will never be ours.
Be warned. Stay away from the bank loans, all the loans and even the Re-mortgage we were advised to take out only put money in the pockets of the advisors!

[Osem]

Yes we too have been bombarded with loans and new credit card offers in recent years but it really wasn't that difficult to avoid taking them up.

Make no mistake, I have every sympathy for all those vulnerable people who were misled even conned into taking out more and more loans - it was all too reminiscent of the personal pensions con and I feel there is a case for compensation in many cases. However, plenty of professional people on good incomes who should have known better also went down the route of borrowing against their houses to fund yet more expenditure on new cars, holidays etc. etc. etc. What excuse did they have and do they not share the blame? The housing bubble had to burst but these people deluded themselves it would never happen.

[slowcoach]

The £50 billion honey pot is just for starters, it's going to need to put up a lot more than that if the Banks decide to dip in it. Just in passing it was mentioned that they can dip in to cover their credit card debts which will never be repaid.

We will soon be in the 1950's era, but without the availability of jobs, if you are lucky enough to keep your job then walking to work will be the order of the day again.

Will anyone really want to win the next general election.

My local supermarket appears to be systematically going through it's lines upping the prices by 20 – 100%, hell scones went up almost 300% before they withdrew them due to lack of sales.

[pοlmki]

If you've got 3 hours to spare:

http://video.google.com/videoplay?do...19560256183936