Financial Fall-Out

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I have been stunned at the news in the financial system over the past few weeks, with major banks going to the wall, and today's news regarding a $700billion bail-out by the US govt of Wall Street firms to get them back on their feet.

I wonder whether people here on this forum, many of whom who will have jobs and careers potentially affected by this turbulent economic climate, think as regards this sort of payout. Is it really fair ? Normally if a business takes a gamble and loses then that is for them to carry. Is it fair that the financial companies should get special treatment ?

There is also the issue of the huge bonuses that are paid out to executives in these financial companies - should this continue after they are given public money to save them from bankruptcy ?

Personnally I just don't think this is fair at all. I just wondered what others on this forum think about this.

:hhhmmm

 

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Hi mate, wouldn't say I was shocked to see any of the recent events, its been brewing for a long time.

Is it fair that taxpayers are footing the bill for banks stupid lending ? no, not really, but the alternative is a lot scarier. Aslong as the banks are regulated better in future I don't mind.

TBH I think things are going to get worse still before they get better over here in the UK. We are about to fully experience what the states have had for the past year or so. Baton down the hatches lol, we'll survive.

 

I don't think it's fair, no. I think that companies should be held responsible for bad decisions - nobody bailed me out for making a bad business decision and going $40,000+ in debt. The financial institutions made the decision to take the risk on people who couldn't afford mortgages and other loans, and now they're failing for it. Not our fault, and we shouldn't have to pay for it.

That said, I don't know enough about the finance industry to know what would happen if those financial institutions AREN'T bailed out. The politicians and economists say that the "average citizen" WOULD be affected if they aren't bailed out, but nobody has really explained why that is or what exactly would happen. If that's true, what choice do we have? <shrug>

 

I've no problem with us (the taxpayer) bailing out the financial institutions but all that I want in return is all the bonuses (from the past 3 years) that these banks have paid to their staff to be paid to the taxpayer.

Otherwise they should not get any of our money and we should just let them fail (capitalism at work)

 

Unfortunately Bank Employees Bonuses, Government Stamp Duty Tax, Estate Agent Commissions all go up with more frequent trading and higher house prices. The net effect is a giant pyramid scheme, so much for Gordon Browns 'No Return to Boom and Bust'. The government ensuring the financial system does not fail and weak regulation means its a one way bet for the individuals involved.

I had a large sum in Northern Rock which I was not allowed to withdraw, they effectively froze my assets, I'm very glad the government bailed me out on that occasion so my feelings are mixed !

I think savers and pensioners absolutely should be protected, I was not aware until then that my funds were at risk, thats why I put my money in a bank not on the stock market! I'd never heard of the &#163;30k insurance limit, there'd also not before been a run on a bank in recent history.

Borrowers put the bank at risk so they should pay in higher rates, not depositors.

I also interviewed at Leeman Brothers one year ago, they were very keen to stress they had made record profits for the last five years, now we know why. Easy to make money in a bull market.

I don't think institutions or shareholders in general should be protected, they were well aware of their risks. The dodgy accounting practices that allowed this to go on and for people to get bonuses should change, they can offset losses for years and claim false profits, look at Enron.

I still cannot see anything that has changed, it happened before in the 90's recession, and I can't see any reason why it currently couldn't happen again. Theres still poor regulation and ineffectual government policies.

Bankers knew they were breaking their own lending rules, self cert, 125&#37; mortgages, 5-6 time salary mulitples, dodgy bonds rated as triple A. They also knew the cheap credit from Asia would run out at some point. Every time this happens the big bosses walk off multi-millionaires and the little guy suffers, any other industry people would be in jail for fraud.

 

Of all the billions paid out to these bankers they'd only pay a small percentage as tax (if anything at all due to smart accountants) so, sod them let them pay all their bonuses back because these have been shown to be (at best) unearned.

http://www.guardian.co.uk/business/2007/aug/28/money.executivepay

A capitalist system shouldn't be used to fund the nest eggs of incompetent gamblers, personally I'd like to see them all go to jail until they have paid off their debts (at least that would discourage them from reckless gambling).

 

Well just to let you know I work in the largest estate agents in the UK and we had the big talk about how we as a company could trade at a loss for two years so there was no concern etc etc etc now they are laying off people left right and center ! Branchs will be down to just a Manager and financial advisor soon ! I've had lots of Independants in my area already close up shop!

 

all this bail out does is slightly delay the inevitable. it is called free market for a reason. the more we butt into it the more issues we have. several of our issues with economics were pointed out almost to the T back in 2002 by Ron Paul. who in my opinion should have been our republican nomination, but apparently that is not what millions of my fellow americans thought.

 

Ron Paul means well... but I disagreed with his thoughts regarding the Iraq War, and his other reforms were far too drastic. I would agree with many of his ideas if they were implemented in small steps.

Meh, I'm not happy with McCain... but there's nobody else even close to what I believe in.

 

McCain, does he even know what he believes in ? "I fully support george bush...er No I don't, ... er yes I do... whats my name again ?"

 

Don't believe what the media tells you. Or are you just looking for "change"?

 

I just watch The Daily Show for all my US political needs, I support the 'God Boy' or the new 'Black Moses', but then I don't get a vote.

Change is good, keeps the politicians on their feet, politicians are like nappies, they should be changed often because they are both full of s*&!t !

 

As with everything in the country, the tax payer has to bail these greedy companies out

 

Ah, then no wonder McCain's your target... The Daily Show is heavily liberal.

 

If we're going to talk about the US Presidential campaign (and it's bound to be "dirty" if for no other reason than it involves politicians), then you might find this CNN story interesting.

 

Thanks for a lot of interesting opinions expressed here. I would say on the whole that I agree with BosonMichael and Postman and others who feel that they just do not deserve this bail-out. For a start will $700billion be enough ? What if the same thing happens again. They must have been desperate in the first place to get involved in sub-prime - so are they kind of the people to trust with such a large sum of money ? Would you go out personnally and buy a whole load of their ‘toxic assets’ with your hard-earned cash ? Why let a government do it for you then ? Because that’s all you’ll be getting for your money.

I’ve met hard-working socially responsible business people in the manufacturing sector who’ve been throttled by their bank and ‘foreclosed’ when they had substantial invoices that would be paid out to them soon. The bank just didn’t want to know. I also seen their draconian side on getting a mortgage some years ago when I was a contract worker. I closed my accounts with that bank as a result, after 14 years of banking with them. And now one of these banks, the Bank of Scotland, after being in business for 300 years, has effectively gone bust – they’d have been better off backing the manufacturing companies or temporary contract workers rather than investing with the ‘spivs’ in the subprime market.

$700billion is an awful lot of money. Similar amounts may be getting paid out here in the UK when the financial system here follows suit and collapses in similar fashion, as it inevitably will. Think of all the improvements in society that could be made with that kind of money ? Like free sports facilities for all kids in every single neighborhood across the country, to create a healthier nation, and lower crime. Or money spent on educational facilities, infrastructure, or the environment, etc etc. Instead it will be spent on somebody’s ‘toxic’ assets, that nobody else wants or will touch with a barge pole.

The irony here is on a truly COLOSSAL scale, that the financial system, the very paragon and epitome of free market values, now depends for its survival on the ‘state’, the very thing that should never ‘interfere’, and that should leave us all alone to do our own thing. Well its interfering now – and boy are they glad for it !

 

Regarding the financial bailout and a true capitalistic system, if there was no bailout, how many people would suffer using the savings accounts at these sites? Are you willing to let people lose all their money, not because they invested with a particular bank, but because they had a savings account?

My problem with the true capitalistic view is that foreigners are able to buy out core pieces to the country's economic engine – that’s scary