Tuesday, September 18, 2007

It's crash, not flash

Yesterday, I made the throwaway remark in the comments of this thread that I didn't think the taxpayer should bail out Northern Rock, or any bank for that matter. This produced a reaction from one poster saying that the Bank of England wasn't the taxpayer. As we see from last night though, it really is the taxpayer that is underwriting Northern Rock's customer liabilities now. Saatchi & Saatchi are right, he's not flash.

Image shamelessly lifted from Guido

10 comments:

Anonymous said...

Whenever we hear a news report that says something like: 'the Government will be paying for/subsidising/ investing in ...', we always yell back: 'no, it's us who's paying, it's our money'.

Anonymous said...

Absolutely. And you're completely right we shouldn't bail them out.

If we do all that will happen is that the banks share price will have crashed, its liability underwritten by public funds, and then other banks move in like sharks for a bargain basement acquisition.

The big banks must be rubbing there hands in glee at the moment.

kinglear said...

What has happened is that - quite apart from massively wrong banking practice by NR, we now have massively wrong political interference, which, in the end, will do noone any good.Cutting the feet from under Merve the Swerve will damage the UK monetary system enormously, as one of the reasons people have invested here was because they believed the spin that the BofE was independant. Now they know it's not. Watch the money vanish over the next few months. If you haven't arranged your funding lines by the end of October, forget it.

Anonymous said...

Dizzy, so you're admitting that your comment about equating the Bank of England with the taxpayer yesterday was nonesense?

dizzy said...

Suggest you go and read my response to you yesterday to find out why the answer to that question is no.

Anonymous said...

I read it. You seem to believe that, because the Bank is ruled by Acts of Parliament, that any money spent by it is public money. Simply bizarre.

I agree that the government shouldn't bail out NR. But I also think that it wont need bailing out (which is why Darling made the offer to do so - it's about confidence building rather than cash). BUT - your comment yesterday (before Darling's announcement) implying that the BoE offering NR an overdraft facility was a taxpayer bail-out is simply wrong.

dizzy said...

I read it. You seem to believe that, because the Bank is ruled by Acts of Parliament, that any money spent by it is public money.

Well you obviosuly didn't otherwise you would not be creating straw men which you have consistently done to represent my view as something that I did not say.

Simply bizarre.

No, what is bizarre is the you have in these threads consistently read what I have said and then created pathetic strawe men misrepresntations of my words.

I did not say that the Bank's money was public. I said that there is a clear notional link between the Bank's money and the eocnomy which filters through to the public at a cost.

What is "simply wrong" here is actually your use fallacious argumentation.

Anonymous said...

Of course I agree that decisions by the BoE have implications for the wider economy. I simply feel that trying to jump from that statement of fact to saying that, if the BoE moves to offer an overdraft to NR, then NR is being "saved by the taxpayer" isn't right.

flashgordonnz said...

So where does the money come from, then? They can't just print it can they? I'll get me coat...

From the annual accounts:
"The entire profit of the Issue Department [bank notes] is paid over to HM Treasury. The Banking Department comprises all other activities of the Bank. The
post-tax profits of Banking Department are effectively shared equally with HM Treasury unless the Bank and HM Treasury agree otherwise (see note 8)."
That reads to me like the taxpayer pwned the bank and so any dent in profits of the Bank will result in lower payout to HM's The Taxpers Treasury. Ergo, I for one think the taxpaer IS effectively, "bailing out" the NR.

Ted Foan said...

Where does JM think the money that the BoE controls came from? The state does not have any money other than that which the taxpayers of the UK have paid into the Exchequer for centuries. Oh, and there is the custom and excise duty that foreigners pay when they trade with us.

If nobody paid any taxes or customs and excises then there would be no BoE and no state-funded institutions like defence, the NHS or state schools. GCSE-level stuff I would have thought.