Add a TRILLION More
Proportionally, this is hard to get your head around.
The United States has roughly 5 times the population of the UK, which makes the British bailout dwarf even that which the Federal Reserve has proposed in toto, if you’re doing it on a per-head basis at least. And when we start adding what other central banks or financial authorities are pouring in to the system worldwide, the sheer numbers are impossible to even contemplate.
All of this is being done as a roll of the dice, because we simply do not know if it will help or not. Iceland is about to go completely broke (global warming wasn’t the ONLY heat they had to worry about,) Russia has shut down trading on its stock market a couple of times now, Germany has guaranteed the safety of all private bank deposits, and there are now rumors that a couple of Hong Kong banks aren’t going to make it. Even down in New Zealand, the financial crisis is beginning to tell on the farms, where farmers are finding themselves unable to borrow for things like capital improvements or equipment repairs.
People have been asking if we’re facing a crisis of 1929 proportions. From what I see, this one may wind up being WORSE. If you’re allowed to keep a few chickens, you might want to get started. I think I may buy my male rabbit a female, and I am definitely going to bring some plant pots in the house and grow things through the winter that a rabbit can eat.
Gordon Brown and Alistair Darling set out a radical £500 billion package today to restore confidence in the UK banking sector and break the crippling logjam in credit markets.
The three-part package includes committing up to £50 billion of taxpayer funds for a partial nationalisation of stricken banks, met from increased public borrowing and with political strings attached that would include reining in executive pay.
In addition, the Bank of England will pump at least £200 billion into the money markets under its existing Special Liquidity Scheme. The Government is also making a further £250 billion available for banks over the next three years to guarantee medium-term debt to help restore confidence and get banks lending to each other again.
The deal was hammered out in talks with banking chiefs that dragged on into the early hours. At a joint press conference in Downing Street, both the Prime Minister and Chancellor were keen to draw a distinction between their rescue plan and the $700 billion US bailout involving the purchase of “toxic” assets.
“All these are investments being made by the Government, which will earn a proper return for the taxpayer,” Mr Brown said.
“Remember, this is not the American plan. The American plan is to buy up the state assets by state funds. The £50 billion is to buy shares and therefore we will have a stake in the banks and we will get the upside in the appropriate cases from what we have done.”
“Look at it another way,” Mr Darling added. “If you didn’t do anything, there would be a very significant cost to all of us as taxpayers.”
The problem is, Mr. Darling, that there may well be a heavy price to pay ANYWAY, in which case you just made things a lot worse.
Oh, and did I mention a lot of States are running out of unemployment funding? This is a direct result of the wingtard “ALL TAXES BAD!!” mantra that kept a lot of states from replenishing their unemployment reserves when they had the revenue coming in to get it done.
I’ll spare you yet another rant on the “free market” morons, who have largely turned into Stalinist Communists at this point. All I’ll say to them is: heckuva job.
Tags: britain, bush, economy, failure, financial crisis
October 9th, 2008 at 3:30 am
Hi JR,
The mess here is bad, the banks and investment “houses” have gambled their customer deposits on a never ending rise in property prices and stock.
Which as in numerous past occasions has turned out to be unwise.
The crux of the matter seems to be that whilst the banks have trillions in paper; securities, bonds, mortgages, and other “instruments” etc, there are not enough physical banknotes to meet the current monthly private sector retirement pension pay-outs, which if not paid, would result in riots and violent confrontations.
So the governments will print some more, thus prolonging the tenure of the usurists.
Stalinism? well, it`s certainly some kind of “enforced socialism,” and my guess is that things are going to be moving much faster in the next few weeks.
Cracks too, in the NATO lines, with some French soldiers refusing to be sent to Afghanistan.
There is talk amongst the left-wingers, of nationalising the banks, and also the utilities. At the same time there are “official” mutterings of a British withdrawal from Afghanistan.
Perhaps the fat lady is about to sing.
October 9th, 2008 at 6:20 am
Yesterday, the Dallas FED chief said on CNBC, and I quote, “We need to suspend Mark-to Market and the Bill of Rights”!!
Sounds like Stalinism to me.
October 9th, 2008 at 7:32 am
JR,
It’s remarkable to me how many bloggers I’ve encountered who have let themselves become genuinely terrified by Bush’s economic propaganda team of Paulson and Bernanke.
These people stay up until 2AM, watching the opening Asian market reports on Bloomberg or CNBC and then blog about how important it is to Main Street that we bailout Bush’s friends and family. It’s astonishing to me.
Rep. Brad Sherman (D-CA) said the House was told if they didn’t vote for the $700 billion dollar corporate welfare package, the Bush administration would declare Martial Law. This is what people should be angry about and not the size of the bailout because we will never be able to pay off this insane debt.
October 9th, 2008 at 8:11 am
Iceland is going to bust over this, yet, they had no National Debt. A Hedge fund manager was attacking the idea of suspending mark to market on securities this morning on CNBC. He said it has nothing to do with the lending crisis. He argued with a former Fed chairman who is blaming SEC regulation and fair market valuation for this whole crisis. On this, I must agree with the Hedge Fund manager. Had mark to market rules been followed, the bad mortgages would have been identified as risky from the moment they were generated. At a time when we need more transparency to solve the crisis, the phony free marketeers are trying to cover up for their past and future crimes. The Hedge Fund manager mentioned that these are the same guys who always blow the free market horn when things go their way, but call for bail outs when things go sour.
This whole situation is the final push to Corporatize America and our gov’t leaders have domonstrated their total loyalty to that goal.
I’ll say it again, if you vote for any Republican or Democrat, you are throwing away your vote. Actually, you are voting for the Corporate State.
October 9th, 2008 at 8:21 am
Maybe, Jim. Maybe not. Obama could turn out to be a Roosevelt in his way of thinking, and Roosevelt, in spite of all the wingtard mantras, was a pretty good thing for America when all the chits are added up.
Nobody really knew what FDR would bring to the table either. I believe he brought the salvation of America for his era, and beyond.
October 9th, 2008 at 8:23 am
Britain is nationalizing eight banks on the brink of failure.
Now, if the nation that brought us the mighty Pound Sterling is tanking, you know there is a structural problem with the global, economic system.
October 9th, 2008 at 9:09 am
Christopher, just trying to get a concept of how much money the UK is throwing at this leaves me queasy. How in the hell do they come up with THAT kind of money?
October 9th, 2008 at 9:38 am
How do we come up with it?
China or, the Bully Boys in Beijing, have ordered the banks not to lend anymore money to the USA.
Can someone — anyone, tell me where we’re going to get $700 billion to bailout Bush’s criminal friends and family members on Wall Street?
October 9th, 2008 at 7:30 pm
Christopher, you forget Paulson has the keys to the printing press. A couple trillion dollars?? No Problem!! Crank ‘em up!! Of course it makes all of the other dollars in circulation worth that much less. It’s called inflation.