EU leaders went to Paris at the weekend and vowed solemnly to co-operate in their handling of the credit crisis. By Monday all bets were off as different countries either broke ranks or strained at the leash in their desire to protect their own private savers first by offering blanket guarantees.
That spectacle has raised all manner of questions — should there be a continental banking regulator for example, to fill the gap between the various central banks and the global regulators like the IMF?
For Britain it raises the immediate question of whether the government should move to stop any seepage of funds abroad by guaranteeing all savers’ deposits. At the moment deposits are guaranteed up to 50,000 pounds.
But the issue of guaranteeing savers’ deposits runs alongside the wider question for Chancellor Alistair Darling of whether Britain should bail out its banks in a blanket operation rather than just acting on a case-by-case basis — effectively buying a stake in the strugglers in a part-nationalisation.
The subject is on the agenda for Monday’s meeting of the crisis National Economic Council.
Bank of England governor Mervyn King has warned of the “moral hazard” in saving banks from their own lack of prudence but the alternative is to let them go to the wall and risk a banking crisis infecting the entire economy and, with it, the lives of ordinary people.
What do you think? Does Britain need a massive U.S.-style banking sector bailout?
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No bailout.
Brown’s “boom” is busted.
Time for a change.
- Posted by JasonNo bail-out. The money will mainly go to enrich those that have caused the situation while they enriched themselves.
Let market forces do their work. Capitalist Society so let it work.
In the course of my work, I have discovered people who all but lost their pensions a few years back due to mismanagement. Nobody came to them and aid, ‘We’ll help you out.’ Now they have a much reduced income from what should have been a good pension.
Market forces every time.
- Posted by Chaslet the shareholders go down with the banks as who gets the benifits when banks report billions in profit year in year for the past several years if the government bail out theys banks what do myself as a higher rate tax payer get from this .as a sugestion as i have three young kids turn my taxes used to bail out the banks as future shares for them in which i am happy to agree otherwise let them go to the wall.just like any other institution
- Posted by john montgomerywhen the dust settles some investors will clean up - but meanwhile Darling and Brown will have to hold their noses and agree to underwrite all private savings - Merkel’s decision to do that will have to be matched, or savers will migrate to banks in Denmark, Ireland, Germany etc.
- Posted by David Knopfler100% mortgages, self certification mortgages, 0% credit cards, balance transfers…do I go on?. The levels of debt generated in the last 8 years are staggering. Consumers have had a ball - the money tree had to go bare at some point.
Oh and the government has had their hand in all of this too…house prices…is does not take a genius to work out that the ordinary man in the street was borrowing way over the odds of their income but as long as the stamp duty was rolling in the government failed to address a very serious financial issue that was brewing…ie the extortionate debt levels - all it needed was for interest rates to rise and the boom would be followed by a bust!
As for the bankers….capitalism…supply and demand. They are not to blame. If they were doing anything wrong…CORRECT regulatory policy should have been in place to prevent their actions from materialising.
I wonder who the economic advisors are to the government….Tom and Jerry?
Hopefully we can learn from this….famous last words I fear though.
- Posted by merina