[Gebari]

http://news.bbc.co.uk/1/hi/business/7657422.stm

This is even bigger than the US bailout relative to GDP. And it will be taxpayer money. On the news 2 of the biggest UK banks (HBOS and RBS) fell 39% and 42% respectively.

This is effectively the part nationalisation of the entire UK financial system. I never thought it would come to this, things are on the brink.

[jbrovont]

On one hand this is really impressive considering the circumstances in the UK. On the other, it seems a little futile considering the world market reactions to a bailout nine times this size. This whole situation is truely awesome in the literal sense of the word.

[Duende]

from the article:

It will involve investing taxpayers' money in banks, which should make them stronger and more confident to lend, he said.

That's so naive, it's beautiful.

[Eli]

I feel sorry for all my fellow POers across the pond, I expect to see stories about bank lines tomorrow.

[mefistofeles]

If they bailout the banks directly the UK plan could be far superior to the US. Plan the problem with the US plan (at least according to Nouriel Roubini) is that it does not recapitalize the banks directly. According to Roubini at least he believes that the Treasury plan will not create an new liquidity because the banks would still be reluctant to lend to one another. The UK may address this, but I haven't seen the actual proposal. The US plan also doesn't address the reduce the debt burden on the US consumer.

This is effectively the part nationalisation of the entire UK financial system. I never thought it would come to this, things are on the brink.

If you live in the UK that's surprising. Housing prices in the UK were going crazy and had no correlation with income and in light of that this crisis isn't surprising.

[JPL]

If the state take-over of the financial sector continues, by christmas both the US and the UK, will effectively both be running a Marxist/Socialist, centrally planned economy.

Oh the beautiful irony of it. Welcome to communism, comrades, it was going to happen sooner or later.

Things could be worse (grin).

Here is a bit of background reading for all you new recruits:

Crisis of Capitalism

The cyclical crisis of capitalism, or “business cycle” is the oscillation between boom and slump, between inflation and recession, which runs through the capitalist economy roughly every ten years.

The business cycle arises from the “distance” that opens up between the production and the consumption of a commodity, bridged by debt, and the huge mass of fictitious capital which builds up on the basis of the credit system. As this mass of paper value and speculative capital grows, the system becomes more and more unstable, the recession more devastating. Tweeking the interest rates and money supply to stave of this crisis is like driving a Formula One racing car; the central bankers of the capitalist powers are very skilled at the art, but the task of avoiding a crash gets harder and harder and fictitious capital circulates around the world in greater and greater masses.

JP

[allmeyer]

http://news.bbc.co.uk/1/hi/business/7657422.stm

This is even bigger than the US bailout relative to GDP. And it will be taxpayer money.

Do you think the taxpayers will protest?

[Gebari]

http://news.bbc.co.uk/1/hi/business/7657422.stm

This is even bigger than the US bailout relative to GDP. And it will be taxpayer money.

Do you think the taxpayers will protest?

Maybe they'll write a few angry words on the internet or to their friends in the pub but that's about it I'm sure.

The plan will see the Government spend up to £50 billion on buying priority shares in the banks in order to boost their capital.

In addition the Government will make £250 billion available to underwrite the banks' medium-term debts in an attempt to prevent a disastrous funding gap in the next few years.

The Bank of England will inject a further £200 billion into the money markets under its Special Liquidity Scheme - the deal which sees banks swap risky mortgages for Treasury bonds.

I make that £500bn in total, or about $800bn - our entire GDP is only $1.3 trillion. FTSE reacted by plunging 6% - the banks are down as well.

[Cabrone]

[quote="JPL"]If the state take-over of the financial sector continues, by christmas both the US and the UK, will effectively both be running a Marxist/Socialist, centrally planned economy. [/url]

To the allotments brothers (after a biscuit and a nice cup of tea).

[vision-master]

An implosion of the banking system is coming, which means a bank holiday will occur. You now must have enough cash in hand to last a month or two. If you have not distanced yourself from financial agents then you have a financial death wish.

Link

[Roccland]

An implosion of the banking system is coming, which means a bank holiday will occur. You now must have enough cash in hand to last a month or two. If you have not distanced yourself from financial agents then you have a financial death wish.

Link

VM, Look - posts like these are a waste of time.

It is all fine...ask pops. You are just fear mongering.

[vision-master]

With a few thousand in cash hidden.

Pantry full of food.

50 gal of stash gas.

Got ammo?

[Roccland]

I could not resist!!!!

October 7, 2008, By Jim Sinclair, MineSet:

Please understand that the Fed reacts to circumstances rather than acting before potential problems happen. If the Fed hadn't taken the rather strange action they took today by becoming OTC derivative dealers themselves this would have been the day the USA banking system imploded.

Watch Libor rates to signal the point of detonation. Circumstances appear as if there were many problem Angels dancing on top of a pin that is being balanced on the nose of just those people who created the problem in the first place.

An implosion of the banking system is coming, which means a bank holiday will occur. You now must have enough cash in hand to last a month or two. If you have not distanced yourself from financial agents then you have a financial death wish. If you have NOT made absolutely sure that your custodian account is a real custodial- ship you are probably in for a surprise.

I took a call yesterday from a mature lady who told me she feels her money market fund that is only in Treasuries will not pay her out. They did tell her they intend to in seven days. I asked her to call me back in eight days. How does she know that this money market fund is not in OTC derivatives based on the movement of Treasuries?

I do not want you to make that call to me. If you can retire from your retirement program at some reasonable discount do it NOW.

This is it and it is NOW. Gold is going to $1200 and $1650. The US dollar rally has NO fundamental legs. Why are so many of you sitting there like a deer caught in the headlights? Protect yourself and do it TODAY!
Respectfully, Jim

Jim uses CAPS too!

[buzzard]

1) With the retrenchment of the PM markets recently, as soon as I had the cash I visited my "silver guy" to augment my stash. He naturally told me that he was not selling. However, after twenty minutes of discussion seventy ounces in junk silver appeared. It is becoming apparent to me that if I hadn't developed a close relationship with this man I would have walked out of his office with no silver.

2) The trustee decided to (finally) release some $30,000 from the trust account from her deceased mother. It appeared as a check from Merrill/Lynch. When my wife presented this check to our small local bank the teller looked like she had seen a ghost. The teller announced that the bank could not accept the check. After some discussion with the manager the check was accepted for deposit with an eleven day hold on the funds to allow it to "clear". (This is normal procedure for large denomination checks). I believe that even small local banks are now running scared.

BTW, the Merrill/Lynch account has lost $100,000 in value since August. The trustee still refuses to wake up. By the time that we can institute action to force the trustee to liquidate the account it will have evaporated entirely.

Time is of the essence, people. Make your moves NOW. I debated with myself on whether to put numbers in here, and decided that the time for being cute is over. This is real. It may not effect us all in the same ways. But, believe me, it will effect us all. I have been working under the theory that I am two years behind where I thought I would be at this time. Nothing that I can do about that now.

3) I phoned my mother a couple of days ago to inquire as to her finances. The one piece of advice that I had for her was: begin drawing out cash from your accounts and keep on drawing cash until your cash position is larger than your account position. She answered, "I've got some news for you, Buz. I have been doing that for years. I didn't even tell your father." I was stunned. I had forgotten that she is a member of the generation which lived through the Depression. This isn't news to them. Oh, the wisdom of our elders... 88 years old and a step ahead of 99% of us.

[mmasters]

Sure one can happen or several, but not likely this year IMO.

[allmeyer]

Don't freak out if you go to your bank on Monday and it is closed. It's Columbus Day.

[eXpat]

A glimpse of the future?

The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President has been elected but cannot act on the situation until after January 20, 2009 when he is sworn in.

Consider the details of the latest Citigroup government de facto nationalization (for ideological reasons Paulson and the Bush Administration hysterically avoid admitting they are in the process of nationalizing key banks). Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got major US Government funds in the past two months. Ironically, only eight weeks before the US Government had designated Citigroup to take over the failing Wachovia Bank. Now it is clear that the Citigroup was in deeper trouble than Wachovia. In a matter of hours in the week before the US Government nationalization was announced, the stock value of Citibank plunged to $3.77 in New York, giving the company a market value of about $21 billion. The market value of Citigroup stock in December 2006 had been $247 billion. Two days before the bank nationalization the CEO, Vikram Pandit had announced a huge 52000 job slashing plan. It did nothing to stop the slide.

The scale of the hidden losses of perhaps the twenty largest major US banks are so enormous that if not before, the first Presidential decree of President Barack Obama will likely have to be declaration of a US ‘Bank Holiday’ and the full nationalization of the major banks, taking on the toxic assets and losses until the economy can again function with credit flowing to industry once more.
...
The reason is that the situation is so intertwined, with six US major banks holding the vast bulk of worldwide financial derivatives exposure, that the failure of a single major US financial institution could result in losses to the OTC derivatives market of $300-$400 billion, a new IMF working paper finds. What’s more, since such a failure would likely cause cascading failures of other institutions. The total global financial system losses could exceed another $1,500 billion according to an IMF study by Singh and Segoviano.

link

[patience]

We should consider ourselves warned. This will be fugly in the extreme.

[jasonraymondson]

yack yack yack... get a job!

[patience]

jason,

I have a job because I made my own counter-cyclical job some years ago, and it is not going away. I feel for the folks who lose theirs.