Saturday, June 13, 2009

Blogged this at Labourhome

Another one I just put on I like the crowd over there. It's stuff I've done before here but I still don't know the answer. Maybe a helpful banker will tell me one day.

Show me the money!

I need some expert help. OK, I know that the current financial crisis was caused by lack of regulation and allowing the markets to govern themselves. And I know that because we had to bail out the banks with jillions of pounds we are in terrible debt, so much so that we have to cut social spending and our children's children will still be paying it off long after we are dead. I'm told that if we hadn't done this the financial system for the entire world would have crashed and we would all be very poor.

What I don't know is where did all the money we gave the banks end up. I've asked this on a number of sites and nobody seems sure. I mean if we say to a bank, "Here's a couple of billion, Fred", where is that money now? It can't still be in the bank vault surely. Neither Brown, Darling or the civil servants have really told us.

So the banks were going broke and their customers were saying, "We want our money back". The banks didn't have the money as they were sitting on sub-prime mortgages or suchlike. If we didn't give the banks money then they would have defaulted and these customers would have lost their money.

Of course the small customers were already covered by government bank insurance so I suspect that most of the readers of this blog would still have their money. Some of the money would probably belong to pension funds, charities and local authorities but one has to suspect that much of it has gone to very rich people. You know people that have far more money than would be covered by the small depositor insurance. I'm thinking of Russian oligarchs, oil rich sheiks, Swiss bankers, hedge fund managers and people like David Cameron and the other 16 millionaires on the Tory front bench.

I smiled when someone told me that Michael Caine was saying he would leave the UK because of the 50% tax. I wonder if some of his deposits were saved by the rest of the tax payers. See Michael, "Not many people know that".

I can't argue if people tell me that if we hadn't bailed the banks out we would have far larger problems than if we had let them fail, covered the small depositors, and then cherry-picked the best bits for nationalization. They would say, "Les, if we had done that then the reputation of the City of London would have gone down the tubes." Sure I know that since we no longer have any manufacturing or industry in the UK, we have to have all these financial geniuses in the City bringing in the money we need to pay for bits and bobs from China.

I accept all this as all three major parties say it's so, but will someone please show me where the money went. If Michael Caine, David Cameron and Fred Goodwin have some of it, I might go and ask for it back.


Manfarang said...

Some of the money may well go where the Concentric Bird eventually goes.
10 US Banks have started to repay bailout money,as has Lloyds(repurchased the preference shares the government bought)

Robert said...

Yes on money borrowed from the government, some way to repay the debts...