[Wolves] For all petrol heads like me :-) + on the subject of petrol

Political Penguin fish at politicalpenguin.org.uk
Mon Jan 14 14:46:16 GMT 2008


ArchLinuxUser dick_turpin wrote:
> On 14/01/2008, Political Penguin <fish at politicalpenguin.org.uk> wrote:
>
>   
>> I think you're under a misconception as to use of taxpayers money.  It's
>> easy to think there's some pot of money of our money out there and it's
>> been used in such a fashion but not correct.
>>     
>
> What its not all kept in a shoe box under the stairs at the BoE? well I never
>
>   
>> The origins of this concept date back to the original formation of the
>> Bank of England where it held reserves and lent against them.  The bank
>> notes we use are nothing more than a guarantee against the centrally
>> held reserves of 'things' to the same value, things being the like of
>> gold, to a lesser degree silver and and foreign currency reserves which
>> are valued against their respective national banks individual
>> gold/silver/foreign currency reserves.
>>     
>
> Oh so that's why it says on bank notes "I promise to pay the bearer
> the sum of..?
>
> --<I've cut the rest>--
>
> Sorry for the sarcasm but I already knew all of that, I'm not looking
> to hold a crusade over it and pretty much everything you've wrote has
> already been propagandised out by the press and news to make it more
> acceptable by the average Sun reader. ;-)
>
> IMO we the tax payer will loose out one way or another in the long run
> although I doubt we will ever get to here about it unless there is
> some sleaze enquiry in 2025 when it will be too late to do anything
> about it.
>
> I think Dave Goodwin is on the same wave length as me and hits the
> nail on the head;
>
> Quote:
> "The government has probably set a precedent in supporting NR, to the
> extent that other banks may feel that they can take extra/unnecessary
> risks in the future." End Quote.
>
>   
For what it's worth, I actually agree with you that the banking industry 
should have effectively sorted out a consortium to take over NR.  
However, as I said the problem with this is the raising of capital.  The 
same is true of the attempts by Richard Branson and his Virgin group to 
put together a package that in a global situation where there's a lack 
of credit they simply can't get the money together to buy out NR.  
Unfortunately in such situations the only sources of credit left 
available are national governments/national banks which pretty much is 
where things stand at the moment.

Your right to equate out the idea of putting eggs in one basket though.  
Much the same as your personal finances or anyone who invests in shares, 
be they companies, individuals or pension groups, the safest option is 
to spread the risk.  That's primarily where NR fell down my over 
investing in the US sub-prime and yes there is a risk to any buyer 
including nationalisation that the proportion of their portfolio taken 
up by this area is too large.  Pretty much all banks invested in US 
sub-prime but the distinction is of the proportion of their entire 
portfolio.  Other banks can offset this because it's a smaller amount, 
NR couldn't.  Of course this leads to banks putting the screws on in 
other ways to claw back their own positions.  Mine decided to charge me 
for going overdrawn even though it wasn't outside of my limit without 
even telling me which a lot of complaining later sorted out but it's 
still true that all banks are being more stringent.

It's also a good point about whether the Bank of England stepping in 
will cause other banks to be more risky.  This of course has to be dealt 
with by the FSA as the governing body for the industry who have already 
changed their guidance in relation to this so hopefully that can be avoided.

In the absence of the private sector being able to put together a 
package can you think of any other solutions outside of nationalisation?




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