This could be it. The end of the game. - Tilted Forum Project Discussion Community

tisonlyi · 01-20-2009, 01:34 PM

Quote:

UK cannot take Iceland's soft option
The British government faces an excruciating choice. It cannot let Royal Bank of Scotland and its fellow mega-banks go to the wall. Yet it risks being swamped by the massive foreign debts of these lenders if it takes on their dollar, euro and yen exposure by opting for full nationalisation.

By Ambrose Evans-Pritchard
Last Updated: 7:00PM GMT 20 Jan 2009

Comments 0 | Comment on this article

Britain has foreign reserves of under $61bn dollars (£43.7bn), less than Malaysia or Thailand. The foreign liabilities of the UK banks are $4.4 trillion – or twice annual GDP – according to the Bank of England. The mismatch is perilous.

It is why sterling has crashed 10 cents from $1.49 to $1.39 against the dollar in two days. The markets have given their verdict on Gordon Brown's latest effort to "save the world".

Credit default swaps (CDS) measuring risk on British debt have reached an all-time high of 125, just below Portugal. The yield spread on 10-year Gilts over German Bunds has doubled to 53 since last week.

Standard & Poor's has quashed rumours that it will soon strip Britain of its AAA credit rating – an indignity averted even after the International Monetary Fund bail-out in 1976. But there was a sting yesterday as it responded to the Treasury plan for the banks. "Market confidence in the sector has eroded to such a degree that it is not clear whether these measures by themselves will bring about a material improvement," the IMF said. "As a result, full nationalisation of some banks remains a possibility in our view."

Spain was relegated from AAA to AA+ on Monday, and Spain's public debt is a much lower share of GDP.

"If Spain can get downgraded, then the risks for the UK are self-evident," said Graham Turner, of GFC Economics. "The increase in the UK gross public debt burden – 11.8 percentage points in just one year – is troubling. The market rightly fears the long-term fiscal costs of a collapsing banking system. Rising Gilt yields are the main impact of the botched move from the UK Treasury."

Mr Turner said the British Government had taken far too long to resort to quantitative easing – printing money – and had wasted months with fiscal frippery as debt deflation throttled the banks.

The parallels with Iceland are disturbing. The country was ruined by the antics of its three big banks. They built up foreign liabilities equal to 900pc of GDP. Operating as hedge funds, they borrowed in dollars, euros and pounds to speculate. However, the state lacked the foreign reserves to match this leverage.

But Iceland at least had the luxury of letting banks default – shifting losses on to the rest of the world. It refused to honour foreign debts.

"They drew a line," said Jerry Rawclifffe, who tracks Iceland for Fitch Ratings. "They created new banks, parking the old losses in resolution committees. It is not easy for other governments to walk away. They have a duty of care."

Indeed, if Britain walked away from UK banks' $4.4 trillion of foreign liabilities – worth eight times Lehman Brothers – it would destroy the credibility of the City and take the whole world into deeper depression.

"The UK cannot go down that route because it would set off an asset price death spiral," said Marc Ostwald, a bond expert at Monument Securities. "The Western banking system is already on life support. That would turn it off altogether."

So whatever the temptations, and whatever the feelings of righteousness over the follies of the RBS leadership in its debt-driven campaign of Napoleonic expansion, the Treasury is wedded to the banks and all their sins. Chancellor Alistair Darling cannot copy Iceland.

S&P's lead UK analyst, Trevor Cullinan, said the Government faces a "severe test" and will be judged by its actions, but he doubts whether matters will reach such a dangerous pass.

"The challenges to UK banks are significant amid a correction in property prices and a contraction of GDP. Nevertheless, the situation is very different from Iceland. The UK benefits from sterling, which is a major global funding currency. UK access to external funding is far more secure. In a worst-case scenario we estimate the cost of recapitalising the UK banking system to be in the region of £83bn (5.7pc of GDP)," he said.

The Government can take out derivatives contracts on currency markets to hedge the foreign debt risk. Perhaps it already has. The banks have $4.4 trillion foreign assets to offset their liabilities, of course. But what is their real value in this climate?

Britain is not alone in its current distress, although the fall in sterling speaks for itself. The sovereign debt of Russia, Ukraine, Greece, Italy, Belgium, Austria, The Netherlands, Ireland, Australia, New Zealand and Korea is all being tested by the markets. The core of countries deemed safe is shrinking by the day to a half dozen. Sadly, Britain is no longer one of them.

UK cannot take Iceland's soft option - Telegraph

The big UK banks are in _SEVERE_ distress. They're all insolvent and clearly so.

The Royal Bank of Scotland is likely to be nationalised in the next few days, with GBP 1.7 trillion of liabilities. That will instantly increase the UK's national debt by, *cough*, 370%. Instantly.

As the govt guaranteed merger of LloydsTSB and HBOS goes through, which is has even larger liabilities, the govt will be the 44.5% owner - with that bank also very close to edge of needing to be fully nationalised too.

It's beyond the British Govt alone to save those banks. If those banks go down, we're looking at something like the collapse of Lehman x 8.

Lehman Bros x 8.

I'd advise you to keep a close eye on what's happening in the UK. Why? Credit Default Swaps.

The chains of CDS' are likely to have severe effects on the rest of the financial world, and the US will not be exempt. If even one of the links in those chains defaults, the whole chain defaults. Which could mean a real world value of trillions or tens of trillions of dollars.

The scenario is this: UK Nationalises its banks, Sterling collapses, UK defaults (including a default of the banks), CDS' around the world are triggered, Insolvent banks and hedge funds in the US and around the world cannot meet their obligations, massive losses bankrupt most financial institutions around the world overnight or quicker... Economic and Societal Chaos.

Take cover folks, this is going to get really rough.

Baraka_Guru · 01-20-2009, 02:04 PM

I haven't seen the film yet, but I was speaking to someone who recently saw I.O.U.S.A., and apparently they discuss how the U.K. is in just as much economic turmoil as the U.S. Is this the evidence we're looking for?

It's hard to get a proper picture when you consider media bias in terms of coverage—U.S. vs. U.K. The U.S., of course, gets more attention for various reasons, including both economics and politics.

I should watch that film already. I've been wanting to see it since I saw the preview trailer.

tisonlyi · 01-20-2009, 02:19 PM

Even IOUSA undershoots.

House prices in the UK are in for a truly monumental haircut. The economy there has ceased up, almost nothing moving around the country, no loans or mortgages being taken out, small businesses having their loans foreclosed left and right, good risks as well as bad, etc, etc...

The British banks are dead. The pound is dead. I don't think a UK default, or de facto default, can be avoided... The trillions of assets that the banks are supposed to be holding are being marked to fantasy, instead of market. In reality, most of those 'assets' are worth a lot, lot less.

That 90bn estimate to recapitalise the banks from the rating agency (the same rating agencies that facilitated the mortgage backed securities nonsense) is a gross underestimate at best, and deliberate manipulation of perceptions in my opinion.

Asset prices, housing amongst them, have an awful long way to fall.

Willravel · 01-20-2009, 02:22 PM

So is it time for the Euro to take a trip across the Channel or would even that be a band-aid at this point?

I'd be really interested to see if nationalization of banks were a possible outcome.

tisonlyi · 01-20-2009, 02:28 PM

I think the UK defaults, then is absorbed into the Eurozone overnight.

I had a gentlemanly bet with my father on the subject last march, thinking it'd happen byt the end of may this year.

In August, I moved it to the end of March.

Nationalization of the banks or their failure are the two options. Once they're nationalised, it's a question of whether the world tries to hold sterling together or not.

If Sterling, including the UK govt and all those banks, goes down, then the world's financial system ends.

(My father, by the way, is a little-englander, hating anything across the channel.

)
-----Added 20/1/2009 at 05 : 44 : 49-----
This is how bad it's got. The head of business for a national newspaper, former head of business for right-wing newspapers also... is commenting on the idea of "jubilee" from leviticus. Seriously.

Dan Roberts: The nuclear options | Comment is free | The Guardian

Willravel · 01-20-2009, 02:49 PM

Personally, I'd switch to the Euro and then nationalize. And I'd ensure that money was backed 100% and simply finance banks through the state. No fake money. No theoretical money. It'd mean a bit more taxes, but I suspect after this people might be willing to pay for more economic and monetary security. I know it sounds Orwellian, but the system we have now seems too unstable.

roachboy · 01-20-2009, 02:50 PM

i've been looking into this a bit since this morning's headline in the guardian indicated that things seem already on their way into a new slippage, tectonic-wise.

it almost sounds like the only way that the pound can be held together is by way of another international currency regime being jammed into place very quickly--something on the order of another bretton woods. i don't see that happening.

but i thought the entire idea behind the imf--before it was transmorgrophied into an instrument of neoliberal-style colonialism--was to prevent currency collapse in the metropole. does it still have that functionality?

if not, what are the options?

tisonlyi · 01-20-2009, 02:52 PM

As it stands, there are no options.

Either there's forgiveness of debts, the rest of the world decides to hold sterling together, or the UK, its banks and then the rest of the financial world implode.

Even if the IMF still had that role, it doesn't have the means to prop up Sterling in its current malaise.

The US govt, the ultimate 'owner' of the IMF, has its own problems... The banking equities have fallen an awful long way today... Roubini has upped his losses estimates to almost $4trillion (up from around $1.4trillion).

Roubini has called every stage of this crisis correctly since 2006.

tisonlyi · 01-21-2009, 12:54 AM

Quote:

Calls to nationalise RBS and Lloyds as markets lose faith in bail-outs
Sterling hammered on currency markets as traders take fright at state of UK banking sector and cost of government rescue

* Ashley Seager, Jill Treanor and David Gow in Brussels
* guardian.co.uk, Tuesday 20 January 2009 21.11 GMT
* Article history

John McFall, confidant of Gordon Brown and chairman of the Treasury select committee, called for the complete nationalisation of Lloyds and Royal Bank of Scotland tonight after shares in both banks crumbled, the pound skidded to a seven-year low against the dollar and government bonds were sold off sharply.

As markets took fright at the state of Britain's banking sector and the wider economy the day after the government's latest bail-out plan, shares in the loss-making RBS slumped to 10.3p, continuing Monday's 66% slide, while the new Lloyds Banking Group continued to fall rapidly as it looked likely that many UK banks would not be paying any dividends for years.

McFall, an influential Labour MP, called for the complete nationalisation of Lloyds and Royal Bank of Scotland "for the sake of financial stability". In an article in the Financial Times co-authored by the veteran private equity expert Jon Moulton, McFall said: "Let us get it over with – nationalise the pair of them."

The pound fell to $1.386, hitting the lowest point since June 2001. It also slumped below €1.07. Sterling was not helped by a surge of confidence in the dollar, as Barack Obama was sworn in as US president.

Jim Rogers, a veteran US investor, said the UK economy was "finished". He told Bloomberg: "I would urge you to sell any sterling. It's finished. I hate to say it, but I would not put any money in the UK."

Rumours were awash in febrile markets that ratings agencies could downgrade the UK's sovereign debt ratings if the government had to issue tens of billions of pounds of government bonds to finance its latest rescue for the banks. A downgrade would increase the cost of raising debt for Britain, the world's fifth largest economy. The price of insuring British debt against default also rose sharply.

Alistair Darling, the chancellor, was forced in Brussels to dismiss market talk that he, like Denis Healey in 1976, would have to turn to the IMF for a bail-out, saying he had laid out at the pre-budget report in November how he intended to pay for the government's schemes.

But Peer Steinbrück, Germany's finance minister, also at the EU finance ministers meeting in Brussels, said he and others had urged a swift return to sound public finances and expressed fears about the situation in Britain, which is forecast to have a 9.5% budget deficit next year, and Ireland, whose deficit in 2010 is put at 13%.

Saying he did not understand Darling's scheme to insure UK banks' multibillion-pound toxic assets via the Bank of England and a "bad bank", he said: "I am sceptical that a national scheme will work."

Steinbrück echoed market fears about the UK scheme by saying it was unclear how to find the right price for the securities in a bad bank. The bank might have to be capitalised with up to 30% of what was on lenders' balance sheets – up to €200bn.

The bail-out also worries the City. "The market rightly fears the long-term fiscal costs of a collapsing banking system," said Graham Turner, of consultancy GFC Economics. The gilts market was spooked by the potential costs to the public purse. Gilts prices fell sharply on the fear of greater supply, which in turn pushed yields up to 3.55% for a 10-year benchmark gilt. Falling yields recently have helped bring down the price of some corporate borrowing and fixed-rate mortgages.

Shares in Lloyds lost half their value before ending 31% lower at 44.8p. Lloyds' stockmarket value is just £6bn – barely half the sum put in by the taxpayer. RBS, soon to be almost 70% state-owned after a £20bn cash injection, has a stockmarket value of less than £4bn. In 2007 it was worth £78bn. Barclays was also hit hard, touching 69p before ending 17% down at 72.9p, to be worth £6bn – little more than the £5.3bn of profits it expects for 2008 and down from £58bn 18 months ago.

Even HSBC, the UK's biggest bank and the only one not to have raised funds from investors, was caught in the rout. It fell 3% to a stockmarket value of about £58bn – less than half the £120bn it was valued at before the credit crunch began.

Darling insisted he had won backing in Brussels for the bail-out. EU ministers said: "Member states continue to remain committed to taking all necessary steps." He said the statement proposed to the EU's Czech presidency by Britain – which demands the proper functioning of credit channels through banks' use of their capital reserves – showed EU unity.

News that UK inflation had its biggest fall in 17 years, dropping to 3.1% in December from 4.1% a month before, did little to calm markets, partly because it had been expected to fall further, but also because the Bank of England has already slashed interest rates to a historic low of 1.5% and is widely expected to cut them further.

Mervyn King, Bank governor, paved the way last night for "quantitative easing" – radical steps to combat deflation and thaw credit markets – by promising to start buying corporate bonds and other assets within "weeks, not months", to pump cash into the system. In a speech to the CBI in Nottingham, he said the Bank was ready to take "unconventional measures" to kick-start the economy, once the weapon of interest rate cuts was exhausted.

King said as well as buying bonds and other securities (to raise reserves on banks' balance sheets and encourage them to lend) the Bank would also consider buying particular classes of assets where markets were malfunctioning. He also threw his weight behind Alistair Darling's new rescue package for the banking sector.

A minister has admitted that the centre-piece of the rescue – the scheme to insure banks against unexpected losses – may last nine years. The admission made by the City minister, Lord Myners, contrasts with Gordon Brown's claim on Monday that the scheme would be short-lived.

Myners told peers: "We are probably talking about a policy duration of no fewer than five years, and probably no longer than eight or nine years … we need a policy that will take financial markets through this economic downturn and beyond."

Inflation is widely expected to turn to deflation this year as the recession deepens and the impact of falling oil prices feeds fully into the figure.

Oil prices fell as low as $32.70 a barrel yesterday, partly on the resumption of Russian gas supplies and partly due to renewed strength in the dollar. That is barely a fifth of the record level hit last summer. The FTSE 100, though, was little moved overall, closing at 4091.17 points on the day as firming pharmaceutical, tobacco and oil shares counterbalanced the losses in bank shares.

Calls to nationalise RBS and Lloyds as markets lose faith in bail-outs | Business | guardian.co.uk

So figures close to the heart of financial and economic policy are now advising that RBS and Lloyds/HBOS are taken under state ownership. Taken together, those two probably add something like 6-700% to the UK's national debt, including massive debts denominated in foreign currencies. This is following exactly the same pattern as the collapse of Iceland.

I think the massive vote of no confidence that will come with and follow those nationalisations will drag the other large banks down, probably with full scale runs on the banks and Argentina-esque scenes of pensioners sitting out the bank, trying to get their money. That'll bring the other banks under the nation's wing in swift order.

Barclays is collapsing as I type. 25% down as of 1 hour into trading.

http://newsvote.bbc.co.uk/2/shared/f...hree_month.stm

Sterling will creak under the weight of the first two banks, but the rest, when they follow, will tear it asunder.

I'm only amazed that Ireland and the other big Irish banks haven't rapidly fallen apart after Anglo-Irish was nationalised...

Urgh, this is all too depressing... But maybe there's some hope:

Britannia and Co-operative to create 'super-mutual' | Business | guardian.co.uk

Go mutuals and cooperatives!

roachboy · 01-23-2009, 06:28 AM

it seems to me that the political valence attached to nationalization is a problem---assumptions as to meaning seem to come from a neoliberal framework---so dumping the pound on currency markets amounts to a neoliberal verdict on a policy choice made along other lines.

i am curious as to why states are remaining passive in the face of currency markets in the context of all this mutation. in theory, they would have the power to act collectively to alter the character of currency speculation. maybe this would be an interesting moment to revive the tobin tax.

genuinegirly · 01-25-2009, 11:29 AM

Quote:

Originally Posted by roachboy

maybe this would be an interesting moment to revive the tobin tax.

Quote:

Originally Posted by google

A Tobin tax is the suggested tax on all trade of currency across borders. Named after the economist James Tobin, the tax is intended to put a penalty on short-term speculation in currencies. The original tax rate he proposed was 1%, which was subsequently lowered to between 0.1% and 0.25%.

So, I'm completely clueless about economics. How would a Tobin Tax help to moderate the current mess?

roachboy · 01-25-2009, 11:45 AM

attac--a french-based political organization (that has since kinda imploded) was advocating the tobin tax on currency speculation in part as a device for slowing it down.
i don't think it's radical enough, the more i think about it.
am stewing a bit, trying to see if an alternative comes to me.

guyy · 01-25-2009, 02:59 PM

Quote:

Originally Posted by roachboy

i am curious as to why states are remaining passive in the face of currency markets in the context of all this mutation. in theory, they would have the power to act collectively to alter the character of currency speculation. maybe this would be an interesting moment to revive the tobin tax.

I think part of the reason was that Bushcrew had shot its last feeble wad in '07 or so, just as the crisis into their view. Other states probably didn't see much point in working out a deal them anyway. Also, residual neo-liberal reflexes are probably still twitching.

A Tobin tax would be a band aid at this point. Maybe there's symbolic value in a band aid. I don't know.

Baraka_Guru · 01-25-2009, 03:07 PM

Yes, it has to go further than the Tobin tax. We need an international body for establishing globally compatible regulatory rules. I think most nations are now interested in updating/adjusting their domestic regulatory rules, but there are international concerns with our globalized economy. There needs to be some sort of synchronization when it comes to these things.

roachboy · 01-26-2009, 05:04 AM

for a while, attac was the only alter-mondialisation group talking explicitly about currency speculation as a central problem of the neo-liberal regime---i used to do alot of translating work for them of position papers regarding the tax and it's likely effects. when i started thinking about this, the memory of those papers came to mind--the idea at the time was to slow the markets down and impose a disincentive. but the period in which that could have been effective is passed.

the approach obama is taking seems to be to attempt a refiguring of the nature and role of the state in the domestic economy first and then to rethink the ways in which this altered state form does and does not fit into the neoliberal system of capital flows and work backward from that starting point. personally, i see no alternative to nationalizing the banking system as being of a piece with this reorientation because it would provide a way to quickly and effectively reorient the space and roles played by that system. at the moment, judging from an article on the front page of the ny times this morning, they're not quite willing to say it to themselves--but i don't see an alternative.

it may be that the administration is playing for time in the interest of testing the consensus building approach to selling their initiatives.

the coming world economic forum should be interesting. i think that's the space in which you'll start to see the reconceptualizing of transnational capital flows, what it does, what it does not do. assuming things hold together that long, i think this is where the big shift will start.

guyy · 01-26-2009, 10:27 AM

I think a new global regulatory framework would have to be part of a nationalisation scheme. Otherwise, the state would only be taking away a buffer (i.e., the banking system, which it supports in various ways) and putting itself more at risk.

tisonlyi · 01-28-2009, 05:43 AM

Remember, though, in all of this... It's fun to charter an accountant:

YouTube - The Crimson Permanent Assurance part 1

WillyPete · 01-30-2009, 08:46 AM

What gets me is how markets allow a CDS on a sovereign currency.

If the currency fails for a currency like sterling, you're fucked anyway, because no-one will be around to pay the insurance on them failing.

01-20-2009, 02:04 PM	#2 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	I haven't seen the film yet, but I was speaking to someone who recently saw I.O.U.S.A., and apparently they discuss how the U.K. is in just as much economic turmoil as the U.S. Is this the evidence we're looking for? It's hard to get a proper picture when you consider media bias in terms of coverage—U.S. vs. U.K. The U.S., of course, gets more attention for various reasons, including both economics and politics. I should watch that film already. I've been wanting to see it since I saw the preview trailer. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot

01-20-2009, 02:19 PM	#3 (permalink)
tisonlyi Nothing	Even IOUSA undershoots. House prices in the UK are in for a truly monumental haircut. The economy there has ceased up, almost nothing moving around the country, no loans or mortgages being taken out, small businesses having their loans foreclosed left and right, good risks as well as bad, etc, etc... The British banks are dead. The pound is dead. I don't think a UK default, or de facto default, can be avoided... The trillions of assets that the banks are supposed to be holding are being marked to fantasy, instead of market. In reality, most of those 'assets' are worth a lot, lot less. That 90bn estimate to recapitalise the banks from the rating agency (the same rating agencies that facilitated the mortgage backed securities nonsense) is a gross underestimate at best, and deliberate manipulation of perceptions in my opinion. Asset prices, housing amongst them, have an awful long way to fall. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

01-20-2009, 02:28 PM	#5 (permalink)
tisonlyi Nothing	I think the UK defaults, then is absorbed into the Eurozone overnight. I had a gentlemanly bet with my father on the subject last march, thinking it'd happen byt the end of may this year. In August, I moved it to the end of March. Nationalization of the banks or their failure are the two options. Once they're nationalised, it's a question of whether the world tries to hold sterling together or not. If Sterling, including the UK govt and all those banks, goes down, then the world's financial system ends. (My father, by the way, is a little-englander, hating anything across the channel. ) -----Added 20/1/2009 at 05 : 44 : 49----- This is how bad it's got. The head of business for a national newspaper, former head of business for right-wing newspapers also... is commenting on the idea of "jubilee" from leviticus. Seriously. Dan Roberts: The nuclear options \| Comment is free \| The Guardian __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- Last edited by tisonlyi; 01-20-2009 at 02:44 PM.. Reason: Automerged Doublepost

01-20-2009, 02:50 PM	#7 (permalink)
roachboy Super Moderator Location: essex ma	i've been looking into this a bit since this morning's headline in the guardian indicated that things seem already on their way into a new slippage, tectonic-wise. it almost sounds like the only way that the pound can be held together is by way of another international currency regime being jammed into place very quickly--something on the order of another bretton woods. i don't see that happening. but i thought the entire idea behind the imf--before it was transmorgrophied into an instrument of neoliberal-style colonialism--was to prevent currency collapse in the metropole. does it still have that functionality? if not, what are the options? __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

01-20-2009, 02:52 PM	#8 (permalink)
tisonlyi Nothing	As it stands, there are no options. Either there's forgiveness of debts, the rest of the world decides to hold sterling together, or the UK, its banks and then the rest of the financial world implode. Even if the IMF still had that role, it doesn't have the means to prop up Sterling in its current malaise. The US govt, the ultimate 'owner' of the IMF, has its own problems... The banking equities have fallen an awful long way today... Roubini has upped his losses estimates to almost $4trillion (up from around $1.4trillion). Roubini has called every stage of this crisis correctly since 2006. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- Last edited by tisonlyi; 01-20-2009 at 02:56 PM..

01-20-2009, 02:22 PM	#4 (permalink)
Willravel ... a sort of licensed troubleshooter.	So is it time for the Euro to take a trip across the Channel or would even that be a band-aid at this point? I'd be really interested to see if nationalization of banks were a possible outcome.

01-20-2009, 02:49 PM	#6 (permalink)
Willravel ... a sort of licensed troubleshooter.	Personally, I'd switch to the Euro and then nationalize. And I'd ensure that money was backed 100% and simply finance banks through the state. No fake money. No theoretical money. It'd mean a bit more taxes, but I suspect after this people might be willing to pay for more economic and monetary security. I know it sounds Orwellian, but the system we have now seems too unstable.

01-23-2009, 06:28 AM	#10 (permalink)
roachboy Super Moderator Location: essex ma	it seems to me that the political valence attached to nationalization is a problem---assumptions as to meaning seem to come from a neoliberal framework---so dumping the pound on currency markets amounts to a neoliberal verdict on a policy choice made along other lines. i am curious as to why states are remaining passive in the face of currency markets in the context of all this mutation. in theory, they would have the power to act collectively to alter the character of currency speculation. maybe this would be an interesting moment to revive the tobin tax. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

01-25-2009, 11:45 AM	#12 (permalink)
roachboy Super Moderator Location: essex ma	attac--a french-based political organization (that has since kinda imploded) was advocating the tobin tax on currency speculation in part as a device for slowing it down. i don't think it's radical enough, the more i think about it. am stewing a bit, trying to see if an alternative comes to me. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

01-25-2009, 03:07 PM	#14 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	Yes, it has to go further than the Tobin tax. We need an international body for establishing globally compatible regulatory rules. I think most nations are now interested in updating/adjusting their domestic regulatory rules, but there are international concerns with our globalized economy. There needs to be some sort of synchronization when it comes to these things. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot

01-26-2009, 05:04 AM	#15 (permalink)
roachboy Super Moderator Location: essex ma	for a while, attac was the only alter-mondialisation group talking explicitly about currency speculation as a central problem of the neo-liberal regime---i used to do alot of translating work for them of position papers regarding the tax and it's likely effects. when i started thinking about this, the memory of those papers came to mind--the idea at the time was to slow the markets down and impose a disincentive. but the period in which that could have been effective is passed. the approach obama is taking seems to be to attempt a refiguring of the nature and role of the state in the domestic economy first and then to rethink the ways in which this altered state form does and does not fit into the neoliberal system of capital flows and work backward from that starting point. personally, i see no alternative to nationalizing the banking system as being of a piece with this reorientation because it would provide a way to quickly and effectively reorient the space and roles played by that system. at the moment, judging from an article on the front page of the ny times this morning, they're not quite willing to say it to themselves--but i don't see an alternative. it may be that the administration is playing for time in the interest of testing the consensus building approach to selling their initiatives. the coming world economic forum should be interesting. i think that's the space in which you'll start to see the reconceptualizing of transnational capital flows, what it does, what it does not do. assuming things hold together that long, i think this is where the big shift will start. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

01-26-2009, 10:27 AM	#16 (permalink)
guyy Addict Location: Cottage Grove, Wisconsin	I think a new global regulatory framework would have to be part of a nationalisation scheme. Otherwise, the state would only be taking away a buffer (i.e., the banking system, which it supports in various ways) and putting itself more at risk.

01-30-2009, 08:46 AM	#18 (permalink)
WillyPete Addict	What gets me is how markets allow a CDS on a sovereign currency. If the currency fails for a currency like sterling, you're fucked anyway, because no-one will be around to pay the insurance on them failing.