´óÏó´«Ã½

How does all this fit in with today's trumpted announcement that house prices will be 25% up in five years after reducing by just 2% next year?

The rights issue model for raising capital has - perhaps fatally, in the short term - in recent days by the HBOS fiasco

and there aren't many more Santander-style White Knights

which leaves us with (a) taxes and (b) Sovereign Wealth ... not a comfortable choice.

Who'd be PM, or Chancellor, eh ?

What I have been trying to understand for the last few months is where all the value has gone. Even if some real value is being destroyed it can't be that much so where has it all gone ?

"1) The UK banking sector's shares have been hammered badly, causing them to go cap in hand to their existing shareholders for more capital."

No - share price movement does not increase or reduce the amount of capital a bank has but rather its market capitalisation. When a company issues shares it receives the price issued at, the movement after this is not the concern of the company but the shareholders. Companies should be concerned with their shareprice but not because this changes their capital but rather to keep the shareholders happy.

This crisis has similar issues to that in pensions 5 years ago. The Government sets rules on solvency. Then something unexpected happens. The rules bankrupt some unfortunate people before someone realises we will all go bankrupt at this rate, and then the rules are re-written.

I've no confidence that the new solvency rules (as for pensions solvency rules) will be any more relevant in 10 years time than the old ones are now. That isn't to say they won't be strong enough, just not relevant. The one thing I know for sure is, something unexpected will happen!

its a mixed picture. not every uk high st bank has sub prime debt [if you want to know who they are think of ones no one mentions] and they are fine.

the western banking model is made up of necessary fictions. Fractional reserve is a fiction based upon human behaviour. It only fails when humans do not behave as expected [e.g everyone taking out their money at the same time]. As fiat banking is a behaviour [no gold standard etc] how do you massage human behaviour? With propaganda. With illusions. So bankers need to be great actors.

Many years ago I remember watching 'steady' Eddie George reporting to parliament and he gave a 'performance' of being a financial wizard. With subtle slow hand gestures and a slow delivery that delivered confidence.

Govt thought when they sold off their retail banking arm that was the end of it but such is banking that the govt will always need a retail banking arm run on sound finance. In the event its picked up northern rock. It might pick up some more. The belief in the market as the only most efficient agent is the model that has failed.

That model is failing in energy too as the uk customer is charged more than anyone in the eu [who have regulated markets]. Markets are proving again and again they are there to deliver profit not social services.


Meanwhile as the famous saying goes the time to buy is when there are riots in the streets.

Banks or Bookmakers?

How have US banks managed to 'lay off' a great chunk of their subprime mortgage bets to UK banks?
Buying the debt at a much reduced rate must have at the time seen to be a 'no brainer' to greedy fund managers and executive shareholders.
Even if the debt were purchased at 10 cents on the $ the loans were given to people with no visable means of support other than a state handout. US banks knew they were never going to recover their money.
Stupid and greedy bank executives have been betting with our money and now we have to pay for it.
Can we bring back publoic flogging for bank CEO's?

I don't think anyone knows what they are doing.

#8 - therealhotairmail

On the contrary, they all know what they are doing - but it is not their money is it? It's yours.

What I find truly disturbing is that no one seems to be legally culpable. I imagine the sub prime business wasn`t the only catalyst behind all this; but someone dreamt up the sub prime business, people decided to invest in it and so on. Yet it appears no one can be taken to trial, none of these that earnt large bonuses will be financially penalised, no one is held accountable.

It appears the finance houses are beyond the law and above government reach, regardless of how much harm they do.

This comment was removed because the moderators found it broke the house rules. Explain.

I am not sure that there is anthing new here, the banks have mis-managed their business, the regulators have not regulated and the government have not governed. We all knew that.

Why Paul Mason should decide to dig this up at this point I am not sure, either he has just noticed or he has nothing better to write.

Will a big bank go under - I think we would all be surprised if it did, given the focus on this sector, without the BoE having a rescue plan. If any Bank has bad news then they have had adequate opportunity to share it. The banks have a pretty good idea of what other banks are up to, they should know were the problems are.

The negative equity comment is strange, if 25% of UK mortgage lending is to households with less than 20% of equity in their properties then that is a poor reflection on our banks.
On the other hand the negative equity issue is one of affordability, it's not a problem unless the house is sold or the householder can't afford their payments.

On a positive note are the government not just in the middle of making several £billion from their last rescue and Richard Branston had a plan to make £1.5 billion from N.Rock.
There is also a lot of cash about looking for bargins, this will come back into the market soon if prices remain low.

The probability is that life will go an and we will all cheer up in about a year, we will get happier when the US elections are over and come next spring things will strart to look a bit better.

I don't know much about the credit crunch, however, I do know that reporting unattributable gossip isn't exactly award winning journalism.

I met a bloke in a pub and he said the same... He was wearing a suit and it was in Canary Wharf... So it must be true.

iI do work in Financial Services and can assure you no one knows exactly what is going on,but I AGREE WITH DEATHBYMINCE that unattributable gossip is no substitute for good journalism. The more this type of comment gets into the mainstream press the more ordinairy people will believe it and then panic.I suggest next time keep the gossip to yourself and report only what you know you can back up.

Hi #13, #14, #15 - if this were "reporting" then you would have a point. As it is, it is blogging. It is not meant to be award winning journalism.

And I am not reporting "unsubstantiated gossip" - I am reporting a real conversation between two serious people. I am absolutely sure neither of them *knows* a bank will fail. I am sure one of them is going to be taking investment decisions on the basis of this. Sure, for those in the know, there is nothing new (ie today new) here; however I am trying to piece together what is happening and I now think the UK authorities are right to have put so much emphasis on pre-emptive banking regulation. They see a lot more than any of us.

Not sure I can get my head around this, not just as a possible official insight into national media broadcasting/publishing editorial definitions, but also consistency...:

'...if this were "reporting" then you would have a point. As it is, it is blogging.... I am reporting a...'

So... is it reporting... or blogging, and what then is the difference as it still appears in print, for public consumption, from a ´óÏó´«Ã½ reporter on a ´óÏó´«Ã½ organ of news sharing?

I am to in future ignore all I read on these pages?

IGNORING IS BLISS (#17)

Way to go JunkkMale. Herewith permission to ignore anything of mine. I don't really approve of bloodsports . . .

Barrie,

Consider yourself ig... oh... rats.

PRICELESS JUNKKMALE #19

Nice one. Thanks. It took a moment then the penny dropped - always the best laugh.
On to oblivion . . .

In on-screen reporting you can pursue bar stool intelligence and try to stand it up as fact. With blogging, I think it's legitimate to explain what people are saying if it's relevant and plausible and doesn't libel anybody, and especially when as "sentiment" it is a material factor in events. If people are beginning to act on an idea it becomes relevant even if not true. I'm trying to help people understand the scale of private concern in the financial sector, is all.

21. At 11:15pm on 29 Jul 2008, PaulMasonOfNewsnight

Errrr... thank you, I think.

Donald. Bill... a little help here!

Paul

The fund management performance of hedge fund managers as a whole is worse than that of indexed funds. Note: you need to ensure that any statistics you get about fund manager performance allows for "survivability" ie those that have closed.

Any individual hedge fund manager will have a vested interest in talking up or talking down bank shares, depending upon whether they are long or short at the time.

Better to seek out facts from analysts and draw your own conclusions from the facts than to trust someone else's opinion without knowing the facts and arguments which led them to form their opinion.