welcome to the new socialist kingdom of Britain

[Aeson]

Originally posted by Kidicious
You do have a point that they won't go under, but I don't think corporations set that as a goal for themselves.

I think you misunderstand risk:reward. It's not that corporations are going to plan on failing. It's that they can take on more risks if they have a implicit guarantee. Yes, it increases the chance that they'll actually fail, but it also increases their profits (usually up front... with the failure a possibility down the road).

There's no way you can guarantee safety without impacting what is deemed an acceptable level of risk.

[Aeson]

Originally posted by Zkribbler
That's why I want the banks, if they want capital from the government, to issue warrants or preferred stock in exchange for it. Yes Ugarte, you get our money, but at a price.

You're getting the worst of both worlds here though (given that these are temporary holdings). Gov is going to be holding stocks during the bear market, but obviously not holding them in the bubble that caused it... or the bubble it's causing.

[GePap]

Originally posted by Dauphin


Not to some, obviously.

Sorry, but I simply can't believe that you honestly think 25% ownership (which entitles the government to 25% profits theoretically) is the same as a 25% tax rate by the government on profits.

At the basic minimum, the arithmatic doesn;t work, because the government gets the 25% tax on the profits, and then a 25% share of the after tax profits as well as owner. Unless you think the government will make those banks it has an ownership state in exempt from taxation.

[Kidlicious]

Originally posted by Aeson


I think you misunderstand risk:reward. It's not that corporations are going to plan on failing. It's that they can take on more risks if they have a implicit guarantee. Yes, it increases the chance that they'll actually fail, but it also increases their profits (usually up front... with the failure a possibility down the road).

There's no way you can guarantee safety without impacting what is deemed an acceptable level of risk.

Even if they just bail them out and ask for nothing in return the financial system is going to have an even stonger tendency towards risk. They aren't going to let the chips fall where they may. They will probably try to regulate the financial system, but they probably won't do a decent job and this is all going to happen again.

[Aeson]

Originally posted by Kidicious
Even if they just bail them out and ask for nothing in return the financial system is going to have an even stonger tendency towards risk. They aren't going to let the chips fall where they may. They will probably try to regulate the financial system, but they probably won't do a decent job and this is all going to happen again.

[Imran Siddiqui]

Originally posted by GePap
All those capitalist in the markets seem to heartily approve of this new socialist system, given the immense stock market rallies today.

Well, of course they do, because it makes them money in the short term. That doesn't necessarily mean its good.

[GePap]

Originally posted by Imran Siddiqui


Well, of course they do, because it makes them money in the short term. That doesn't necessarily mean its good.

And calling what is going on "socialism" is daft too.

[Imran Siddiqui]

I don't think he actually believes it to be socialism... it makes for a nice thread title though.

[TheStinger]

Of course I don't think it's socialsim, but events have driven the Uk to do what in other circumstancesd would be the most left wing economic policy thic country has seen since the 1940's, however I don't think they had any choice and whilst the govt bares some but not all of the responsibility for getting us in the mess I think they are doing quite well in response

[Lazerus]

I see Northern Rock has already repaid just over half of what was used to bail it out not so long ago

[fed1943]

It seems the least bad, so the right approach:
To buy shares and not the bad credit.
And, in my opinion, when things return to normal the Gov should
resell the shares with a profit.
Said profit would be the compensation for the risk and the punishment
for poor management.
Best regards,

[Q Classic]

It's happening in the US, too, to Citibank, JP Morgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of America, Merril Lynch, among others...

[Dauphin]

Originally posted by GePap


Sorry, but I simply can't believe that you honestly think 25% ownership (which entitles the government to 25% profits theoretically) is the same as a 25% tax rate by the government on profits.

I never said I believe that. The complete opposite in fact.

[Dauphin]

Originally posted by Aeson
I would have been willing to accept that you were promoting a "yes" before then, but not after. I had given the "yes" and you responded argumentatively rather that to confirm or clarify.

Argumentative? No. Just developing a thought given it's relevance to several banks being in such a position.

You can make questions and comments at people without taking contrary views.

[Agathon]

I wonder what comical train of reasoning the neoliberals will invent to try to get out of this.

Look, it ought to be the end of the privatization mania and the rest of neoliberalism. It was based on flawed economic ideas and has been failing for some time now. New Zealand already had to re-nationalize its railways and there have been other bailouts.

I doubt this will be anything more than a blip. Western democracies ceased to function rationally a long time ago – people now spend all their time worrying about their little patch of **** and simply cannot make a rational, long term decision.