Icelandic Bank Bailout

[Simpson]

I was doing some reading about icesave and it sounded dead dodgey, i was tired at the time so can't quite remember it all but it went along the lines of the bloke who owned loads of high street shops included icelands started the bank and overlent himself money becuase in the end who's bank manager was going to say no to the boss. So there was a massive conflict of interests and so when the share prices of the store crashed he was f**ked?

That was the most vuage, innacurate shit I've probably ever written in my life.

[Papa Manual]

Customers of Landsbanki (Guernsey) Limited have been told today they're getting 30p in the pound back.....

Oucccch.

[monkeyseemonkeydo]

Customers of Landsbanki (Guernsey) Limited have been told today they're getting 30p in the pound back.....

Oucccch.

Is that on balances over and above the £50,000 limit guaranteed by the government or are Guernseyites not covered by that?

[Papa Manual]

It depends whether the company is incorporated in Guernsey as a standalone business, which technically Landsbanki (Guernsey) Limited is. "Guernseyites" (hehe) aren't covered in this case from a legal perspective although there was some discussion of the UK government stepping in and assisting.

If banks such as Lloyds, Barclays etc go tits-up, then Guernseyites are fine in theory (as the UK will cover it). To be fair though, in reality the UK government will be rather f**ked if any of the major banks go down. The deposit guarentee is to stop mass panic and people withdrawing their money.

[Extreme_biker0]

It depends whether the company is incorporated in Guernsey as a standalone business, which technically Landsbanki (Guernsey) Limited is. "Guernseyites" (hehe) aren't covered in this case from a legal perspective although there was some discussion of the UK government stepping in and assisting.

If banks such as Lloyds, Barclays etc go tits-up, then Guernseyites are fine in theory (as the UK will cover it). To be fair though, in reality the UK government will be rather f**ked if any of the major banks go down. The deposit guarentee is to stop mass panic and people withdrawing their money.

Yep, as soon as a critical mass of cash machines stop working there will be a run on *all* banks, as people begin to fear that they wont be able to get at the money in their account, and withdraw say £500 each 'just in case'. There is not enough physical cash for that to happen, so more ATMs run out of cash, and the problem worsens!

The deposit guarentee serves to raise this initial triggering threshold of unworking cash machines, by giving people reassurance that they will *always* be able to get at their money.

Do you believe them?

BANK RUN!!!

Edited October 16, 2008 by Extreme_biker0

[Papa Manual]

Although anyone who puts "my money safely under my bed" deserves whats coming to them for being stupid. In times like this inflation means that even though they have the physical money, it's becomes rapidly worth less and less.

[Simpson]

Although anyone who puts "my money safely under my bed" deserves whats coming to them for being stupid. In times like this inflation means that even though they have the physical money, it's becomes rapidly worth less and less.

i keep all my money under my bed...

guess thats a gambler for you

[Extreme_biker0]

Although anyone who puts "my money safely under my bed" deserves whats coming to them for being stupid. In times like this inflation means that even though they have the physical money, it's becomes rapidly worth less and less.

True but interest rates are also low, so putting it in a bank hardly inflation-proofs it.

Weighing up the risk of not being able to buy food, or more likely petrol to get to work, as opposed to the cost of the interest at 5% of a few hundred quid... I'd say it was worth it. And i'm not trying to instigate a run here. But should your debit/credit cards stop working for a few weeks while a bank gets taken over, could you all carry on, really?

For the cost of about 1p in interest I know I can!

[Papa Manual]

Yeah, but if anyone withdraws their money from UK banks, the financial system will collapse. So that means no pay for workers (after all you’d have no bank account), but there'd be very little work anyway (no industry, no trade etc). It would be curtains for the UK for a loooong time.

EDIT: And then there'd be super-inflation due to a shortage of goods, people hoarding etc.

[Extreme_biker0]

Yeah, but if anyone withdraws their money from UK banks, the financial system will collapse. So that means no pay for workers (after all you’d have no bank account), but there'd be very little work anyway (no industry, no trade etc). It would be curtains for the UK for a loooong time.

EDIT: And then there'd be super-inflation due to a shortage of goods, people hoarding etc.

Yeah, it would be bad. But bad consequences is no safeguard against it happening is it!?

People are nervous out there, and lots have already lost money due to a bank failing (see topic!). If it got out that a UK bank was in serious trouble, you can bet your ass people would be out of there like a shot.

[Papa Manual]

That's true. Too many people read the Daily Mail (amongst other fine publications). Rather than pumping money into these institutions (granted some are actually in serious trouble rather than media-induced panic-selling, in which case they're properly f**ked) they get scared and pull their cash out. Institution shits itself, frozen assets, more media coverage (then no other company will touch/support them), bye bye company.

EDIT: I use too many brackets.

EDIT2: Northern Rock is the safest place for your cash at the moment, but I don't think they can take any more deposits.

[Extreme_biker0]

That's true. Too many people read the Daily Mail (amongst other fine publications). Rather than pumping money into these institutions (granted some are actually in serious trouble rather than media-induced panic-selling, in which case they're properly f**ked) they get scared and pull their cash out. Institution shits itself, frozen assets, more media coverage (then no other company will touch/support them), bye bye company.

EDIT: I use too many brackets.

EDIT2: Northern Rock is the safest place for your cash at the moment, but I don't think they can take any more deposits.

So what can you do besides hold a cash buffer? It's no use trying to be a samaritan and propping up the bank with your savings; quite frankly a don't think any of use are rich enough! Right now the cash is much more sensibly held outside one of these institutions, just in case it becomes inaccessible.

It's game theory.

Right now we have a situation where the logical thing to do would be to hold cash. But if that happens everyone suffers, becasue the banking system collapses. So everyones personal motives conflict with the motives of the population as a whole, who need a working banking system. What is the likely outcome of a situation like this?

Read up on game theory and find out

Edited October 16, 2008 by Extreme_biker0

[Papa Manual]

So what can you do besides hold a cash buffer? It's no use trying to be a samaritan and propping up the bank with your savings; quite frankly a don't think any of use are rich enough! Right now the cash is much more sensibly held outside one of these institutions, just in case it becomes inaccessible.

It's game theory.

Right now we have a situation where the logical thing to do would be to hold cash. But if that happens everyone suffers, becasue the banking system collapses. So everyones personal motives conflict with the motives of the population as a whole, who need a working banking system. What is the likely outcome of a situation like this?

Read up on game theory and find out

I will indeed read up on game theory, although at a glance it looks like my worst nightmare. Economics/Maths URGH! Anyway, trying to avoid redundancy myself so over wiki-ing probably isn't prudent. I post here by typing into word and pasting it over when I'm done hehe.

I will check it out at home.

I see what you're saying, but I don't agree with your argument as if you pull a buildings foundations out it collapses. You may have the foundations (ie money), but what's the point in having them if you can't do anything with 'em? No financial system and you may as well just burn your cash or use it as bog-roll.

I think you just have to plan more effectively where you stick your cash at the moment and avoid institutions that offer dickheadedly high interest rates as it's an indication that they're in the shite.

[Simpson]

we should all buy 4 honda civic's with green neons all modifyed and shit, get a harpoon gun, and go an need for speed those petrol tankers ass's

fact - invest in petrol

i've started keeping all my money in cash recently because i just don't have any faith in banks, like thingy said, if my card gets stopped then im up shit creek without a paddle, i have money in 3 different banks - nationwide current account, abbey savings and a private keyfinance account where i get 11 percent. i know my moneys not safe in key but i get a joyfull return of like 120quid every quarter which is pretty cotch, but a pretty high risk atm.... although measures have been put in place to safeguard the investment. but keep all the money i need monthly at home. only downside is if my house is robbed your not insured against cash loss's.... badtimes

i don't get loads of money, but wanna safeguard what i have in, mediumly high, meduimly low and low options.

[Papa Manual]

I'd stick everything in low risk/low interest at the moment as a bank offering base-rateish interest rates are probably reasonably comfortable.

In any financial climate I'd be asking why a bank/investment company is offering double base-rate on small deposits.

Anyway, enough of work and TF, time to ride .

EDIT: Oh yeah, investing in oil/petrol is a good idea but I think it may go down as low as $50 a barrel if things carry on. That's when I'm buying.

[doopdoopbedoop]

I will indeed read up on game theory, although at a glance it looks like my worst nightmare. Economics/Maths URGH! Anyway, trying to avoid redundancy myself so over wiki-ing probably isn't prudent. I post here by typing into word and pasting it over when I'm done hehe.

I will check it out at home.

I see what you're saying, but I don't agree with your arguement as if you pull a buildings foundations out it collapses. You may have the foundations (ie money), but what's the point in having them if you can't do anything with 'em? No financial system and you may as well just burn your cash or use it as bog-roll.

I think you just have to plan more effectively where you stick your cash at the moment and avoid institutions that offer dickheadedly high interest rates as it's an indication that they're in the shite.

don't forget that the banks aren't completely full of stupid people. Some banks will be keeping their interest rates artificially low to try to convince people with your view that they are the safe option. Luckily for me, i only have £23 in the bank, and don't get paid till the 6th so I have nothing to lose at the mo! haha.

[Papa Manual]

True, but it gets to the point where if they're really desperate they whack up the interest rate to attract the masses (who don't hold my view).

[doopdoopbedoop]

Yea, I can see why they'd do it obviously. And in that vain, maybe the people who are stupid enough to think "ooo, double base rate - must be safe" deserve to lose their cash. If I had a load of cash right now I'd be spreading it as thinly as possible between the sensible sounding banks.

[Extreme_biker0]

Yea, I can see why they'd do it obviously. And in that vain, maybe the people who are stupid enough to think "ooo, double base rate - must be safe" deserve to lose their cash. If I had a load of cash right now I'd be spreading it as thinly as possible between the sensible sounding banks.

Hongkong Shanghai Banking Corporation seems to be the best bank, only seen nominal falls in their share prices unlike the others which are now rock bottom. Contrary to its name, HSBC is Scottish origin, on a completely tangential and unuseful note!

But yeah, enough of this shit, I don't even ride trials any more (so why do I still hang around here!?) but tonight we're (3 of us) going xc riding with our new lights. Total 120 watts bright white semi-focussed light shining form the helmets forwards - must remember not to look towards approaching cars!