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[Neil]

Originally Posted by Cloud

Gold would be a dreadful investment - it might hold its value in the event of a complete meltdown, but otherwise it's far too volitile. Even today, it jumped $15 an ounce in the space of about two hours.

Yes, the price of gold is volatile but it's secure. If you have a lot of money tied up in savings and/or stock then it is never completely secure (yes, even government backed banks can collapse). The likes of gold and silver are. The price will vary lots, but it will ultimately never become worthless. If you don't want to accept this risk then the next best thing to do to become completely secure is put your money under your bed.

Agreed with NS&I - but Northern Rock has 100% guarantee too, and no government would dare let Northern Rock collapse now. A collapse in a nationalised Northern Rock would (as would a collapse in RBS) would destroy the entire foundations of the banking system in the UK, which would be political suicide in today's environment.

Northern Rock is guaranteed for now as it nationalised, but it won't be forever. It will be released back to the private sector in due course. The government are now trying to re-coup the massive loan they gave them to bail them out and so their savings, mortgages and other products will be more uncompetitive when compared to others. You'll get better rates of interest from other banks as well as NS&I for savings and the like.

[daveofficer]

Originally Posted by Cloud

RBS would probably be a sound investment at the minute - they're at a 3 month low, you've mentioned that they're attracting people from BoS - all in all, not a bad situation for them to be in. Unless of course, they're in even more mess with US subprime debt than anyone realises.

you could apply that last sentence to absolutely anything with even a toe dipped into investments or financial market just now, not just rbs. it's that kind of wild speculation that did for hbos, not short selling. at the end of the day the market just lost confidence in them as they desperately looked over their shoulder for a crumbling bank whether or not there was one.

all the banks will be benefitting from the hbos/tsb situation not just rbs i guess.

now the real question you should be asking isn't whether or not any of the banks are in a mess just due to sub prime but more to do with aig who underwrite an awful lot of things that you wouldn't even be aware of.

[daveofficer]

Originally Posted by Neil

Yes, the price of gold is volatile but it's secure. If you have a lot of money tied up in savings and/or stock then it is never completely secure (yes, even government backed banks can collapse). The likes of gold and silver are. The price will vary lots, but it will ultimately never become worthless. If you don't want to accept this risk then the next best thing to do to become completely secure is put your money under your bed.

putting the money under your bed is of course riskier than gold because there's always a chance that your currency of choice will collapse and become worthless

[Hugh_Jazz]

Originally Posted by Cloud

Can I ask why you'd be in favour of a permanent ban? I don't quite understand it, but I've seen it defended on the basis of serving to deflate the value of overvalued share prices - so I'd be interested to see why people are so against it.

(yes, I understand the role it played in the demise of HBOS as an independent bank, but there's absolutely no way of telling at the minute if they were right to short sell or not)

Short selling is basically where an "investor A" borrows e.g. 100 shares from "investor B" that they think will go down in price. They sell the shares at say £10/share.....and then buy the 100 shares back at at £5, pocketing the £500 difference, before giving the original 100 shares back to "investor B".

While short selling was far from the only factor responsible for HBOS collapse, it certainly exacerbated an already shit situation. Anybody who cashes in on the terminal decline of one of our biggest companies, adding to their problems in the process, and therefore contributing towards thousands of job losses is a greedy wanker. And that's why it should be banned, or at the very least, very carefully regulated.

[Neil]

Originally Posted by daveofficer

putting the money under your bed is of course riskier than gold because there's always a chance that your currency of choice will collapse and become worthless

Heh, a fair point sir! Just look at Zimbabwe.

[lepeep]

Originally Posted by daveofficer

putting the money under your bed is of course riskier than gold because there's always a chance that your currency of choice will collapse and become worthless

or someone finds out and sends some Geordies round to torture you and kill you, then knick it.

[Graham Knight]

Short selling has been castigated for over 300 years. Sometimes, like the new legislation that has jst come into effect, it has been banned completely.

Yet all kinds of investors “hedge” their investments. All the “Put” option buyers also hope that a stock price will fall.

I do not believe that City gossip and Internet chit-chat or short selling actually brings down the value of a business. If anyone believes that it does, they should be asking questions about the validity and strength of the business.

The banks no longer trust each other and are therefore frightened to lend to each other. And they are frightened because when a bank does fail, none of its competitors are absolutely certain where the liabilities lie or how the debts will affect their own business.

The last few days have proved that many so-called “Captains of Industry” are prepared, in the run up to a failure, to spout statements that are misleading and are often subsequently proved to be completely wrong.

The short sellers put their money where their mouth is and stand to lose a fortune if they are wrong but no one can deny the accuracy or excellence of their research and forecasts.

HBOS director Sir Ronald Garrick must wish he had the foresight of the short sellers as he bought shares ten months ago and paid £7.34p for them. No doubt they seemed a bargain to him as the shares had earlier been up to £11.65. Yet despite the Bank of Scotland promising that everything was fine just three days ago - it has been forced by the government to face the reality that its shares had been overvalued by about £10. If the bank really had assets to back the higher value it would not be in trouble – the fact is the assets were not there.

All companies tend to make positive statements about their business. When did you last hear a company Chairman say, “We are doing very badly and our share price is too high?”

If you believe in the “free market” there should be no restraints. It relies on people making profits and losses. If the government was to guarantee all losses there would be no market.

Mind you, on a personal basis I am insured with Norwich Union and it reinsured my cover with AIG that is now owned by the American government following a cash injection of 85 billion dollars.

Now the US government is mulling over whether to bail out (take over) Ford with another 25 billion dollars. This will follow the 30 billion it gave to Bears Sterns Bank and the 200 billion it shelled out to take over the liabilities of the two companies that guaranteed about half the mortgages in America.

Neil headed this thread “Capitalism Crumbles” and it certainly is not a “free market” in the US now. Every few days some huge conglomerate suddenly realises it needs billions and the government effectively nationalises it.

If Karl Marx were alive today he would be amused and astonished at way both the US and UK governments have sought to get themselves out a self-imposed financial mess by nationalising industry and imposing strict regulations on free enterprise.

The American bailouts have come at a price as the value of the dollar is sliding. Fortunately our government has been less profligate so far.

The money governments use for bail-outs is not unlimited – it is a finite source. It comes from money that the government collects from you and me!

We are all taxed in various ways and as governments hand out money, it spends money collected from people like you and me, to protect people who have usually been big spenders while trading, yet have been demonstrably so inefficient that their businesses have failed. In a true free market failures really do fail. They should not be invited to reopen their casino-like businesses and be given another stack of chips at the expense of every taxpayer.

Neil’s idea of gold coins might not be that bad. Yesterday the US government issued 90 day bonds that had negative interest rate. “Here is £100 do you promise to give me back £99 in three months time?” could become a common request soon.

Amongst all the rock’n’roll memorabilia that adorn my walls, I have a framed 200 billion mark note from 1923 - just to remind me that money isn’t everything.

[Niederrhein Nomad]

All the banks crumbling is quite a bad thing but they had it coming and the majority of people I think saw that. I'm of the belief that there is a possibility that local banks could come back into fashion in the form of credit union type establishments.

Nescu
St machar
grampian

all 3 are credit unions, good for savers/borrowers not so good if you need a debit/credit card

The way I work it is, I have a credit card which all my bills come off of, all purchases, food, nights out etc. I pay this off ever month with the paycheck plus a little more so I have a debit balance on the credit card(agreement from lloyds means i get a good interest rate) and the rest goes into a credit union 50% of the excess and 25% goes into my barclays account(ever notice the overdraft fees at barclays?) Barclays charge £5.60 for going over the overdraft limit and 25% into a CBOC account(always better to have money in institutions from more than one country).

[Spoonie]

interesting to read everyone's thoughts and working in banking just now is certainly interesting. it's fair to say that there's ALWAYS more going on behind the scenes than people realise. our leadership team are privvy to more information from across the sector than most and even they admit to being surprised at the way things are playing out. the fact that the competition laws have been canned overnight shows how unprecedented this activity is.

will be interesting to see what Lloyds do now because their history of integration isn't great - they've still not integrated the TSB technology platforms so they run completely independently in that respect and that was 13 years or so back it happened. i think they'd be keen to take advantages of their economies of scale and start chopping up fast but i doubt they'll be allowed given the impact that may have on unemployment levels in scotland.

[Le Stu]

YouTube - 9/21/2008 Ron Paul on the Late Edition with Wolf Blitzer

Congressman and former Republican party candidate Ron Paul on the economy and the two presidential candidate's potential policies. He's regarded as a bit of a wingnut, in the states, which is why I*'m extremely worried for America.