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We’re a nation on the brink of going bankrupt
The consequences of this failure are grim indeed. Britain now faces, for the first time in history, the prospect of national bankruptcy.
Consider the following terrifying facts. Our national debt officially stands at approximately £400billion – in itself a frighteningly high figure
However, that £400billion is minute compared with the collective indebtedness of the banks which are now under effective government control.
Let's take the case of just one – the RBS group, whose two principal assets are Royal Bank of Scotland and NatWest. RBS has outstanding loans and other assets amounting to an eye-watering two trillion pounds. That's five times the size of the national debt.
Already the taxpayer owns a whopping 58 per cent of RBS thanks to last autumn's bail-out.
Admittedly nations do not actually go into liquidation when they go bankrupt. But the process is every bit as humiliating and would certainly cost millions of jobs, and mean a huge drop in the living standards for every single one of us.
National bankruptcy occurs when the national debt grows so large that investors believe it can never be repaid. At that point they go on strike.
Two things then happen. The currency collapses. That is already starting to happen with sterling, precisely because of growing international fears about the solvency of the British state.
And the government starts to print money. Unable to borrow money in the form of loans to pay off the national deficit, it orders the central bank to create it. This was the tactic resorted to when Germany went bust in the early 1920s, and by Robert Mugabe in Zimbabwe.
A concerned citizen tells it exactly how it is under New Labour
Time for Bank bosses and greedy bankers generally to have their salaries divided by 10 or more, and to pay back their outrageous bonuses. That'd cull a few Billions for the Treasury. WHEN IS GORDON GOING TO ACT INSTEAD OF ALLOWING THEM ALL TO GET AWAY WITH IT? When will some bankers end up in prison for gambling with OUR money. When will we get a Govt that KNOWS how to run a country.
The travesty continues - Written off, an oligarch's £2.5bn
The taxpayer has been forced to write off a £2.5billion loan from Royal Bank of Scotland to a Russian oligarch.
London-based billionaire Leonid Blavatnik owns the chemical giant LyondellBasell, which is on the verge of collapse. Gordon Brown was said to be furious after Treasury officials found details of the loan in RBS's books. The money was lent to 51-year-old Mr Blavatnik by the Dutch bank ABN Amro, which was taken over by RBS when Sir Fred Goodwin was chief executive. He was forced to quit in October after claims that his reckless expansion strategy was responsible for bringing RBS to its knees.
Russian-born Mr Blavatnik splits his time between New York and his £41million home in Kensington, West London. This month, it was announced that LyondellBasell was teetering on the edge of bankruptcy with £18billion debts. A collapse in demand for chemicals has left the company struggling to service
Powers which allow the Government to impose bin taxes on the whole country without consulting Parliament have been brought in by stealth.
A little-noticed clause in the Climate Change Act means all councils are free to adopt charges of up to £100 - without MPs voting on the issue first.
The Conservatives said the revelation was an 'outrage'.
They likened it to ship money, the tax levied by Charles I without the consent of Parliament - one of the causes of the English Civil War.
This week sees the deadline for councils bidding to run the first payasyou-throw pilot schemes.
The Department for Environment, Food and Rural Affairs confirmed that powers in the clause will allow any pilot scheme to be implemented across every council in England by ministerial order.
31 January 2009
Notes from Underground
This is a composite of chatter and 'gossip' and anecdotes picked up on the grapevine from multiple sources, some that could be considered reasonably informed.
Treat it as rumour and hearsay none of it can be guaranteed authenticity, and second hand information is what it is. More of it is coming from Europe than the US, which seems odd.
There was more of a struggle in deciding to allow the more speculative portion of this out than you might imagine.
It seems as if the government is downplaying the seriousness of the situation a bit while they work to find a way forward.
There is an air of quiet desperation as the situation grows progressively worse, and there is intense debate on when and how to break it to the public. They are not even sure what exactly to break because the situation is so fluid. No one wishes to be the messenger and possibly be blamed for inciting a loss of confidence.
There are rumours swirling that there will be a bank holiday in the UK, and they will be particularly hard pressed because of the high percentage of their GDP that financial services represent. The pound is heading to parity with the dollar. The good news is that it will probably not be as bad as Iceland.