Britain Has World's Most Over-Indebted Banking System

According to a blog by Ed Conway, Britain has the worlds most over-indebted banking system.
This is not good news though the banks see debt as actual money it seems, so they are feeling rather wealthy maybe.

These are the figures from the IMF



To quote ED:

The Fund’s Global Financial Stability Report has revealed that the total gross debt of Britain’s banks is equivalent to 742% of the UK’s total economic output – equivalent to around £11 trillion. Not only is this bigger than the 547% of GDP total in the last report in September, it means Britain has overtaken Ireland, whose banking system’s debt is equivalent to 691% of GDP

The whole economic collapse thing is looking like a very real prospect at the moment. The UK has just pledged to give £10 BILLION to the IMF whilst also planning to borrow a substantial amount also!!! What on Earth kind of system are they trying to prop up here?

They are robbing us, the UK citizens, to give to the IMF, to borrow back so that we have to pay it all over again!

Am I getting this wrong, I am not terribly bright but it seems like the people running this country have no concept whatsoever of fiscal responsibility! If I ran my household finances like this, I would be bankrupt and probably imprisoned!

Maybe Ed Conway got it wrong? Anyone out there able to explain this to me?

Yeah, you've got it a bit wrong there. Yes the UK has pledged £10bn to the IMF, but you've got to understand that this is a loan charged at interest. It's not been 'given' to them at the expense of the tax payer and it wont add to our country's deficit. It is essentially a fund set up to help bail out the Eurozone if/when it needs to. The reason why it is in our interest to do so is because of the effect that a Eurozone default would have on our own economy.

It's all just Zero's pressed into a computer when the transfer happens, we wont see lorry loads of cash cross the channel to euro land. Fictunal. If they have 10 Bill laying around in honey pots someone please tell them to spend it a little more wisely..

What we need is a date for a worldwide bank run... These bastards are continuing to get away with their criminal activities.

The firewall isn't going to accomplish much and when it runs out of funds or confidence, the whole ponzi will come crashing down.

I am British and Britain is finished......and it is a stink hole
run by stink holes!

Meh! wish i lived somewhere else..

reply to post by rigel4


Britain's economy is obviously not perfect, but it'd be a bit brash to call it 'finished'. Even if if Italy defaults, the risk of England having to default on it's debt is still only about 20%.

reply to post by Faulks


Hi, and thank you. I admit I still do not understand what the point is of lending money to the IMF when the government will be borrowing money back from them.

Will the interest the government pays be less/equal or more than it will be paid?

How can they both borrow from and lend to the same body? Who if anyone benefits from the arrangement?

All of the global economy is completely screwed up, why does it matter which 'zone' collapses first as they will all implode shortly afterwards anyway?

Originally posted by Threegirls
reply to post by Faulks

 

Hi, and thank you. I admit I still do not understand what the point is of lending money to the IMF when the government will be borrowing money back from them.

Will the interest the government pays be less/equal or more than it will be paid?

How can they both borrow from and lend to the same body? Who if anyone benefits from the arrangement?

All of the global economy is completely screwed up, why does it matter which 'zone' collapses first as they will all implode shortly afterwards anyway?

Its all a confidence game so that the IMF can trumpet on the news about its big bailout bazooka.

Your not supposed to look in the barrel where theres only an IOU for a shell. :-)

I'm sure I recall stumason explaining this once and it's all a gross exaggeration or misrepresentation.

Being a bit of a financial imbecile I only tend to understand basic economics and it made my head hurt, but after a bit of pondering it did make sense.

Hopefully he'll notice this thread and give an explanation, in layman's terms with a bit of luck.

reply to post by Threegirls

the uk needs bank that is the way the country makes it money. but remember most f the banks in uk are not owned by the uk but by the corporation of London.

reply to post by Freeborn


Indeed, a layman's terms explanation would be helpful. I share your lack of savvy on the more complex issues.

Purplemer

Thank you for the comment, I am under the impression that the banks make far more debt than money though. 'Profits' are the only actual money and these only become money when derived from debt and are laundered through the system it seems.

Savings are used as collateral and are greatly outnumbered by the debt issued on them. They are also being diminished by rising cost of living, less money available to save and taking from savings to cover necessary day to day needs.

you have to think why Britain have pledged another 10 billion to the IMF...10 bill is the maximum he can hand over without getting parliamentary approval - which he would never get.

Osborne has argued that it is a loan with interest ..

what gets my goat up as a tax payer, is the recent budget and 2 years of hardship under the lib-con (over a decade under labor)

Britain has little manufacturing and exports compared to France Germany ..we have come a nation of bankers which has left us at the mercy of other countries ..

Ireland voted against the Euro only to be bullied and threatened with bankruptcy if they didn't play ball

i doubt the people of Britain will even get a chance to vote on it when the time comes

tbh i don't think we need Europe ..what we need is manufacturing and investment in jobs

10billion invested in Britain could create alot of jobs and wealth ....but it looks like they don't care about you and me ...as long as the bankers are happy



as for our nations debt...well all money is debt..just look at a £20 note...with the i promise to pay the bearer the sum of blah blah ...

Originally posted by Threegirls
reply to post by Faulks

 

Hi, and thank you. I admit I still do not understand what the point is of lending money to the IMF when the government will be borrowing money back from them.

Will the interest the government pays be less/equal or more than it will be paid?

How can they both borrow from and lend to the same body? Who if anyone benefits from the arrangement?

All of the global economy is completely screwed up, why does it matter which 'zone' collapses first as they will all implode shortly afterwards anyway?

No worries, OK bear with me for a second and I'll try to explain it the best I can.

The UK isn't borrowing anything from the IMF (International Monetary Fund), the IMF is essentially a bailout fund to stop countries from having to default on their debts.
The loan is charged at interest, meaning WE receive the interest. Just like any bank, when you or I take out a loan for example, we don't receive interest, we have to pay it! In this case, the UK is acting like a bank by providing the loan.

As far as the global economy, no one is certain that it will 'implode' and the IMF's sole existence is to minimize the risk of such a thing happening. It has vowed not to use the money invested to prop up currencies (by improving interest rates for example) but will instead use it only as a last resort, and only if the country in question has made every effort to improve their economy themselves.

By eurozone, we refer to all the countries that use the Euro as their standard currency, there are 17 in total who are all members of the EU. Despite the fact that they all use the same currency, we must not forget the fact that they are all separate entities and therefore some have stronger economies than others. The only problem is that all countries within the eurozone are inherently interconnected because of their shared currency which means that if one country defaults on its debt, it could well bring the others down with it. (Even more likely due to the weakening of all world economies due to the current global recession). The UK, although not part of the eurozone is also severely threatened by a eurozone default (which in laymans terms means any country within the eurozone that is no longer able to pay the debt that they are required to do), and so the UK is acting self-interestedly by helping to support those countries that are at particular risk of default in order to protect our own economy.

The reason why the loan is given to the IMF and not the ECB (European Central Bank) or the countries in question is because of the fact that it is a huge sum of money (that although is mostly taken out of foreign currency reserves at no cost to the tax payer) would be pretty disastrous if not taken care of properly. The ECB and the eurozone countries could waste any money 'given' to them by countries such as the UK by not using it correctly or for the wrong reasons entirely, in addition to the fact that the countries at risk of default already have very poor credit ratings. This means that it would be very unlikely or us to ever see that £10 billion again. On the other hand, the IMF is one of the most sound and credit worthy financial institutions on the planet and as of yet, no-one has ever lost any money that they have put into it. It also, (as previously mentioned) has strict controls as to when to utilize its funds and as a result, the chancellor has deemed it an acceptable risk to take. Seeing as though the UK was heavily involved in forming the IMF, it would be pretty ludicrous not to support it in carrying out the role it is intended to do.

Originally posted by sitchin
tbh i don't think we need Europe ..what we need is manufacturing and investment in jobs

10billion invested in Britain could create alot of jobs and wealth ....but it looks like they don't care about you and me ...as long as the bankers are happy

edit on 06/-05004/2011 by sitchin because: added video

Read my above post ^^

The reason why we didn't choose to invest 10 billion in Britain is
1. We loaned the money with the full expectation to receive it back in full. It was never 'given to them'. £10 billion invested into UK infrastructure would be fantastic, but it is a pipe dream that could never happen with the economy as it is.

2. You are absolutely right about manufacturing, however, we lack the infrastructure and the cheap labour in order to effectively compete with mass manufacturing/exporting nations such as China. Germany has the infrastructure available as well as a worldwide reputation for quality which is why it remains so competitive. This is already changing and as China's economy develops, expect Germany's exports to steadily decline in the years to come.

Whether we should rely on Europe is irrelevant, we do, and as a result, we must do everything in our power to ensure that the Euro doesn't collapse. All countries go through the same cycle: pre-industrial (little technological development, these rely solely on agriculture); industrial (think back to the industrial revolution, where the UK's economy was based almost completely on manufacturing); and finally the post industrial society in which the UK and America sit as of now, where we expect a certain standard of living (high wages, good working standards etc.) and the economy is mainly service based. In this society, we can no longer effectively compete in manufacturing with industrial countries because those within the industrial society are yet to demand better living/working conditions, and so have a huge cost advantage over production. That and China sits on huge amounts of natural resources to further improve it's position as a manufacturer. If we tried to become a manufacturing based economy as opposed to a service based economy we really would be nailing the holes in our coffin as we simply can't compete on a global level. Unless any of you fancy working in a sweat shop for less than £1 a day?

Most of the time people who are quick to cry conspiracy simply don't understand why things are as they are and so attribute things to malice, instead of seeing that sometimes, we must take risks and sometimes, we must do things we don't really want to do, simply because it is necessary.