British banks downgraded

[-:Undertaker:-]

http://www.telegraph.co.uk/finance/financialcrisis/9348123/Debt-crisis-Moodys-downgrade-of-Britains-banks-to-hit-families.html

Debt crisis: Moody's downgrade of Britain's banks to hit families

Home owners and businesses face having to pay higher interest rates following a downgrade in the credit ratings of Britain’s biggest banks, analysts warned on Thursday.


http://i.telegraph.co.uk/multimedia/archive/02255/UKdebt_2255676b.jpg
Moody’s, a leading international ratings agency, was poised on Thursday night to cut its scores for Barclays, Lloyds and Royal Bank of Scotland because of the eurozone crisis


Moody’s, a leading international ratings agency, on Thursday night cut its scores for Barclays, Lloyds and Royal Bank of Scotland because of the eurozone crisis. Senior politicians warned the banks not to use the downgrade as an excuse to charge more for borrowing on the high street.

The downgrade coincided with a warning from the CBI, Britain’s biggest business group, that the fragile economic recovery was at risk of being “choked off by a lack of finance”. Credit ratings help determine what banks must pay to borrow money on international markets. The lower the rating, the higher the interest rates they pay and the more collateral they must offer. Sources at the big banks played down the impact of any downgrade on Thursday night, insisting that markets were already anticipating the move.

But analysts warned that the costs could still be passed on to families and businesses. Andrew Tyrie, Conservative chairman of the Treasury select committee, said: “Any increase in the cost of funding would add to the squeeze on banks. The UK needs the banks to recover – we can’t have a full economic recovery without them. “This is particularly important to hundreds of thousands of small businesses and sole traders who have difficulty getting access to loans at reasonable rates.”

Barclays saw its credit rating cut by two grades from Aa3 to A2. HSBC, RBS and Lloyds suffered a reduction of one. Other large banks around the world faced reductions in their ratings as Moody’s took a more pessimistic view about the impact of the European crisis on the financial sector. The agency had signalled earlier this year that it was preparing for the downgrade, but shares in the big British banks still fell ahead of the move on Thursday. Barclays and RBS shares closed down 1.7 per cent, while HSBC fell 1.1 per cent.

US shares also fell sharply amid growing concerns about the global economy.

We deserve it, we're still increasing spending (and indeed are projected to to 2015 onwards) despite Conservative, Labour and Liberal Democrat fairytales of 'savage cutbacks' - oh I wish we did have some savage cutbacks because the scenes in Athens and Madrid will arrive to these shores before long if we do not drastically cut back spending. Even now if we implemented cut backs, i'm beginning to feel that an eventual default is inevitable because of the sheer size of the debt we have.

We are not worthy of an AAA rating nor are our banks, reality is beginning to strike.

And i'll shamelessly promote again - during the years before the crisis first hit, the only political party to warn of overspending was UKIP. The Conservatives had vowed to match Labours' spending plans (all facts, will provide links should you wish me to). So lets' see, they were right on the Euro. Right on the EU. Right on the debt - what more could you want?

Thoughts?

[Fifty-Six]

Banks in North America were downgraded by Moody's also, including the Royal Bank of Canada.

[Ardemax]

Cutting the way out of recession hasn't worked in history (1929 Wall St Crash + FDR investing America out of depression) so why would it work now?

Whilst I agree the government shouldn't be mindlessly spending on things, I think it should invest in things that would create jobs, rather than cutting jobs.

[-:Undertaker:-]

Cutting the way out of recession hasn't worked in history (1929 Wall St Crash + FDR investing America out of depression) so why would it work now?

Wrong, that is a common myth. The Great Depression was caused by the Federal Reserve which distorted the market and caused a massive crash. The example here http://libertariananswers.com/what-is-the-cause-of-the-great-depression/ points out how the Canadian monetary system wasn't manipulated by government and suffered very little losses in the 'boom and bust' cycle. The spending by FDR only prolonged the Great Depression by removing money from the economy in order to spend in public works schemes. That is why many people refer to it as turning a recession into a depression.

Oh and it has worked by the way, the downturn finally ended at the end of WW2 - when military jobs were all scrapped and the American government was drastically slashed back. At the time people warned of what you warn, yet the economy went through one of its best growth periods in history as the private sector had both the freedom and the capital to expand.


Whilst I agree the government shouldn't be mindlessly spending on things, I think it should invest in things that would create jobs, rather than cutting jobs.

How can you 'create' jobs by creating jobs which there is no demand for/which don't produce anything? do you think if the government suddenly 'invested' in ten coal mines, five hundred shopping malls, two dams and built ten motorways that that would help the economy? if so, Greece would be among the richest nations on Earth at this very moment.

Every penny government spends is a penny taken out of the real economy.

[Ardemax]

Wrong, that is a common myth. The Great Depression was caused by the Federal Reserve which distorted the market and caused a massive crash. The example here http://libertariananswers.com/what-is-the-cause-of-the-great-depression/ points out how the Canadian monetary system wasn't manipulated by government and suffered very little losses in the 'boom and bust' cycle. The spending by FDR only prolonged the Great Depression by removing money from the economy in order to spend in public works schemes. That is why many people refer to it as turning a recession into a depression.

Oh and it has worked by the way, the downturn finally ended at the end of WW2 - when military jobs were all scrapped and the American government was drastically slashed back. At the time people warned of what you warn, yet the economy went through one of its best growth periods in history as the private sector had both the freedom and the capital to expand.



How can you 'create' jobs by creating jobs which there is no demand for/which don't produce anything? do you think if the government suddenly 'invested' in ten coal mines, five hundred shopping malls, two dams and built ten motorways that that would help the economy? if so, Greece would be among the richest nations on Earth at this very moment.

Every penny government spends is a penny taken out of the real economy.

Then why did it work so well when FDR created Alphabet Agencies? Millions of unemployed people found jobs as a direct result from government investment interventions.

I'm saying if you invested in public works schemes, jobs will be created in things like construction (we can use Hitler and the autobahns, if you like). Yeah the Great Depression was caused mainly by over-speculation on the stock market and the abuse of the credit system and if spending by FDR only prolonged the Great Depression, then why did unemployment drop from 14.5 million to 11 million? Although it wasn't 100% effective, America was turning out of depression. WW2 eventually ended the depression as the government built munitions factories and sold the surplus to Europe.

The government needs to invest to stimulate growth, without investment in industry, which companies are going to grow?

[-:Undertaker:-]

Then why did it work so well when FDR created Alphabet Agencies? Millions of unemployed people found jobs as a direct result from government investment interventions.

That is different from actually creating wealth, and if you don't create wealth then it is all done on the debt card as the FDR public works programmes were done so. Take the unemployed in this country today for example, let's say it is six million. We could hire three million to work on public schemes, but that would actually cost more than keeping them on low level benefits to do nothing. So believe it or not, it is actually beneficial to pay people to be on benefits than to work on FDR-type schemes because the FDR schemes are far more damaging to the economy than the benefit solution.


I'm saying if you invested in public works schemes, jobs will be created in things like construction (we can use Hitler and the autobahns, if you like). Yeah the Great Depression was caused mainly by over-speculation on the stock market and the abuse of the credit system and if spending by FDR only prolonged the Great Depression, then why did unemployment drop from 14.5 million to 11 million?

In the same way that the last Labour government increased spending by 50% and hired an extra 800,000 public sector workers. The unemployment figures decreased, sure, but it is all paid for via debt which you eventually have to confront - and of course to then pay off the debt and keep up with interest payments you then are forced to take even more from the private sector (the part of the economy which pays for the rest) by which you then shrink because you literally chop its arms and legs off.


Although it wasn't 100% effective, America was turning out of depression. WW2 eventually ended the depression as the government built munitions factories and sold the surplus to Europe.

But as I said, the war wasn't what got America out of the problems - it was the massive cuts that were enacted after the war such as all the servicemen who were laid off. Those such as yourself would argue for those servicemen to be put on public works schemes to keep them in employment - luckily the US ignored this and introduced swinging cuts to the government which saw private business enter what was one of the most prosperous economic periods in American history.


The government needs to invest to stimulate growth, without investment in industry, which companies are going to grow?

No it doesn't, complete fallacy that I used to believe in only because I was taught it in GCSE History without looking at the other side. The government doesn't need to 'invest' in anything because government is incapable of investment and always has been. Only private individuals and companies can invest and create wealth, all government does it steal it.

Nations which have broadly followed my examples are the United Kingdom (1980s), United States (post-WW2), Chile (1980s), Hong Kong (1970s/80s), Singapore (1970s/80s), Taiwan (1970s/80s), South Korea (1970s/80s), China (1980s onwards), India [partially] (1990s onwards).. Nations which have followed your example broadly include the United Kingdom (post-WW2 to 1970s), South America in general from post-WW2 (excluding Chile) and Chile itself in the 1970s.

If you want the best case study example of my argument vs yours, look at Chile under the 1980s monetarist reforms and any other South American nation.. and you'll find that because Chile took the hard medicine I proscribe, it is now the only country in South America that is classed as a developed nation.

[Ardemax]

That is different from actually creating wealth, and if you don't create wealth then it is all done on the debt card as the FDR public works programmes were done so. Take the unemployed in this country today for example, let's say it is six million. We could hire three million to work on public schemes, but that would actually cost more than keeping them on low level benefits to do nothing. So believe it or not, it is actually beneficial to pay people to be on benefits than to work on FDR-type schemes because the FDR schemes are far more damaging to the economy than the benefit solution.



In the same way that the last Labour government increased spending by 50% and hired an extra 800,000 public sector workers. The unemployment figures decreased, sure, but it is all paid for via debt which you eventually have to confront - and of course to then pay off the debt and keep up with interest payments you then are forced to take even more from the private sector (the part of the economy which pays for the rest) by which you then shrink because you literally chop its arms and legs off.



But as I said, the war wasn't what got America out of the problems - it was the massive cuts that were enacted after the war such as all the servicemen who were laid off. Those such as yourself would argue for those servicemen to be put on public works schemes to keep them in employment - luckily the US ignored this and introduced swinging cuts to the government which saw private business enter what was one of the most prosperous economic periods in American history.



No it doesn't, complete fallacy that I used to believe in only because I was taught it in GCSE History without looking at the other side. The government doesn't need to 'invest' in anything because government is incapable of investment and always has been. Only private individuals and companies can invest and create wealth, all government does it steal it.

Nations which have broadly followed my examples are the United Kingdom (1980s), United States (post-WW2), Chile (1980s), Hong Kong (1970s/80s), Singapore (1970s/80s), Taiwan (1970s/80s), South Korea (1970s/80s), China (1980s onwards), India [partially] (1990s onwards).. Nations which have followed your example broadly include the United Kingdom (post-WW2 to 1970s), South America in general from post-WW2 (excluding Chile) and Chile itself in the 1970s.

If you want the best case study example of my argument vs yours, look at Chile under the 1980s monetarist reforms and any other South American nation.. and you'll find that because Chile took the hard medicine I proscribe, it is now the only country in South America that is classed as a developed nation.

Ok well that was a lot of information from one point...

I'm gonna go all out and say I agree with you on the cutting thing, partly because I can see this going on for a while and I have exams to not fail. S'yeah.

Though the point you made about WW2 not getting America out of its problems I don't get. I mean it slashed unemployment by 10 or so million, saw farmers and those in the agriculture industry make huge profits and in terms of "social" problems, it saw women play a more active role in industry, with many finding jobs that they wouldn't have had. What other major problems were there that the government at the time faced? FDR didn't serve 4 terms for no reason...