SERIOUSLY THOUGH! - what are the Spanish banks to do?

Reinforcing my point about China, I was talking today with a Spanish chap who is the "presidente" of a co-operative of apricot growers.  Between them, they produce preserved apricots that they sell preserved in large jars (I guess to bars and shops).  

They used to sell a jar for 29€ which gave them a small profit after paying costs etc.  The reps have now come back to them and told them to forget it as the exact same thing is being bought from China for 14€.

He says that if they sold at that price, they would be bankrupt within weeks as it costs them more than that to produce.

Where is the sense in all of this?

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Looking back down the thread to Marksfish remarks about Barclays and JPM - I think thats quite worrying for Barclays depending on what they have bought - lets not forget that the Fed instructed JPM to bale out Bear Sterns (seems so long ago now) owing to their toxic debt book. My understanding is the only reason JPM increased their initial bid is that they worried that if BS actually filed chapter 11 they could bring down the likes of JPM themselves owing to the debt books they were already involved in with BS and thus exposed to something similar themselves. The Fed would most certainly not have wanted a house with JPMs standing to go to the wall but apparently that is the reason the initial bid was increased and also backed by the Fed.
 

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There goes another one.....seems even the canny Swiss are suffering:


By Sky News SkyNews - 37 mins ago

Swiss bank UBS is to axe 2,000 jobs and will close down its commodities dealing operation as part of a major restructuring.

The widely touted cull takes the number of job losses at UBS's investment banking arm to 6,000 during the past year.

The Swiss giant has been one of the worst hit by investments in toxic mortgage-backed assets.

The credit crunch has landed it with writedowns of £23.7bn since the start of last year.

UBS said it would be reducing its fixed income and currency dealing operations.

It will also "substantially" reduce the number of staff trading mortgage-related assets.

Jerker Johansson, chairman and chief executive of UBS investment bank, said: "The ongoing crisis in the financial markets and dramatically changed industry dynamics require us to recalibrate our business."

The bank's job cuts are the latest to hit the City, and follow several hundred redundancies from collapsed US investment bank Lehman Brothers this week.

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I for one will be keeping my accounts open in Ireland...for so many years so many people have ridiculed the Irish, well for the Government to now guarantee ALL money held in Irish banks this is a good move...now there is no worry about the €20k ceiling...or the £35k ceiling...would I overstep the mark to say that if all governments did this then at least all the small deposit holders would know their money was safe...rather than spreading it around as many banks as you need to have your money covered

Just look at what is happening with the Rock...reported last night that they cannot cope with the number of people wanting to put their money into it as the UK Government is guaranteeing all deposits....

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That's all very well for investors, but surely it will encourage the banks to act even more foolishly - the very thing that has dumped us in this mess in the first place.

Could this happen?.......

1) A government guarantees all deposits - however high

2) A bank suddenly has so much money in new deposits that it has to loan it out to anyone it can so as to cover the interest it is paying the investors.

3) In the end, it lends on the "wifebeater, sub prime" market.

4) The market collapses

5) The bank collapses

6) 20 other banks collapse (as they are doing the same)

7) The government has guaranteed a sum greater than its GNP and has to borrow from the IMF.

8) The IMF is now the Chancellor of the Exchequer (as happened to Healey in the '70s)

9) The state has no hope of ever repaying the loans as it is paying huge amounts in social security and unemployment benefit.

10) The state is declared bankrupt.

What happens next?  

I for one have no idea.   

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So its back to the money under my bed and skinning rabbits?

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Jerker Johansson, chairman and chief executive of UBS investment bank - Jerker? You couldn't have dreamed up a better name for a banker!

"for so many years so many people have ridiculed the Irish, well for the Government to now guarantee ALL money held in Irish banks this is a good move.....if all governments did this then at least all the small deposit holders would know their money was safe"
Maybe, maybe not. Up until now, people have been trying to gauge which bank is safe and which is not. If other governments follow the Irish lead (France and Greece have already hinted they may) in order to prevent funds flooding out of their banks and into Irish ones, people will instead try to assess which countries are safe and which are not - and Ireland has already admitted that it's the first European country to officially go into recession. So people will then pull all their money out of Ireland, and put it into say, France, which has far less exposure to trashy mortgage debt, and Irish banks will go bust, closely followed by the Irish state, as per Max's post.

For once, it looks like our Gordy has made the right move, by calmly increasing the savings guarantee to £50k (from next Tuesday), thereby giving confidence a welcome boost whilst not going overboard with a knee-jerk reaction.

"look at what is happening with the Rock...reported last night that they cannot cope with the number of people wanting to put their money into it"
They won't have to cope much longer, as there is a self imposed limit (as part of the nationalisation plan) on how much market share they are allowed (I think it's 1.5% of all deposits). When they reach the limit, they'll just shut their doors! They also cannot offer the best savings rates any more, so at least for now, Irish banks are looking more competitive.

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Roberto

You always seem to hit the nail on the head.  I get the feeling that the world's banking system is drifting away from the capitalism on which it is based to a more statist system.

Nice to hear someone say something positive about our Gord - there's a first time for everything it seems!

I still can't accept that he was a good chancellor, I think history will show that he was at least as bad as Healey, but had inherited a bigger pot from Major, so had more time to screw everything up.

I saw yesterday that Caja de Granada announced how strong their portfolio is and that no investor has any need to worry - so they are the next down the tube then!

 

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Depending on the source, some reports say that 94% of all UK bank deposits are below £35K - and 98% below £50K - so raising the limit isn't going to affect many people, so it's pointless. Other reports put the figure at closer to 55%. Who knows? (Probably not the bankers, anyway)

Either way, a lot of people are apparently moving their savings around, seeking a safe haven, most of them with less than £35K balances. Again, some critics say this is pointless, since ALL FSA registered institutions are covered by the same guarantee. But they're surely missing the point? Savers don't want to run the risk of having to go through a lengthy and complicated claim process (nobody knows how it would work, as it's never been tested - yet) and are just tying to judge which bank is less likely to fail. Raising the limit to £50k may not affect many people, but it is a gesture to show confidence in the system, which I think was aimed at reassuring people and calming nerves. Whether it will stop people taking their couple of grand out of HBOS and putting it in Northern Rock, I don't suppose so. But neither would offering a 100% guarantee, and since no country can possibly guarantee 100% of all it's banks savings in reality, it just seems to me that GB has shown a calm head when those around him may be losing theirs.

Other than that, I can't say I'm a fan. I don't like the way he sucks in air when talking - creepy! I don't understand much about politics, and I'm not convinced it makes very much difference who's in charge. But I must admit I rather like Boris Johnson. He makes me giggle every time he speaks - and not many politicians can do that!

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Except perhaps Boris' father - of course theres Dubya as well - then perhaps guffaws of derision and disbelief dont mean the same

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Hi roberta glad to read you like boris so do i.Did you see him on tv in who do you think you are he is related to a king way back ps sorry this does not belong her irene

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Irene - Hi roberta???? You trying to get in touch with my feminine side? That used to be exclusively Smiley's domain, but since he's not been around much lately....

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Thats coz u played hard to get and a man with a fuschia pink dress can only take so much
 

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hi i just sent a pm sorry roberto bye irene

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Roberto - you said...

and since no country can possibly guarantee 100% of all it's banks savings in reality,

SO true.  They should also remember that this is our (the taxpayer's) money they are playing with.  

I can just imagine the short sellers and all the other sharks rubbing their hands with glee over all of this.  

"Governments guaranteeing our irresponible speculations?  Super - Great - Spiffing!"

One thing I remember about Maggie was her saying "This isn't OUR money, it's the taxpayers - we have a responsibility'".  Shame our Gord never saw or understood that.

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Smiley.....can we all have a photo of you in the fuschia pink dress please?

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They are very rare and very costly and they have only been made available to an exclusive club - get back on track! But get to Boys Town or Cabopino on the right time of the month and you might get the opportunity to take your own picture.

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Sorry, Smiley - I'm a really boring dyed- in-the-wool married 21 years (and faithfully) hetero.  Sorry to disappoint you.

What scares me more than pink dresses is news items like the following.....

 By Sky News SkyNews - 2 hours 5 mins ago

Another major bank is facing collapse just hours after European leaders vowed to work together through the global financial crisis. 

Chancellor Angela Merkel warned that if the German government fails to salvage the rescue plan, the institution's crisis will become "a crisis for the entire system".

It comes as Belgium stepped up its search for a partner to buy part of the banking giant Fortis that was part-nationalised by the Dutch government.

And the Prime Minister of Iceland, Geir Haarde, has been thashing out a rescue plan for the country's beleagured banks which have billions invested in British High Street names, including Iceland and House of Fraser.

As the scale of the problems confronting European banks deepen, European leaders have called for a major international conference "as soon as possible" to reform the global banking system.

Oh - that'll be a great piss-up! (Max)

At an emergency summit in Paris, Gordon Brown and his peers from France, Germany and Italy said the meeting should be convened to agree a coordinated response to the current economic crisis.

The leaders want the international conference to meet before the end of next month.

French President Nicolas Sarkozy said its task would be to revive the current finance system set up at the Bretton Woods Conference 60 years ago, which created the International Monetary Fund and the World Bank.

Meanwhile, Chancellor Alistair Darling said the UK Government will offer further assistance to banks which get into difficulties, saying he was ready to take "pretty big steps" to ensure Britain gets through the crisis.

But he said he would resist pressure to scrap the Bank of England's inflation target to allow for cuts in interest rates, insisting it was vital to maintain economic discipline even in bad times.

And he indicated he was ready to let state borrowing rise higher rather than increase taxes, arguing that now was not the time to take money out of the economy.

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Do any of these politicians have even the faintest idea about simple economics?  Do they think that having a big beano with lots of vintage wines and a huge dinner is going to solve anything?  They are all pygmies - and I apologize to the pygmy community for the slight.

Where are the statesmen?  The Churchills?, the Thatchers?

HELP!!!!! 

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I watched the vote in the house of representatives (again) on Friday - bit like watching a basketball game, really - and thought, phew, now the bill has been passed, perhaps Monday will bring a bit more calm on the markets.
What??
Does anybody have any clue at all as to what's going on?
Germany announces full protection for savers - but didn't really mean it, but it's too late, Denmark & Sweden reacted by offering the same or similar. Trading is suspended in Russia, then Iceland, as markets go into freefall. It's all rather bewildering. The disparity between Lloyds & HBOS shares is getting wider - will the deal go ahead? If it falls through, can the govt. actually do anything to save HBOS and the rest of the sector from self destructing? Zapatero announces that the Spanish banks are strong and won't be affected........why did he have to say that? Be afraid, be very afraid.
Meanwhile, TJ is sitting pretty atop a pile of gold bars somehwere, feeling kinda smug!
If you're reading this, TJ, we'd really welcome your thoughts and insight.

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Hi do you think its worth putting some money in banks in gibraltar from a spainish bank?irene

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