Turning Point by John Francis Kinsella
In the not so distant past commercial banks had made money from current accounts and services, which was to say safe money. Then they broadened their activities by providing a whole range of loans including for example mortgages and consumer credit. As their ambitions grew they turned to investment banking extending their activities into more risky markets, speculating in credit default swaps and complex financial instruments.
Their objective was growth and greater profits however they had very little idea of the complexity of speculative financial instruments and did not fully realize what they were getting themselves into. Finally, when their experiment in financial alchemy exploded in their faces the damage to their shareholders and customers was devastating.
Crashes were seen as things of the past, not only by banks, but also by the country’s leader, Gordon Brown, an economist, who during the whole time during which the bubble grew had presided over the British economy as Chancellor of the Exchequer defining the policies that were to exacerbate the crisis when it came.
When the bubble finally burst Britain’s four largest banking institutions: Barclays, HBOS, HSBC, Lloyds TSB and Royal Bank of Scotland were suddenly staring insolvency in the face. The only solution found by the nation’s politicians was to plunder taxpayers money in the one of greatest confiscations in the history of Britain, a consequence of the most reckless wave of financial speculation the nation had ever seen.
New Labour under Blair and Brown had built one of Britain’s most extraordinary periods of growth on the foundations of financial and property speculation. Lulling those who had surfed the boom into believing it would go on forever. Encouraged by politicians and the prospect of huge profits, bankers, duped by their own foolishness, came to believe in their own indestructibility raking off huge bonuses that in turn fed the wave of speculation.
In the good old days a friendly bank manager advised his customers on loans and family investments, today such tasks had become centralized by the big banks that had introduced complex risk assessment systems. Managers have long been transformed into salesmen whose job is to sell financial products such savings, insurance and investment plans.
Exactly the same thing happened in the stock market when large investment banks developed general brokerage services taking over from small brokers, replacing them with faceless traders. In many of the larger banks trading became more important than their everyday business, and the most lucrative part of their business, effectively transforming them into hedge funds.
After another weekend of crisis talks that were concluded at dawn on Monday October 13, the government announced Lloyds TSB was to take over HBOS with the help of seventeen billion pounds of taxpayers’ money, and RBS was to receive an injection of twenty billion. The resignation of RBS’s infamous chief executive, Sir Fred ‘the shred’ Goodwin, was immediately effective. The news of the bailout prompted a weak rally on the London Stock Exchange, giving some momentary relief to Fitzwilliams and Kennedy.
Antigua
Their objective was growth and greater profits however they had very little idea of the complexity of speculative financial instruments and did not fully realize what they were getting themselves into. Finally, when their experiment in financial alchemy exploded in their faces the damage to their shareholders and customers was devastating.
Crashes were seen as things of the past, not only by banks, but also by the country’s leader, Gordon Brown, an economist, who during the whole time during which the bubble grew had presided over the British economy as Chancellor of the Exchequer defining the policies that were to exacerbate the crisis when it came.
When the bubble finally burst Britain’s four largest banking institutions: Barclays, HBOS, HSBC, Lloyds TSB and Royal Bank of Scotland were suddenly staring insolvency in the face. The only solution found by the nation’s politicians was to plunder taxpayers money in the one of greatest confiscations in the history of Britain, a consequence of the most reckless wave of financial speculation the nation had ever seen.
New Labour under Blair and Brown had built one of Britain’s most extraordinary periods of growth on the foundations of financial and property speculation. Lulling those who had surfed the boom into believing it would go on forever. Encouraged by politicians and the prospect of huge profits, bankers, duped by their own foolishness, came to believe in their own indestructibility raking off huge bonuses that in turn fed the wave of speculation.
In the good old days a friendly bank manager advised his customers on loans and family investments, today such tasks had become centralized by the big banks that had introduced complex risk assessment systems. Managers have long been transformed into salesmen whose job is to sell financial products such savings, insurance and investment plans.
Exactly the same thing happened in the stock market when large investment banks developed general brokerage services taking over from small brokers, replacing them with faceless traders. In many of the larger banks trading became more important than their everyday business, and the most lucrative part of their business, effectively transforming them into hedge funds.
After another weekend of crisis talks that were concluded at dawn on Monday October 13, the government announced Lloyds TSB was to take over HBOS with the help of seventeen billion pounds of taxpayers’ money, and RBS was to receive an injection of twenty billion. The resignation of RBS’s infamous chief executive, Sir Fred ‘the shred’ Goodwin, was immediately effective. The news of the bailout prompted a weak rally on the London Stock Exchange, giving some momentary relief to Fitzwilliams and Kennedy.
Antigua