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What would/could have happened if the Government didn't bail out the banks? watch

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    Picture the scenario:

    A run on Northern Rock.

    Chancellor says to Adam Applegarth (CEO of NR at the time) that he is a lemon, but leaves it at that.

    And thus, what would have happened to all of the other banks if the state had not stepped in?

    RBS/Natwest?
    Halifax/BoS?
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    If we just left the banks to go bust, we'd probably be in a depression around now.
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    Loadssssss of people left homeless for a start, and eventually this whole episode would have led to practically ruining the economy. I'm not New Labour's biggest fan, but I gotta back Gordo and Al on this one.
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    Would of had an drastic psychological effects on the markets therefore the econimical Depression would of been in full swing.

    When the American Government decided Lehman Brothers go bust that was scary. Because the markets reacted aggressively heading south.

    I wonder what would of happened if Lehman Brothers were saved?......hindsight is wonderful thing I guess! :rolleyes:
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    As much as it pains me to say it, Gordo and Darling did the right thing in bailing out the banks. If they'd just let them be, both HBOS and RBS would have collapsed and most probably taken the economy down with them.
    On the other side of the coin though - Gordo was an idiot for forcing Lloyds TSB and HBOS together. Lloyds TSB was fairly safe from the banking mess (posting a £1 billion profit) but has now been dragged down by HBOS's atrocious debts to the point where it's having to slash its workforce to survive. The government pulled a fast one and saved itself from having to completely nationalise HBOS.
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    (Original post by Prince Rhyus)
    Picture the scenario:

    A run on Northern Rock.

    Chancellor says to Adam Applegarth (CEO of NR at the time) that he is a lemon, but leaves it at that.

    And thus, what would have happened to all of the other banks if the state had not stepped in?

    RBS/Natwest?
    Halifax/BoS?
    A short, sharp recession, rather than a long drawn out one.
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    The world would have been crap for a few years but in future we would never have recessions due to stupid risk taking by banks again. They would learn their lesson. Despite what you may think the bankers aren't stupid and knew they would never be able to be allowed to go bust by government so they had no incentive to be sensible
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    If the government didn't bail the banks out and one went bust, there would have been a run on the banks, which could have caused banks on the edge to also collapse and those in healthy positions to suffer (as happened in the great depression). This would have meant the businesses and individuals who relied on banks would struggle or become bankrupt. Unemployment would have been far more severe, the stock markets would have fallen an awful lot more, the house prices would have plummeted, recovery would have been longer and the recession may have ended up as a depression.

    Regardless of whether you're a socialist, free market capitalist, or a liberal, the idea of bailing out a private business would have been a horrible idea, but for the greater good of the economy it was needed.
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    A lesson learnt.
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    (Original post by respect_campaign)
    Regardless of whether you're a socialist, free market capitalist, or a liberal, the idea of bailing out a private business would have been a horrible idea, but for the greater good of the economy it was needed.
    That's cheating and not an argument.

    We seem to take some issues for granted.

    I mean, if the banks really were worth saving, then why didn't miss JK Rowling loan some money to old Gordon? They could've made a killer profit.
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    (Original post by respect_campaign)
    If the government didn't bail the banks out and one went bust, there would have been a run on the banks, which could have caused banks on the edge to also collapse and those in healthy positions to suffer (as happened in the great depression). This would have meant the businesses and individuals who relied on banks would struggle or become bankrupt. Unemployment would have been far more severe, the stock markets would have fallen an awful lot more, the house prices would have plummeted, recovery would have been longer and the recession may have ended up as a depression.

    Regardless of whether you're a socialist, free market capitalist, or a liberal, the idea of bailing out a private business would have been a horrible idea, but for the greater good of the economy it was needed.
    What makes you think that the recovery would have been longer? There is evidence that Hoover and Roosevelt's efforts prolonged the great depression and made it worse. You are right that the collapse would have been shorter and sharper, but that is precisely because malinvestments would be liquidated rather than kep afloat. As for house prices falling, why do you think that a bursting bubble should be reinflated? Easy credit had pushed house prices higher than they should have been in the first place.
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    The governments decision to bail out the banks was absolutely the correct one.
    In 1929, America, no bank was bailed out. No money was given out.
    It took until 1933 (that's about 3 and a half years) until the economy started recovering, and took until 1939 for the economy to return to its previous position.
    It's taken what 18 months for us to start recovering. Lesson were learned IMO.
 
 
 
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