Am I understanding this correctly?

[DimPrawn]

1. Banks are effectively bankrupt (through buying worthless assets and over leveraging).

2. Stock markets dive.

3. Tax payers money is stolen and given to said banks.

4. Bankers pocket millions and walk away.

5. Stock market recovers (bankers make some more money along the way).

6. Stock market recovery falters (as banks are still holding worthless junk and are overleveraged).

Goto Line 2.

[shaunbhoy]

Pretty Much. Ask sasguru for a fuller explanation. He is probably "running the numbers" as we speak, the sad, one-dimensional, uninspiring, numbercrunching, computer-modelling, naive, stato-geeky anorak!!

[sasguru]

You missed a crucial point. Every single bank is effectively bankrupt from the start.
Banks outgoings are always more than their deposits - it's how they make money.
The whole edifice depends on confidence.
If a clearing bank were to fail - then we really would have the second great depression

[sasguru]

Pretty Much. Ask sasguru for a fuller explanation. He is probably "running the numbers" as we speak, the sad, one-dimensional, uninspiring, numbercrunching, computer-modelling, naive, stato-geeky anorak!!

As opposed to a being an imbecilic, idiotic cretin with a pea for a brain, eh, SB?

[shaunbhoy]

So easy!!

[DimPrawn]

You missed a crucial point. Every single bank is effectively bankrupt from the start.
Banks outgoings are always more than their deposits - it's how they make money.

Ahh, I see.

I want to make money out of lending money. Trouble is, I don't have any money, so I borrow money wholesale and then lend it to punters at a profit.

Then I get greedy and realise, actually, who cares if I lend to bad payers or buy worthless assets, as long as I can sell on these debts to bigger mugs.

After all, worst case, the tax payer will bail me out.


Nice work if you can get it. Of course, we mustn't question the integrity or the value of the City must we?

[oracleslave]

Nice work if you can get it. Of course, we mustn't question the integrity or the value of the City must we?

Sounds like you have been infected with AtWitis

[DimPrawn]

Sounds like you have been infected with AtWitis

I will sue you for that defamation!

[Bagpuss]

I feel a book coming on..

Basel II and ways to avoid it, by the 'Bank'rupters

[AtW]

I feel a book coming on..

Basel II and ways to avoid it, by the 'Bank'rupters

Get off your high horse now....