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Banking Nationalisation


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#1 Wizard

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Posted 13 October 2008 - 13:20

The apparent Nationalisation of some major banks gives the public a large stake in what is arguably the most powerful and profitable businesses in the world. Will this new shareholding power actually result in a positive step for the economy and the financial sector or is this just a backward step for capitalism?

#2 Dauth

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Posted 13 October 2008 - 13:54

I am an inveterate capitalist and would normally just allow businesses to collapse however with banking since it hits the public so hard, this cannot be allowed to happen. The public may have some ideas of how to run the bank but like I said elsewhere they aren't suited to that role. If the public were actually sensible they'd only invest in mutuals, banking is a risk and we took it and lost. I'm glad my parent have both worked for the civil service, the pensions are guaranteed.

Capitalism only works when the people who are responsible are held accountable, so the people who chose to take on bad debt should be the ones forced to pay up. Almost every British citizen is sick to the guts with the idea of Northern Rock managers getting huge severance packages.

Having to do this is a step backward for capitalism, however with some sensible management/legislation you could turn it into a step forward by making people responsible for their actions financially. There is no good reason for someone who has crashed a bank to be given millions of pounds, however someone who works the bank properly can be paid highly.

#3 logical2u

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Posted 13 October 2008 - 17:10

By definition nationalization is a step-backwards for capitalism, however in this regards the free market actually ending up betraying its investors - which isn't really supposed to happen in the proper free market. And while we could argue for economic darwinism, again it's the will of public (and their urge not to get screwed over by their banks) that will continue to drive this trend of nationalization.

This is probably a good move from the public eye - their money is preserved, and likely will be consolidated in a national bank of sorts, thereby increasing the potential gains for shareholders.

This may cause problems for Credit Unions and the like, if only because they now have to present a front against a unified national banking system.

Banks will never recover from this - they will be distrusted by the public for years, and their investments are already horribly damaged. Nationalization means that they will have even more problems as they come under direct government regulation and supervision. However, they will survive. Which is good for their employees and the honest members.

For the dishonest ones - well, this might just be another Enron.
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#4 Shirou

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Posted 13 October 2008 - 17:24

Because national debt's are more of a long-term problem, solving short term problems like these by creating long term problems can only be a short term fix...

But in times of crisis, it may just as well be needed. However, now that we have seen some of the imbeciles and stupidity that rules the financial system, especially in the US, and the factor of 'greed' in all of this, national debts will only rise to make up for people's mistakes.

I don't know what to think of it. I have lost faith in the current financial system, but it's probably the only way to stop a recession.
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#5 nip

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Posted 16 October 2008 - 03:53

Without accompanying stricter regulations for the financial sector and with a continued laissez-faire practice of existing laws it will be a very short positive step for both the economy and the financial market. The socialisation of the global financial sector is likely a nightmare for hardcore capitalists but I think it is of benefit for societies if proper implemented.

Capitalism must be put in irons. The deregulation of global financial markets that began in the 70's is one of the causes for the actual crisis. For decades mainly the US and Britain complained over too much regulations and all requests to tighten them and to reform financial oversight were rejected. Those regulations disturb the free market economy they argued. As a result all types of dubious bank and insurance institutions, ratings agencies, short sellers, speculative traders etc. arrived at the scene, acted like the robber barons of the 19th century who stripped money from countless investors, and manipulated stockmarkets worldwide. Greed shows no bounds either in banking or in the credit business and this crisis can't be kept within bounds so it'll affect us all. Despite the hundreds of billions of tax dollars globally injected into the rotten financial market we will face rising inflation and unemployment rates, growing national debts, tax increases and likely recession in the near future. The financial crisis becomes an economical crisis.

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