150 billion quid wiped off the FTSE.
- Thread starter joe-90
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H
holmslaw
But does that money actually exist anywhere other than on some balance sheet.
Imagine 3 banks, a b and c, a borrows £10billion off of b, b borrows £10billion off of c, and c borrows £10billion off of a. There all paying interest to each and loaning the money out to others, so theres a combined debt of £30billion. One day a computer glitch means that another bank d mistakenly pays £10billion to bank a. Theres now a combined debt of £40billion.
The banks decide to clear their debts, so a pays b £10billion, b pays c, and c pays a. Bank d discovers the mistake and demands the money back from a, and a give the money back.
So the situation now is the £40billion debt has vanished, no bank lost any money they have exactly what they started out with.
I think we are witnessing the biggest con the world has ever seen. And the first step should be make every bank settle all interbank debt.
Imagine 3 banks, a b and c, a borrows £10billion off of b, b borrows £10billion off of c, and c borrows £10billion off of a. There all paying interest to each and loaning the money out to others, so theres a combined debt of £30billion. One day a computer glitch means that another bank d mistakenly pays £10billion to bank a. Theres now a combined debt of £40billion.
The banks decide to clear their debts, so a pays b £10billion, b pays c, and c pays a. Bank d discovers the mistake and demands the money back from a, and a give the money back.
So the situation now is the £40billion debt has vanished, no bank lost any money they have exactly what they started out with.
I think we are witnessing the biggest con the world has ever seen. And the first step should be make every bank settle all interbank debt.
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Couldn't agree more. This is all 'electronic' money. It didn't exist in the first place so how can it have been 'lost'?
It may not have existed but if someone bought shares low and sold high - then there would soon be rea£ $$$ in their offshore bank account
R
RedHerring2
It isn't money lost but value lost!
As Nige indicated, when the value changes you can "crystalize" your gains or losses by buying or selling. That's when money is gained or lost.
For instance. if I buy £100 worth of shares, they'll go up or down in value, which matters little until I sell them. that's when I gain or lose.
The stock market is a "zero sum" game. Some win, some lose. All the losses are covered by all the gains, excluding fees and charges, of course.
As Nige indicated, when the value changes you can "crystalize" your gains or losses by buying or selling. That's when money is gained or lost.
For instance. if I buy £100 worth of shares, they'll go up or down in value, which matters little until I sell them. that's when I gain or lose.
The stock market is a "zero sum" game. Some win, some lose. All the losses are covered by all the gains, excluding fees and charges, of course.
Banks are in the business of "inventing" money anyway. In holmslaw's scenario bank a can only borrow £10 billion off bank b if that bank has a little over £1 billion as collateral (a bank can lend 9 times what it has) so the debt now makes bank b worth £10 billion plus its collateral i.e. something over £11 billion. With all banks borrowing and lending to each other the amount of money created out of thin air is huge .
What noone will admit is that the financial crisis is largely down to an inherently flawed system.
J
joinerjohn
Shares go up and down in price all the time. The only people that lose money when share prices fall, are those stupid enough to sell at the low price. Last time share prices fell, a lot of investors took the gamble to buy them at low prices, then made a nice profit years later, when the share price had risen. People who have shares and actually hold on to them through bad times, only lose money on paper. Shares are actually worthless, until they are sold.
well that wont work as the paper assets stay the same if you give an amount and get the same amount back the amount on the books is the same
but where it will work is when you introduce fees like consultancy 'management 'and unfavorable interest rates for the transactions that move to a different account/company /person
