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Local Council's Investments in Icelandic Banks

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Joined: 14 Sep 2005

Posts: 425
Location: Rhode Hill, Uplyme

PostPosted: 12/10/08, 10:35    Post subject: Local Council's Investments in Icelandic Banks Reply with quote

It seems that Devon County and East Devon District Councils have not been amongst the councils, unlike those around us, that have invested in dodgy Icelandic banks as the two following articles indicate.

Among those most at risk are: Somerset County Council, which has £25 million invested in three affected Icelandic banks; Dorset County Council which risks losing £28.1 million; Plymouth City Council with £13 million tied up, and Cornwall County Council which has £5 million in Landsbanki. South Hams District Council, Mid Devon District Council and Restormel Borough Council also risk losing millions.
Western Morning News On Line ,Saturday, October 11, 2008, 10:00

Devon County Council says it has a planned cash management strategy to invest with some banks and building societies, but only those with a sound credit rating.
A spokesman said: "In the current climate though, the council is being extremely cautious and recent investments have not been to banks and building societies, but with the Government's debt management office and some large councils."
South Devon Herals Express On Line, Friday, October 10, 2008, 11:01

This whole business does throw up the obvious question of should investors in Icelandic banks be allowed to have their cake and eat it?

Why did they deposit their cash in Icelandic banks?

Well because the interest rates were higher than those available in the UK stupid.

Why are higher interest rates obtainable?

Because there is added risk.?

These investors could have invested their money in solid gold UK outlets and be guaranteed the return of their deposits. Their greed, whether they be councils, charities or private individuals, should not be the reason for them to be reimbursed by the government. Capitalism is based on “You pays your money and takes your choice” and you should not be expected to be bailed out otherwise lets tear up the rulebook.
It's later than you think
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Joined: 04 Jul 2006

Posts: 54
Location: Axminster

PostPosted: 12/10/08, 19:41    Post subject: Reply with quote

Can't see much fault in that opinion..............
If these councils were to receive no Government assistance, though, would it rebound on the locals via raised council taxes etc, to cover for their folly (great middle-class word, that) ?
If it did, surely that would be an absolute scandal??
BUT, while I'm cogitating, does that mean that they may retort: "Well, this market portfolio dabbling ensures a degree of profit, ensuring the tax payer does not contribute higher taxes locally, so therefore if we didn't do it, you would suffer, anyway!" ? Does that make sense? I'm not one for financial ruminating, but it is a fascintaing subject, for once..... Shocked
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Joined: 14 Sep 2005

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Location: Rhode Hill, Uplyme

PostPosted: 14/10/08, 07:44    Post subject: Reply with quote

I believe that the government intends to reimburse private investors in the Icelandic banks but not necessarily the councils. When one considers blame that decision seems topsy-turvy. The individuals chose to put their money in these banks. Would reimbursing them indicate that the nanny state has gone too far and that we can eventually expect a flutter on the horses to be backed up by the state?
Whereas council taxpayers had no choice. It was down to the individual council’s financial services manager who made the decision to deposit funds in the Icelandic banks. Should the council taxpayer suffer for this?
As in this entire sordid affair it is the culprits who got us into this predicament who no doubt will get off scot-free and the rest of us will foot the bill in one way or another.

It now seems that Darling and Brown are looked upon as the saviours of the financial world but can someone please explain one thing to me?
We are told that the government will borrow the money to finance the bailing out of the banks. But from whom will the hundreds of billions of pounds be borrowed – the banks? And where will the banks get the money?
This money merry-go-round makes one think what in fact is money. Is it merely a figment of the imagination and solely down to trust and confidence?
On the £20 note in my wallet it states that, “I promise to pay the bearer on demand the sum of twenty pounds”. Great so I can exchange this piece of paper for four other pieces of paper each with a similar message but this time for five pounds. But in this age many people have “progressed” so far that they don’t even have anything to do with these pieces of paper. For their weekly toil a few more digits are added to their electronically maintained account and we trust the banks over the accuracy of these calculations. Money goes out of these accounts, again on the basis of trust, after briefly flashing a piece of plastic at a cashier or by pressing a few keys on a computer keyboard.

But if all this, and the actual value of this money, is down to trust what confidence can one have when even the banks don’t trust each other to lend one and other money?
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Joined: 17 Sep 2005

Posts: 706
Location: Lyme Rd, Uplyme

PostPosted: 15/10/08, 01:02    Post subject: Smoke and Mirrors. Reply with quote

Exactly Rhodie, none of this money actually exists!

Ever since we moved away from the 'Gold Standard' in 1971, our economy has been based upon 'smoke and mirrors'. When confidence in the illusion fails, the whole thing is exposed for what it is - a trick.

Take a local hospital who invested some spare money in an Icelandic bank. Did they turn up at a branch with several suitcases of £50 notes ? No of course not, they transferred it from an account here in the UK. How did it get there ? The Local Healthcare Trust sent it to them as a transfer from its accounts. How did it get there ? From central government who got it by syphoning tax in the form of VAT, PAYE etc from people who work. They in turn get paid by bank transfer from employers and so on and so on and spend it on their mortgage and their credit cards by direct debit.

Where did the money go in Iceland - is there a big heap of dollars and pounds somewhere ? No of course not - because it never existed.

Where did the billions of dollars go in the USA that now need to be replenished to return their economy to the straight and narrow ? Nowhere - they just don't exist.

it's never too late
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