So can someone please tell me where this £500 billion has come from?

[Callisto]

Because I don't understand. Has GB borrowed it from somewhere and if so where?

Countess - teh figure is more like £16k per taxpayer when I watched news last night!

argh

Exactly, the whole thing is ephemeral, based on fear or confidence - and things get good or bad depending on the nerviness of the little twonks that wave their arms about on the market floor.

lol at MP and newsround. S'not as good since they dropped 'John Craven's' from the title.

Actually Newsround have just about hit the nail on the head on all counts!! "It's our money or it's borrowed, we don't know if this is going to work, and if it doesn't we're all buggered"!!

2By IncontinentiaButtox on Thu 09-Oct-08 09:59:34
It's simple, they are borrowing money in our name, to give to the banks, who will then lend it back to us and charge us interest.It's like a big infinity sign, and if you examine it too closely, you'll figure out that it's a big circular con job, but that's a modern credit-based economy for you. 2

Best explanation I've heard yet for this doubling of the national debt

they say buggered on newsround???

Allow me to enlighten you

It is being sold to us as a long term solution when in effect if you disect it and look at it closely it is a short term sticking plaster which will eventually fall off.Don't think we have any gold reserves lefy didn't gordon sell those ages ago to fund the excesses of the last 10 yrs.

I don't get this fully. The govt say they are borrowing but from who? That's the bit that confuses me given that the whole reason we are in this mess is that nobody will lend money anymore?

Its like the US plan to buy this "toxic" debt. All very well and good but what then happe to it? The implication is that they will sell it back later but to who? Nobody would touch it with a farking bargepole surely?

I know there are people much cleverer than I figuring this all out but sometimes I think that if people had asked "stupid" questions before like, oooh "how are people on £15k a year going to pay back a £150k mortgage?" or
"what exactly is a CLO and why would anybody actually want to buy them?" then perhapswe wouldn't be in this royal mess.

'Nuff said.

Excellent article OMaLittle. I finally understand that I'm not meant to understand it at all. (Loved the Newsround explanation too).

Upwind - wanted to say thanks for explaining something to me yesterday on a similar thread, sorry I didn't at the time.

The thing with toxic debt in the US (and mortgages here) is that it's not actually all toxic. It's just that before, people didn't care that they didn't know what was and what wasn't, and carried on trading it. Now, they don't know, and so won't touch it with a barge pole. But the vast majority of mortgages are still being paid by the people who have taken them out, and will continue to be so.

I think what's actually going to happen with the toxic debt in the UK that the govt has taken on is that the majority will be paid back by homeowners, but those people who should never have been given a mortgage in the first place because they couldn't afford to buy their own home will default, which means the govt will take possession of their houses, and therefore finally have some decent social housing stock, Of course if they'd had decent social housing stock in the first place people who couldn't afford a mortgage wouldn't have had to take one out, and the govt wouldn't have had to buy up toxic debt and......

AD said on C4 News they are borrowing the money, from where he didn't elaborate (China?)

so we'll have to pay the interest on the loan too, presumably

They are borrowing it from the tax payers the public purse which should be used for health education policing etc.

Noddy, Darling said they would have to borrow from elsewhere initally and pay it back from taxpayers I THINK - as Jon Snow was quzzing him on who would be paying the interest on the loan

thats even worse because god knows what the interest will be

But thats the bit I don't get. 500 billion is huge. It's just shy (apparently) of the amount we spend on health,education,etc. as a whole.

So - what is going to happen to that spending? Are we seriously going to borrow that much cash? That's just phenomenal - we'll be paying it back for the next 50 years.

Also, apprently loads of councils have got money tied up in Iceland (country not purveyor of interesting frozen foods) so will they get money to replace it?

The really scary thing is that nobody knows if this is actually all going to work. What happens if it doesn't? Do we borrow another £500 billion from the magic bank???

But what's the alternative? I hear lots of criticism and not many suggestions about what should happen instead.

Gordon says it's borrowed money.

I'm not criticising Daisy - to be fair I can't see any alternative. I'm just genuinely not understanding the mechanics of the deal.

peanut - yes about 6 or 7 council have a lot of money in IceSave (like, millions) and darling has said they will not be bailing them out as they should have been aware of the risks.

Noddy - it's terrifying, they are going to bankrupt this country, if they haven't already - they are making a terrible mistake, they should let the banks go down the pan, nationalise them properly and then compensate anyone who has lost money NOT pump all this money UNCHECKED (the Gov haven't put any of their 'people' into the banks to ensure this doens't happen again) into the hands of those who have got us into this mess.

Go on then dinny, let's hear your plan for averting worldwide depression.

And when did Darling say that Councils won't get their money back? This wasn't thought to be a 'risky' investment, this was a large, western bank, guaranteed by Iceland's compensation scheme offering slightly better interest rates than UK banks.

Dinny, it isn't unchecked is it? The govt will hold shares in the bank and have specifically stated that 50 bilion is for lending.

They aren't just handing over the cash and letting banks continue as normal. I'm normally one of the first to criticise Gordo but on this one I think you need to give them some credit.

DaisySteiner - Darling said it on last night's Channel 4 news

No he didn't! He just didn't say that councils would be covered. At the moment it appears the Treasury hasn't made a decision on this.