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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

RBS Produces Loose Change Profit as Tax Payers Finance Bankster Profits

Companies / Credit Crisis Bailouts Aug 07, 2009 - 11:10 PM GMT

By: Nadeem_Walayat

Companies

Best Financial Markets Analysis ArticleRBS announces a inconsequential profit of £15 million, the market expectation was for £1 billion on the back of an artificial banking system that is heavily supported by the Tax payers, and when I mean heavily I mean to the tune of £1.5 trillion and growing ! RBS itself is now 70% owned by the Tax Payers whether they like it or not.


The Bank of England yesterday panicked and printed another £50 billion of money out of thin air primarily to buy government debt so as to finance the near £200 billion of ANNUAL deficit between government revenues and expenditures in advance of a 2010 General Election, I won't repeat the detailed analysis during the week but point you to the three earlier articles -

06 Aug 2009 - Bank of England Panics and Prints Another £50 billion to Prevent Economic Depression

The Governor of the Bank of England, Mervyn King waved his magic wand again today and conjured another £50 billion into existence to the surprise of most market commentators right from the BBC downwards with Stephanie Flanders seen floundering to back track on previous commentary on BBC TV News, as lemming like behaviour had led the mainstream media to conclude that the Bank of England had put Quantitative easing on hold in the face of growing signs of economic recovery......

05 Aug 2009 - Halifax, HBOS Cancer Continues to Eat into Lloyds TSB, £4Billion Loss

Today Britains biggest tax payer bailed out bankrupt mortgage bank HBOS, contributed towards Lloyds TSB bottom line loss of £4 billion. The HBOS bad mortgage debt losses continue to eat into Lloyds TSB's balance sheet to the tune of another £10 billion, that's £20 billion to date of HBOS bad debt provisions of which the UK tax payers have a 50% stake in and given more capital injections will soon rise to approx 70% of the group. So that there is no illusion A 70% GOVERNMENT STAKE MEANS DEFACTO NATIONALISATION......

04 Aug 2009 - Northern Rock, Tax Payer Bailed Out Bankrupt Bank Adds 750Million More Losses

Today Northern Rock, the first of a series of tax payer bailed out bankrupt banks announced a further loss of £750 million to be added to the tab picked up by the tax payer that is now approaching in total £1.5 trillion across the banking sector and destined to continue expanding to an eye watering £2 trillion or near 200% of GDP by the end of this year as I originally estimated back in November 08........

Back to RBS, £15 million profit after dumping billions of bad debts onto the Tax payers that looks set to eventually total £350 billion into the asset protection scheme. RBS says that it will be in a position to repay all of the loans and capital to the government by 2013. Really ? Does that include the 90% loss on the debts dumped onto the tax payers?. The 'normal' market practice is for bad debt to have a value of between 10p and 20p in the pound, NOT 90 to 94p! which is the current situation, so when the Bank Says it will repay the taxpayers and when the BBC reinforce this view, then readers should be aware that this is blatantly UNTRUE for the debt dumped onto the tax payers is worth 10p to 20p and NOT 90p which is the benefit to RBS! and even there much of the 10p loss sustained by the bank is financed by the taxpayers via capital injections!

RBS also states states that the bank offset bad debt losses from Investment banking profits - WHAT INVESTMENT BANK PROFITS ? THE PROFITS RBS ALLUDES TO ARE AS A CONSQUENCE THE BANK OF ENGLAND PRINTING MONEY TO BUY GOVERNMENT AND CORPORATE BONDS BOTH FROM AND VIA THE BANKS as WELL AS FORCING THE BANKS TO BUY GOVERNMENT BONDS so as to Improve the quality of their bond portfolios ! I.e. Profit from ARTIFICIALLY FALLING Yields on Government Bond Portfolios and EARN COMMISSION on BOND MARKET TRANSACTIONS ! HENCE THE PROFITS ARE AN ILLUSION! As if there were no Quantitative Easing and other state actions then there would be NO investment banking profits that the banks are announcing.

Now let me correct the above the BANKS are making profits from one source - And that is the corporate and individual debt slaves by widening the spread between what the banks pay and charge in interest earned on debt which has now widened to more than 4%, from a free market banking system that typical charges between 0.5% to 1%. This is something I warned of as long as 18 months ago ! Yes February 2008, long before the financial Armageddon of September / October 2008 which has since been repeatedly reinforced by each new action the government has taken to FINANCE BANK PROFITS.

To reiterate my writings of the past 16 months that what we are seeing is a process of FRAUD on the tax payers of Britain. The establishment that runs Britain is showing how it operates in full public glare, of how firstly ordinary citizens are turned into perpetual debt slaves, and then secondly how the bankster's and their minions call upon unlimited access to the monetary resources of the state without any consequences to create the illusion of bankrupt banks turning back into profit making machines as bad debts are swapped for hard tax payer cash.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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