Quote:
Originally Posted by Paul Markham
...The reality is the investment banks will move out of the UK and take their trillions with them if they want to...
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Much of "their trillions" isn't their money, and furthermore, most of it doesn't even physically exist - they can't take it anywhere.
Banks, in effect, create money under authority of the government in a fractional reserve system through loans and other various financial activities.
http://en.wikipedia.org/wiki/Fractional-reserve_banking
Most people have the misconception that banks lend out deposits. The reality is very different - banks can literally create new money out of nothing far exceeding the amounts of their reserves (hence, fractional reserve banking). New loans expand the money supply, and repaid / defaulted loans, shrink it...
While governments put safeguards in place in regards to how much new money can be created, derivatives and other exotic financial instruments further complicate matters.
Why should the general public have to bailout the power-elite's failed financial ventures, often involving reckless lending and sketchy derivatives. In my view, and that of many others, Iceland's approach dealing with the banks was far better ... just default and be done with it as opposed to dragging out the misery for decades
Ron