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-- Posted Sunday, 18 January 2009 | Digg This Article | | Source: GoldSeek.com
The normally reliable Daily Telegraph reports that the UK is planning to launch a $390 billion toxic-loan bank early next week, using the excitement of the Obama inauguration as a smoke-screen for a very big reshuffling of the British banking system. The separation of good from bad loans, and shoving the unwanted assets into a new ‘toxic’ bank is controversial with the banks as it will probably be compulsory and involve fixing a value on loans that have gone wrong. Bank stock prices and executive bonuses are in danger. Bad loansUnderwriting the scheme will be the hapless British taxpayer to the tune of $50,000 each, although as time passes many of the loans will be repaid. The idea is that once banks are freed of their bad loans then the banking system will start to function again. However, bailing out the banks is a costly business for the UK government and it will have to borrow the money, creating a surge in the money supply. This will add to the down pressure on sterling and will likely mean a run on the pound by foreign holders. UK owners of gold and silver have already benefited from the protection of precious metals during the storm of 2008 and can be expected to seek further protection in this safe haven in coming weeks. DevaluationThe currency impact is the immediate worry of the massive bank bailout plan but further out this is bound to be inflationary. Indeed, inflation is the one sure fire way to deal with debt, toxic or safe. On the other hand, inflation is bad for consumers whose salaries tend not to keep up, and for many firms which can not adjust prices fast enough to match cost input rises. For investors inflation is particularly nasty for bonds and bank deposits whose capital value drops while interest rates slip behind inflation. British savers are surely bound to turn to gold and silver in 2009 to protect them as they did in 2008, only in even greater numbers.
-- Posted Sunday, 18 January 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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$390bn UK Toxic Bank Plan Gold Positive
