We have two chances.

1) they on-going disaster finally escapes their containment measures.
2) we revolt and throw them and their political lick-spittles out.

Or both.

Mr King knows and has known since mid ’08. Mr Haldane, also of BoE also knows.

I am not trying to be smart and it sounds like there aren't any get out of jail cards, so I accept it's going to hurt, but what is the best route forward?

I am always more than delighted to be corrected. Not that I enjoy making mistakes but I am keen to learn. Please never hesitate to correct anything I have misunderstood. Worse than me being wrong ( egg on face I can contend with) I feel ashamed to mislead people who come here.

It doesn't sound as if my mistake was material to the argument.

Would you consider dropping me a private email? I would love to talk to you more in complete confidence. I need to learn and some of my questions require a specialist knowledge.

I quite understand if you feel you can or simply don't wish to. But I thought I would ask.

Either way thank you for this comment and thanks for reading.

A comment regarding investment bank vs retail banks. Please understand I am only a very little fish in a big pond full of very big sharks. I hope I won't be abused for my comments, but sometimes an insider story can clarify things….

Investment banks dealt with the result of the massive mortgage boom, through securitisation of the loans made by retails banks. But the banks causing the problems were all non investment banks. When Halifax (retail bank) went to Ireland few years ago, they wanted to be one of the biggest banks there. They did, by lending money to ANYONE that would ask. The commercial lending went out of control. The losses there are staggering! And mounting. I totally agree about your comment on Ireland.
Securitisation was as a great tool. Banks could lend lots of money, go to Goldman Sachs or whoever, ask to securitise their loan into a CDO structure and sell most of it Hey presto the credit risk was passed to another "sucker" sorry investor. Unfortunately banks started to accumulate a lot of that crap on their books. They just hold other banks risks rather than their own. When things turned sour in the US (main culprit) and Europe the whole thing blew up.

I could spend hours rambling about details, the US retail and commercial mortgages securitisation etc… sorry have no time now.
Lots of people are angry. Including bankers. Many little people like me saw it coming, so saying the crisis came out of the blue is complete and utter b*llsh*t. Some people (few) high up in banks have been ruining the banks, the countries etc… but above all do not forget that the balme is equally shared by the polititians who were (and still are) in bed with the bankers. Through economic policies and keeping interest rates artificially low for so long it fed a lending frenzy that does not seem yet to be ending. Money was cheap (very cheap) returns in interest were ridiculously low, everyone was look for higher returns via higher risk, hence lend to sub-prime boomed…. long story….

Maria41

I've noticed some inaccuracies if I may dare to say so, in your explanation of CDOs and Synth. CDOS. Understand as well that the usual CDO underlying were bonds, not mortgages. But the MBS (Mortgage Backed Securities market was huge- Fanny Mae/Freddy Mac etc… spring to mind).

A CDS's reference asset is a bond. If the issuer of a bond records a credit event, as defined in the ISDA document, the owner of the CDS (long Protection) would go to the seller of the protection (short protection or long Risk if you prefer) and the seller of the CDS would pay the difference between the current bond price and par (notional value of the bond). So if you had a 1m protection on GMAC and GMAC defaulted, you would go to the company that sold the protection and either deliver the reference asset (bond) for 100% of value of that bond (that in the market would sell probably at 40 to 60% maybe) or cash settle. Cash settlement would be more the norm as there are many more CDS than reference assets around!

For banks, originally it was a very good tool to protect against Credit Risk. If you had a big loan on a company, you could buy protection to reduce the risk. It was also an easy way, by selling protection, to have a "synthetic" bond position, without the need to buy a bond on a particular company, and with reduced on no regulatory capital required (at the time). That's how it started on the late 90's. When I joined a big investment bank and started covering those products, (in a risk control & reporting role) in 2001, it was just the beginning of the CDOs.
The CDS market moved quickly from credit risk insurance to a speculation tool. A Market market maker bank would make good money from that. CDOs then came along. The structure is rather complex. A good explanation can be found in this excellent website: http://www.riskglossary.com/.
(Part 1)

But seriously – that's mind blowing. I guess we must be talking about different 'parts' of the bank, one taking out CDS for the CDOs it was building and one issuing them for other banks' CDOs on the say so of the ratings agencies? One hand not knowing what the other is doing?

Because anyone with half a brain who had oversight of the whole picture would surely see that what one part of the company was doing was writing insurance for exactly the type of asset that another part of the company was betting against?

I know that this doesn't necessarily imply a conspiracy where government bailouts were factored in early on (I suppose that person at the top would think 'So what? Even if it all goes tits up, I'll still be walking away with a fat pay cheque') but doesn't it still amount to sociopathic behaviour?

Which would be startling, because I've always tried to see the roots of this crisis as being stupidity walking hand in hand with greed. The blind faith in never ending growth blinkering the players to anything but the evidence of very recent history. The jackals only turning up on the scene once the carnage had begun, forcing the debts on to the public purse via the craven political class out of sheer necessity (well, self preservation) and precipitating the sovereign crises. But this is clear evidence as far as I'm concerned of deliberate intent, at the very highest level, to drive the whole system into a wall – at god knows what ultimate cost – for short term financial gain.

Sickening.