Fascinating talk.  Was particularly interested in Michael’s aside about not owning your home, as I don’t own mine and was until now under the impression that I was wrong.

is it possible to conceive of a policy whereby deposits are guaranteed - but banks are not.

i.e. if your bank goes down and you lose your bank balance the govt. will give you the money directly based on the failed banks records.

Or is something like this impossible?

This claim that if they don’t have a bailout then hundreds of businesses will go bust overnight.  Has this ever happened in history, even in the Great Depression?

I disagree with Michael about the consequences of missing a paycheck.

No one likes it, but a company can pull it off, in fact I’m pretty sure at least one professional football club in last year’s FA Cup was in this situation. In the drug industry, where I write, I would not be surprised if Genentech (which I hasten to add is not in trouble: profits up 6.7% in last quarter) is the sort of company that people like to work for, where a blip in pay, handled openly and sensitively, would not cause a stampede to the exit. BTW they just paid their 10,700 staff $371 million as a bonus to compensate for the disruption while the management negotiate a possible $43.7 billion takeover by the biggest shareholder, Roche (frankly, not a bad employer either, I hear). I don’t think it was needed, but you can see why staff turnover at the biggest biotech drug firm is pretty low.

Speaking personally, I have twice been in a position of working for a company that went down. My behavior was completely different because of the corporate culture. I was willing to lose about £500 in the first case, I got nasty for £10 in the second.

The first was Intel Information Ltd, publisher of Conflict International and a pioneer of on-line terrorism and low-intensity conflict reporting. My boss was open about the problem, he said he couldn’t keep us going. He told us about his plans to sign up customers and I worked for at least two weeks (it may have been four) unpaid in the hope that business would pick up.

It failed, but I have no regrets about my decision. I do regret that the technology at the time meant we were using a bulletin board to do something that would now be done on a website even with a dial up connection. I’m convinced that the basic business model was sound and that one could put together a terrific business now with some of the personnel and the basic methodology. I’m open to offers. ;-)

The second was, I suspect, as close to a fraud as I have witnessed close up. I got a temporary job in Kilburn, which paid cash for a couple of weeks, to cover a teacher at a college for teaching English to Foreigners. My guess is the previous guy knew what was coming and ran. I was promised help with training to get the job permanently (I would have needed a qualification). This was a lie.

After less than two weeks the rumour went round that we were closing. However, some of my students, on the second Friday morning, paid up till the end of the academic year (I recall at least one person told me she’d handed over several hundred pounds only the previous week). At midday, we were told the place was closed with immediate effect.

The boss’ wife (he was nowhere to be seen) tried to pay me up to the previous day only. I threatened to call the police if I wasn’t paid in full (including the rest of the day, which I have been, at least verbally, contracted to do). She decided I meant it and gave me the extra in cash. I later found out I was the only teacher to not be out of pocket.

I returned to the classroom and carried on my classes to the end of the day. The electricity was cut off at one point. Luckily, most students were sitting their exams and these had been booked and paid earlier in the year. I privately gave two free seminars for those students. I got a card from one later thanking me.

I regret not calling the police.

Sorry if this comment is too long.