Gluestick Posted February 12, 2009 Share Posted February 12, 2009 Dog wrote:[quote]Did you read Kaphoens link? Who Really Rules Your World[/quote]Naturally. Link to comment Share on other sites More sharing options...
Gluestick Posted February 12, 2009 Share Posted February 12, 2009 Brian (again) wrote:[quote]I'm mystified as to where the above form part of a constructive criticism?[/quote]The sheer nonsense that has inevitably emerged about global finance and banking since the beginning of the crisis astounds me!I was simply pre-empting the inevitable............................................ Link to comment Share on other sites More sharing options...
brianagain Posted February 12, 2009 Share Posted February 12, 2009 [quote user="Gluestick"]The sheer nonsense that has inevitably emerged about global finance and banking since the beginning of the crisis astounds me!I was simply pre-empting the inevitable............................................ [/quote]I agree! Thank you for your incisive analylsis.Brian (again) Link to comment Share on other sites More sharing options...
Jonzjob Posted February 12, 2009 Share Posted February 12, 2009 PM Gluey. Link to comment Share on other sites More sharing options...
Kaphoen Posted February 13, 2009 Share Posted February 13, 2009 [quote user="Gluestick"]It had to come eventually I suppose![Www]It's all the fault of the Illuminati: Bilderberg: Davos: Alien Invasion: The New World Order: Freemasonry: The Priory of Scion. etcGroan.............................You are not a member of the David Icke Fanclub are you by any chance?Ask yourself one simple question.[/quote]Simple question: Is this obtuse addition to the debate intended to be sarcasm or irony? Link to comment Share on other sites More sharing options...
Gluestick Posted February 13, 2009 Share Posted February 13, 2009 Either; depends how you read it I suppose.Rather, it was intended to be cynical humour.Please do ask yourself one question: your quoted article states:-[quote] Banks Create Money by Creating Credit; Credit that can be accessed by credit card, overdraft cheque or bank loan represents nothing more than a bank’s promise to pay. Credit money exists only as numbers in bank computers.[/quote]This myth is spreading like wildfire throughout the internet.If the premise was true, then surely, banks wouldn't need the Paulson-Bernenke Bail Out Plan in the States: nor the Brown-Darling abortion in the UK, as they would simply continue to "Create money" as before!Further, there would be no "Credit Crunch": same rationale.In fact and of course, the awful tired and overworked cliché "The Credit Crunch" has been a godsend for such incompetents as Brown, as they can transfer blame to extraneous circumstance.The core problem for Britain, more accurately, is what is termed the "Funding Gap": i.e., in simple terms of reference, Britain was, to utilise a business analysis expression, "Overtrading" throughout the period from 1998/9 onwards: economic activity which demanded credit was far higher and accelerating much faster than the real economy could create wealth: so the funding had to be imported from foreign capital markets.Unfortunately, and this is where the banks caused the core problem, they broke the first and primary law of banking: one never ever borrows short and lends long. Which is precisely what they did, since the interbank market biases towards the shorter periods. They are never term investors, merely make-weight book balancers, principally, (in both directions).If you want to understand why this went wrong, then study the demise of Continental Illinois bank in the 1980s.http://fic.wharton.upenn.edu/fic/case%20studies/continental%20full.pdfThen study the demise of Long Term Capital Management.http://en.wikipedia.org/wiki/Long-Term_Capital_ManagementAs the last intelligent Chair of the Fed, Paul Volcker stated on both occasions, if either CI or LTCM had have been let go, then probably either event could have tripped the Ultimate Domino Effect feared for so long: which is what has partially happened now.And this is the result of Fractional Reserve Banking, not banks enjoying the ability to create money from thin air! Link to comment Share on other sites More sharing options...
Danny Posted February 13, 2009 Share Posted February 13, 2009 [quote user="Gluestick"] And this is the result of Fractional Reserve Banking, not banks enjoying the ability to create money from thin air![/quote] aren't you really all saying the same thing here, like in this examplehttp://www.ibtimes.com/articles/20081209/understanding-how-the-fractional-reserve-banking-system-is-affecting-the-credit-crisis.htmMaybe you can explain it to me as that seems to suggest to me that the FRB does allows the banks to do create money from thin air. I am not saying this is wrong or bad either, just trying to understand. It seems there is a lot of semantics and jargon even though it is a complicated system.Danny Link to comment Share on other sites More sharing options...
Gluestick Posted February 13, 2009 Share Posted February 13, 2009 It is in fact all about what is called The Velocity of Circulation of money.Yes, theoretically, it appears that banks can "Create money" from thin air: until settlement!What Continental Illinois did is to simply delay the point of settlement by continually taking in replacement funds or "Rolling Over" funds from the global interbank market.However, at some finite point the music stops: lack of focus by regulatory authorities (Like the B of E in the UK) went to sleep and ignored the UK bank's mounting liabilities based upon the earlier Reserve Assets: the critical measure of any bank's liquidity is its obligations (Debts) expressed as a percentage of its real reserve assets.As I stated before, if it was possible for banks to simply conjure money from thing air, indefinitely, then why do we have a current problem?The other problem, of course is that bank's loans are classified as "Performing" and "Non-Performing" and thus delinquent.Trouble is banks place debts (from borrowers of all classes) on the asset side of their balance sheets: which makes the picture look far rosier than it is in reality.Which of course is what the current tussle concerning "Mark to Market" is all about.Ah well; back to my Perpetual Motion Machine: it's nearly finished now![:D] Link to comment Share on other sites More sharing options...
Alan Zoff Posted February 13, 2009 Share Posted February 13, 2009 "Trouble is banks place debts (from borrowers of all classes) on the asset side of their balance sheets" -GluestickI remember having difficulty getting my head round this concept in O level Economics. It certainly seemed to me at the time that this meant that they could create "money" from thin air which, as you say, was not the reality. (Not surprisingly, I didn't pursue a career as an economist.) Unfortunately, too many people who should have known better either began to believe it was true or chose to ignore the fiction. They were either - like me - too dim, or - regrettably unlike me - making too much money from it, or did not want to be seen as party-poopers. Link to comment Share on other sites More sharing options...
Gluestick Posted February 13, 2009 Share Posted February 13, 2009 Emperor's Cloak Syndrome - ECS - © PDD(R) Ltd as it is called, Alan.You are so right!Whilst loads of people are making money then no one dares to question the underlying realities!The markets, really, are like a water skiier, who has no towboat and no ski line: he is maintaining forward momentum and flotation, purely on his own absolute belief.When reality occurs (as it so boringly does in dynamic and interactive systems!) then he sinks like a stone without trace.Which, of course, is what we have right now. Link to comment Share on other sites More sharing options...
Devon Posted February 13, 2009 Share Posted February 13, 2009 Quoted by Gluestick:As I stated before, if it was possible for banks to simply conjure money from thing air, indefinitely, then why do we have a current problem?Because it was possible for banks to conjure the money from thin air: just not indefinately. The wheels have come off and thats why we are in one of the most desperate messes since banks were invented. Banks used to take Saver's money, lend it to people who were probably capable of paying it back, keep some as profit for themselves as well as rewarding the Saver. The Shadow banking system allowed them to cook the books and con us all. The coming hardship and depression might not be all bad: hopefully when our economies reboot (as they surely will) our Societies in the West will return to sound principles: a fair days pay for a fair days work would be a good place to start. Link to comment Share on other sites More sharing options...
Gluestick Posted February 13, 2009 Share Posted February 13, 2009 [quote user="Devon"] Quoted by Gluestick:As I stated before, if it was possible for banks to simply conjure money from thing air, indefinitely, then why do we have a current problem?[quote]Because it was possible for banks to conjure the money from thin air: just not indefinately. The wheels have come off and thats why we are in one of the most desperate messes since banks were invented. Banks used to take Saver's money, lend it to people who were probably capable of paying it back, keep some as profit for themselves as well as rewarding the Saver. The Shadow banking system allowed them to cook the books and con us all. The coming hardship and depression might not be all bad: hopefully when our economies reboot (as they surely will) our Societies in the West will return to sound principles: a fair days pay for a fair days work would be a good place to start.[/quote]Which, fascinating though the answer you provided is, does not actually answer the question![quote]Because it was possible for banks to conjure the money from thin air: just not indefinately. [/quote]Which I feel, I have already stated, in rather more specific and technical terms.[quote]The wheels have come off and thats why we are in one of the most desperate messes since banks were invented. Banks used to take Saver's money, lend it to people who were probably capable of paying it back, keep some as profit for themselves as well as rewarding the Saver[/quote]Sadly and with great respect, I fear you don't actually understand banking: and more critically, what did cause the problem!Banks were not "Taking saver's money" and lending it on: they were borrowing massively from the global interbank market, short term which is now closed to them. (And participating in lots of other dangerous practices such as Securitisation, bundling debt into MBSs backed by suspect CDOs and then forming SIVs etc)If you examine the main global economies you will quickly discover that the UK and USA have the lowest savings rates in the developed and worse IDC world.Which was and remains one of the core problems. [/quote] Link to comment Share on other sites More sharing options...
Devon Posted February 13, 2009 Share Posted February 13, 2009 Quoted by GluestickSadly and with great respect, I fear you don't actually understand banking: and more critically, what did cause the problem! Nothing personal Gluestick and the fact it's all well beyond our control anyway, but sadly and with great respect, I fear I actually understand banking better than the banks understand banking. Our Financial System/banks/Parliment and all the clever people they employ have created a lovelly LaLa Land and they desperately want to stay living in it: that's not going to happen IMHOI am not too interested with all the smoke and mirrors, I am interested to have a knowledgable person hazard a guess where we will all be in 2 years time: would you care to share your guess? I don't see the point in getting bogged down in detail: the lowest base rate in the BoE's history, our Banks nationalised in all but name and the money printing presses doing overtime (again, by another name) speaks volumes. Link to comment Share on other sites More sharing options...
Kaphoen Posted February 15, 2009 Share Posted February 15, 2009 [quote user="Gluestick"]If you want to understand why this went wrong, then study the demise of Continental Illinois bank in the 1980s.http://fic.wharton.upenn.edu/fic/case%20studies/continental%20full.pdfThen study the demise of Long Term Capital Management.http://en.wikipedia.org/wiki/Long-Term_Capital_ManagementAs the last intelligent Chair of the Fed, Paul Volcker stated on both occasions, if either CI or LTCM had have been let go, then probably either event could have tripped the Ultimate Domino Effect feared for so long: which is what has partially happened now.And this is the result of Fractional Reserve Banking, not banks enjoying the ability to create money from thin air! [/quote]Thank you for the above information. Whilst I study it, readers may like to hear this man's views:http://www.youtube.com/watch?v=Xeb2VnI7S4U Link to comment Share on other sites More sharing options...
Jonzjob Posted February 15, 2009 Share Posted February 15, 2009 I'm not sure if this has been posted befre, but does this have any gearing on anything?http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4629670/Gordon-Brown-must-go-says-HBOS-whistleblower-Paul-Moore.html Link to comment Share on other sites More sharing options...
Bugsy Posted February 15, 2009 Share Posted February 15, 2009 http://news.bbc.co.uk/2/hi/uk_news/politics/7889798.stmHow much longer can they really be allowed to stay...................?Muppets. Link to comment Share on other sites More sharing options...
Scooby Posted February 15, 2009 Share Posted February 15, 2009 The irony is that the building societies that demutualised did so to increase their access to the wholesale markets and to reduce their regulatory capital requirements. In hindsight not a smart move. I agree Gluestick re your comments on fractional reserve banking - further compounded, I think, by BASEL II. I think the government had no choice in rescuing HBOS et al but they could have avoided (or at least mitigated) the situation by better regulatory control over the last 15 years or so. Link to comment Share on other sites More sharing options...
Gluestick Posted February 16, 2009 Share Posted February 16, 2009 [quote user="Scooby"]The irony is that the building societies that demutualised did so to increase their access to the wholesale markets and to reduce their regulatory capital requirements. In hindsight not a smart move. I agree Gluestick re your comments on fractional reserve banking - further compounded, I think, by BASEL II. I think the government had no choice in rescuing HBOS et al but they could have avoided (or at least mitigated) the situation by better regulatory control over the last 15 years or so.[/quote]Yes; I do agree, Scooby. Interestingly for me, the nonsense of the BSs demutualising and becoming banks, parallels the S & L scandal in the States in Reagan's era.Halifax (A core part of HBOS of course) were the biggest and best capitalised BS in the UK; BoS prints Scotland's currency notes! Thus a conglomerate is created from a quasi central bank and the biggest strongest building society with the best balance sheet; and still the directors can't make profits!And now it is back to the future, with new mortgage lending expected to emerge from savers rather than interbank!Excepting, of course, that UK savings levels are derisory: and as the recession turns nasty expected to worsen: and who in their right mind will bother to save at 0.1% interest less 20% CRT! Link to comment Share on other sites More sharing options...
Ron Avery Posted February 16, 2009 Share Posted February 16, 2009 [quote user="Bugbear"]http://news.bbc.co.uk/2/hi/uk_news/politics/7889798.stmHow much longer can they really be allowed to stay...................?Muppets.[/quote]and as your lot would have EXACTLY the same, so are you including them in the muppets?You obviously missed your pal Cameron on the box yesterday saying that Darling and co had no choice. I take it you are not a customer of HBOS then and would rather that all those that are lost their money and savings etc.Transcript of part of the interview.JON SOPEL: Okay, your Trade Spokeman, Ken Clarke, yesterday said that the merger of Lloyds TSB and HBOS had been a disaster and shouldn't have been allowed to happen. Do you agree. DAVID CAMERON: I think that it is now looking like a bad decision. Now let's rewind to October and remember the situation we were in then. You know it looked as if major banks were going to fail and we argued that the government was right to step in and stop the major banks from failing. Why? I think people … an answer, because they've seen their taxpayers money go in to it. Why? Because if the major banks collapse, you don't just get a recession, you get a depression, you get a slump, that's the lesson from the 1930s. So the merger of HBOS and Lloyds, was presented to us as the way of stopping a major bank, HBOS, from collapsing. The people who objected at the time, were objecting on the basis of competition policy or many actually were objecting in Scotland, they wanted to see the Bank of Scotland effectively to remain … (interjection) BOTH TOGETHER JON SOPEL: You were … DAVID CAMERON: No, I didn't want to see HBOS collapse. JON SOPEL: So is Ken Clarke wrong then, to have said it was a disaster and should not have … (interjection) … DAVID CAMERON: I think he was, I think he was very perceptive at the time to have questioned it. Link to comment Share on other sites More sharing options...
Bugsy Posted February 16, 2009 Share Posted February 16, 2009 [quote user="Ron Avery"][quote user="Bugbear"]http://news.bbc.co.uk/2/hi/uk_news/politics/7889798.stmHow much longer can they really be allowed to stay...................?Muppets.[/quote]and as your lot would have EXACTLY the same, so are you including them in the muppets?You obviously missed your pal Cameron on the box yesterday saying that Darling and co had no choice. I take it you are not a customer of HBOS then and would rather that all those that are lost their money and savings etc.[/quote]Once again Ron, your blinkered views presume too much.Would the Conservatives do any better, I have never said so much and actually have no idea. What is clear, for those that want to see, is that throwing money into this 'never-ending' black hole has actually done nothing to improve the dire situation. The facts on HBOS and the merger with Lloyds TSB were there for all to see and yet were completely ignored by these, so called, 'experts'.Darling and Brown would have actually been better to give the money to the savers holding funds within those banks and then let them go under, rather than giving it to the fat cats to squander on yet more perks and bonuses.Incompetance just isn't sufficiant a word.. Link to comment Share on other sites More sharing options...
Théière Posted February 16, 2009 Share Posted February 16, 2009 I agree. Watching Andrew Marr and the new head of the FSA "with hindsight" blah blah.The whole point of paying people (dare to say experts) on stupid salaries is for their experience and FORESIGHT. I am sure I could do the job for half the amount with hindsight.So many of these top people seem to be talking with hindvoices [;-)] Link to comment Share on other sites More sharing options...
Gluestick Posted February 16, 2009 Share Posted February 16, 2009 [quote]and as your lot would have EXACTLY the same, so are you including them in the muppets?[/quote]Amazing that you still defend "Your" muppets!Laudable loyalty; but sadly misplaced..........Most of us with reasonable in-depth knowledge of global finance, banking, economies and etc, agree that the last people one needs in charge of any nation state's monetary affairs are politicians.Or, indeed, bankers.Both groups are venal, self-serving pimps, on the real economy: as this fiasco has copiously illustrated.BTW: savers with these banks would have been protected anyway by the government's own scheme, up to £50K.Interesting that in the late seventies, when the same gang of bankers were endeavouring to commit financial harri karri on the then flavour of the month (Syndicated Sovereign Risk Eurobond Loans to Third World and IDC states), the banks had to take their licks like a man: no state aid was forthcoming.And it was a Labour government, of course.The only reason Brown and Darling Darling scrambled to bail out the UK banks, was simply because they wanted to maintain a continuum of Brown's "Economic Miracle": even to the point where they dreamed up arcane schemes to try and seduce first time buyers into the property market; at a time that 99% of informed pundits and analysts were still insisting there was much down left in values!Nice strategy! Try and Kick Start the market by leaving youngsters keen to buy their first house in crippling debt and facing severe Negative Equity! That's callous, unconscionable political expediency at best: and proof, if any more were really needed, of arrogant stupidity and lack of comprehension of both financial and fiscal afairs."Hard" Eddie George even admitted his complicity and culpability in assisting Brown (as Chancellor) in creating this whole disaster when he gave evidence to the Treasury Select Committee in March 2007!http://www.independent.co.uk/news/business/news/exgovernor-george-says-bank-deliberately-fuelled-consumer-boom-441160.htmlPerhaps the only politician who emerges from this fiasco with any credibility, is Vince Cable. Link to comment Share on other sites More sharing options...
Ron Avery Posted February 16, 2009 Share Posted February 16, 2009 OK Gary, so you are not a conservative supporter even though you constantly call for a change of government [Www] [Www] so who would be in your cabinet??Before choosing any of the Opposition cast an eye over this, it for some reason escaped thae attention of your usual reading matter and the BBC..David Cameron was accused of being "in the pocket" of bankers last night after a probe found a third of Tory funds are from financial firms. Since he took over in 2005 the party has received more than £14million from individuals or businesses linked to the City and banking - with some firms coughing up over £1million.The revelations raised questions as to whether the donations made it impossible for the Tories to clean up the disgraced industry.Labour MP Denis MacShane said: "These figures show just how much Cameron is in the pocket of hedge fund managers and speculators."They show why he can't be relied upon to speak in the country's best interests." The Tories failed to back a ban on shortselling where City traders gamble on the collapse of a company. They also called for deregulation of the mortgage market.Mr MacShane added: "It's hardly surprising when so much of the party's funding is from bankers." Mr Cameron came under further fire at the weekend after he told The Politics Show on BBC1 that a Tory Government may cut spending on schools and hospitals - but estates worth up to £1million would remain free of inheritance tax. So you'll be OK then[:P][blink] Link to comment Share on other sites More sharing options...
Stan Streason Posted February 16, 2009 Share Posted February 16, 2009 I’ve sort of dipped in and out of this thread from time to time and as I see it no signs of abating I wish to add my four penneth (now only worth three farthings). Sorry it may be a bit long. It’s all down to a couple of factors in my view some which cannot be changed (greed vanity, selfishness) and some which patently could (poor decision making, poor leadership and poor regulation). I also blame the accountants (I am one for my sins). For ages the technical leaders of the profession have had a bee in their bonnet about getting accounts theoretically correct rather than thinking how they are used. Hence years ago we had several doomed attempts at inflation accounting and more recently we have had the disaster that is called International Accounting Standards (IAS). I won’t bore you with the details but it starts with the premise that every company’s accounts should be comparable with every other company. So banks accounts would be forced into a similar framework as a manufacturer etc. Patently daft because they are 2 totally different businesses which should report in totally different ways. The disaster waiting to happen has been creeping in for a number of years but IAS brought it in big time. Marking to market. In short you can take to profit the difference between the value of an asset at the start and end of a year. (On which bonuses are paid etc.) In the old days a profit was the difference between the cost of an item and WHAT YOU SOLD IT FOR. Assets were valued at the lower of cost or realisable value (i.e. prudently) but now in the one-way-street of rising values over the last few years, huge profits have been reported for basically doing nothing mare than saying something was worth more than it used to be. Once again in my view a big turning point in this tide of confidence was Northern Rock. NR’s model was that it borrowed on the interbank market. It was at that time the leaders of the banks (Or Gordon Brown if the banks leadership proved to be so short sighted) should have got together and said to each other “we WILL lend to NR because we cannot face the consequences of seeing people queuing outside a British bank to take its money out”. The government should have forced this in the same way banks were forced to take Eurotunnel shares for their loans – It’s in the greater good and government will interfere much more if you don’t. So greed and selfishness of the banks, vanity of the accountants, poor leadership and regulation by the authorities and the government. Only one person had the opportunity to both see it coming and perhaps avert the worst of it – Gordon Brown. I’m not saying anyone else would have done any better but, as with selling off our gold reserves for very little, as for coming through our most consistent period of prosperity with nothing saved in the kitty for a rainy day (prudence indeed), he certainly has failed his biggest test. Link to comment Share on other sites More sharing options...
Gluestick Posted February 16, 2009 Share Posted February 16, 2009 [quote]David Cameron was accused of being "in the pocket" of bankers last night And NuLab aren't equally in the pockets of Big Business and the wealthy, then?[/quote] Have you forgotten such as Lord Cashpoint already?And the Non Dom's Downing Street Dinner!And the Hiduga Bros.Astounding.................................. Link to comment Share on other sites More sharing options...
Recommended Posts
Please sign in to comment
You will be able to leave a comment after signing in
Sign In Now