Removing Banks Casino Cross Subsidy Would Save The Tax Payer £12-15Bn Per Year Of Risk Bearing

[Guest sillybear2]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8392886/Reform-of-British-banks-may-cost-15bn-a-year.html

"The Wyman report says the annual cost of subsidiarisation would be between £12bn and £15bn. The main reasons for the increased costs are because banks could not move capital between different divisions easily and would have to go to multiple sources of funding to back different parts of the bank's global structure."

So by their own admission without the explicit and implicit backing by the state via deposit insurance and being too big to fail most of the functions of these investment banks would be loss making. It's pretty clear their only real business is making bets and transferring the risk on to tax payers via artificially low borrowing costs and maturity transformation, so they invest in higher yielding assets with cheap money and sit on the spread.

They get to pocket the difference and pay out bumper bonuses in the calm years, and when a black swan event suddenly strikes and wipes out the equivalent of a decade's worth of "profit" the bankers next step is to blackmail the government into footing the losses, lest they destroy retail depositors and the payments system. Amazingly they don't want this arrangement to end, they like stealing from the future and passing the bill on to mug tax payers when the inevitable payback time arrives.

The quid pro quo for £1.2 trillion of state support over the last two years to prop up an insolvent financial sector that's five times GDP is a £2.5bn per annum levy. Does that sound like a good deal to you? I think the state can back more productive endeavours with our taxes, if people want to gamble let them do it with their own money, and let them face the consequences of their actions when it all goes wrong. They might think before they make stupid decisions.

Edited March 20, 2011 by sillybear2

[The Spaniard]

We need to bring about a far more fundamental change in our monetary and banking system than the mere separation of retail and investment banking, though even that very limited reform would be an improvement on the status quo.

The Bank Charter Act of 1844 made it illegal in general for commercial banks to issue their own banknotes denominated in pounds sterling, the national currency. However, technology has moved on, and our means of exchange, our money supply, is now overwhelmingly electronic. It is issued into circulation, through loans made to us at interest, by the commercial banks. To all intents and purposes, collectively we now rent our means of exchange from the banking cartel. Our money supply has been expensively privatised, exactly what the 1844 Act was intended to prevent.

The way forward is now to apply a similar solution to present day electronic money and to issue publicly, debt-free, an adequate and persistently circulating national means of exchange, at the same time preventing by new counterfeit law any commercial bank from expanding the money supply.

For a fuller exposition of this more fundamental approach to monetary and banking reform see:

http://www.positivemoney.org.uk

[Injin]

We need to bring about a far more fundamental change in our monetary and banking system than the mere separation of retail and investment banking, though even that very limited reform would be an improvement on the status quo.

The Bank Charter Act of 1844 made it illegal in general for commercial banks to issue their own banknotes denominated in pounds sterling, the national currency. However, technology has moved on, and our means of exchange, our money supply, is now overwhelmingly electronic. It is issued into circulation, through loans made to us at interest, by the commercial banks. To all intents and purposes, collectively we now rent our means of exchange from the banking cartel. Our money supply has been expensively privatised, exactly what the 1844 Act was intended to prevent.

The way forward is now to apply a similar solution to present day electronic money and to issue publicly, debt-free, an adequate and persistently circulating national means of exchange, at the same time preventing by new counterfeit law any commercial bank from expanding the money supply.

For a fuller exposition of this more fundamental approach to monetary and banking reform see:

http://www.positivemoney.org.uk

Yay! It's cut and paste an already disproven theory time!

[RufflesTheGuineaPig]

We need to bring about a far more fundamental change in our monetary and banking system than the mere separation of retail and investment banking, though even that very limited reform would be an improvement on the status quo.

The Bank Charter Act of 1844 made it illegal in general for commercial banks to issue their own banknotes denominated in pounds sterling, the national currency. However, technology has moved on, and our means of exchange, our money supply, is now overwhelmingly electronic. It is issued into circulation, through loans made to us at interest, by the commercial banks. To all intents and purposes, collectively we now rent our means of exchange from the banking cartel. Our money supply has been expensively privatised, exactly what the 1844 Act was intended to prevent.

The way forward is now to apply a similar solution to present day electronic money and to issue publicly, debt-free, an adequate and persistently circulating national means of exchange, at the same time preventing by new counterfeit law any commercial bank from expanding the money supply.

For a fuller exposition of this more fundamental approach to monetary and banking reform see:

http://www.positivemoney.org.uk

Oh dear The MCLs are back again...

[erranta]

http://www.telegraph...5bn-a-year.html

"The Wyman report says the annual cost of subsidiarisation would be between £12bn and £15bn. The main reasons for the increased costs are because banks could not move capital between different divisions easily and would have to go to multiple sources of funding to back different parts of the bank's global structure."

So by their own admission without the explicit and implicit backing by the state via deposit insurance and being too big to fail most of the functions of these investment banks would be loss making. It's pretty clear their only real business is making bets and transferring the risk on to tax payers via artificially low borrowing costs and maturity transformation, so they invest in higher yielding assets with cheap money and sit on the spread.

They get to pocket the difference and pay out bumper bonuses in the calm years, and when a black swan event suddenly strikes and wipes out the equivalent of a decade's worth of "profit" the bankers next step is to blackmail the government into footing the losses, lest they destroy retail depositors and the payments system. Amazingly they don't want this arrangement to end, they like stealing from the future and passing the bill on to mug tax payers when the inevitable payback time arrives.

The quid pro quo for £1.2 trillion of state support over the last two years to prop up an insolvent financial sector that's five times GDP is a £2.5bn per annum levy. Does that sound like a good deal to you? I think the state can back more productive endeavours with our taxes, if people want to gamble let them do it with their own money, and let them face the consequences of their actions when it all goes wrong. They might think before they make stupid decisions.

It's not just the investment bankers trebled salaries + bonuses - accruing risk free dosh are all the supa-wealthy 'hidden' investors and shareholders who are screwing the UK population into the ground!

Fekkin load of Pirates!

"Removing Banks Casino Cross 33 Subsidy"

Edited March 20, 2011 by erranta

[efdemin]

We need to bring about a far more fundamental change in our monetary and banking system than the mere separation of retail and investment banking, though even that very limited reform would be an improvement on the status quo.

The Bank Charter Act of 1844 made it illegal in general for commercial banks to issue their own banknotes denominated in pounds sterling, the national currency. However, technology has moved on, and our means of exchange, our money supply, is now overwhelmingly electronic. It is issued into circulation, through loans made to us at interest, by the commercial banks. To all intents and purposes, collectively we now rent our means of exchange from the banking cartel. Our money supply has been expensively privatised, exactly what the 1844 Act was intended to prevent.

The way forward is now to apply a similar solution to present day electronic money and to issue publicly, debt-free, an adequate and persistently circulating national means of exchange, at the same time preventing by new counterfeit law any commercial bank from expanding the money supply.

For a fuller exposition of this more fundamental approach to monetary and banking reform see:

http://www.positivemoney.org.uk

Wouldn't this just be like various in-game 'currencies' that currently exist? E.g. World of Warcraft has its own currency (not sure what it's called) for buying virtual bits'n'pieces. Microsoft have 'XBox Live Points' for buying downloadable games + add-ons, etc.

Why bother setting up a bank if you can just piggy back on one of these systems?

Will we ever see Tesco clubcard points being used to buy an annuity?

[Traktion]

Wouldn't this just be like various in-game 'currencies' that currently exist? E.g. World of Warcraft has its own currency (not sure what it's called) for buying virtual bits'n'pieces. Microsoft have 'XBox Live Points' for buying downloadable games + add-ons, etc.

Why bother setting up a bank if you can just piggy back on one of these systems?

Will we ever see Tesco clubcard points being used to buy an annuity?

Bitcoins are a providing just that sort of thing - a free market digital currency. IMO, their model is flawed (inherent shortage of supply) to become 'the solution'*, but it is an interesting concept.

However, the real useful bit is the credit clearing system. Something like Ripple could provide this sort of thing and could work in combination with (to facilitate credit) the above or fiat currency. Essentially, you cut out the banks and rely on a decentralised clearing solution instead.

Whether either will become successful remains to be seen.

As for the 'debt free' money idea as outlined above, it sounds well meaning, but flawed. Credit is just promises. Consider that issuing an invoice with, say, 30 day payment terms, is a form of credit issued by the one individual/company to another. The problems start occurring when people confuse bank savings (the flip side of bank credit) with cash**; the former is at risk of default, where as the latter isn't.

EDIT: To add, you could just QE (print) and buy up all gilts to remove the debt side of fiat money. However, I would expect rampant inflation in the interim as previous promises of productivity (the sweat and tears to repay the government debt) would have been replaced by paper and ink. That said, government debt could be considered against human rights (IMO) and encourages the wealthy to feed off the poor (extracting rental from money).

P.S. Why not have club card points, facebook credits or anything else? Sooner or later, people will wake up to this thought, especially when smart phones are becoming common (miniature, Internet enabled, computer - who needs a VISA machine?)

* You could have competing Bitcoin standards to provide 'enough' liquidity, very much in the 'Denationalisation of Money' model (see my sig). However, history doesn't favour competing currencies (within the same region) too well, although that's not to say it can't happen.

** Arguably, the government could default on accepting fiat for taxes, but in this case 'cash' could be lumps of gold, fiat, bitcoins or whatever currency you choose.

Edited March 21, 2011 by Traktion

[efdemin]

Bitcoins are a providing just that sort of thing - a free market digital currency. IMO, their model is flawed (inherent shortage of supply) to become 'the solution'*, but it is an interesting concept.

However, the real useful bit is the credit clearing system. Something like Ripple could provide this sort of thing and could work in combination with (to facilitate credit) the above or fiat currency. Essentially, you cut out the banks and rely on a decentralised clearing solution instead.

Whether either will become successful remains to be seen.

As for the 'debt free' money idea as outlined above, it sounds well meaning, but flawed. Credit is just promises. Consider that issuing an invoice with, say, 30 day payment terms, is a form of credit issued by the one individual/company to another. The problems start occurring when people confuse bank savings (the flip side of bank credit) with cash**; the former is at risk of default, where as the latter isn't.

EDIT: To add, you could just QE (print) and buy up all gilts to remove the debt side of fiat money. However, I would expect rampant inflation in the interim as previous promises of productivity (the sweat and tears to repay the government debt) would have been replaced by paper and ink. That said, government debt could be considered against human rights (IMO) and encourages the wealthy to feed off the poor (extracting rental from money).

P.S. Why not have club card points, facebook credits or anything else? Sooner or later, people will wake up to this thought, especially when smart phones are becoming common (miniature, Internet enabled, computer - who needs a VISA machine?)

* You could have competing Bitcoin standards to provide 'enough' liquidity, very much in the 'Denationalisation of Money' model (see my sig). However, history doesn't favour competing currencies (within the same region) too well, although that's not to say it can't happen.

** Arguably, the government could default on accepting fiat for taxes, but in this case 'cash' could be lumps of gold, fiat, bitcoins or whatever currency you choose.

Hmm, for all its faults I think the central bank system is ok for the time being. Anything decentralised on the 'net is too open to being gamed or outright broken by anyone with the time and or inclination. (See: gold farmers in China, virtual currency being stolen from an account via hacking, etc.)

FWIW, I was being facetious with my post about using Tesco clubcard points to buy an annuity but all these things do start to make you think about what 'money' really is.

EDIT: Sorry for going OT.

Edited March 21, 2011 by efdemin

[Traktion]

Hmm, for all its faults I think the central bank system is ok for the time being. Anything decentralised on the 'net is too open to being gamed or outright broken by anyone with the time and or inclination. (See: gold farmers in China, virtual currency being stolen from an account via hacking, etc.)

FWIW, I was being facetious with my post about using Tesco clubcard points to buy an annuity but all these things do start to make you think about what 'money' really is.

EDIT: Sorry for going OT.

[This is a bit OT too]

Agree on the security front - it has to be done well or it will fail.

The joy of pondering whether the central banking system will be replaced or not, is that we can let the market decide. Admittedly, while taxation and government spending is high, it gives fiat additional leverage though; you have no choice but to pay your UK taxes in Sterling, which makes Sterling very dominant, especially for those who have little left over each month.

It is interesting to consider that if there were few taxes and government spending, then the private sector could use whatever it liked to represent credit (promises). Company A may accept Sterling, gold, silver, Bitcoins or whatever, with company B accepting just silver, Bitcoins and Tesco club card points. If you can get credit in any of these currencies from anyone willing to give it, then you could pay for what you wanted.

It may be that the private sector wanted to stick with Sterling, but the point would be that people would be choosing it on merit. If the government managed the quantity of money poorly, market theory would dictate that alternatives would become more attractive.

When you consider that any individual or collective can both borrow or issue credit, it makes you consider what need there is for the government (collective) to borrow at all - it just takes wealth from the poor and yet to be born, as interest to the wealthy. Why does the government have that right and why do more people not question it?

Edited March 21, 2011 by Traktion