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Wolfie Tells All On Hardtalk Interview - Or Does He?

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So-called INDEPENDENT Commission on banking - Martin Wolf Interview

Waffle and smokescreens - they are not going to rein in the bankers/City!

http://www.bbc.co.uk/iplayer/episode/b010pxkk/HARDtalk_Martin_Wolf_Independent_Commission_on_Banking/

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Getting rid of fractional reserve, and/or debt/money mechanisms...would it actually make us better off?

Capitalism is a terrible system...but the alternatives are worse

Democracy is a terrible system...but the alternatives are worse

What countries actually have another banking and money system? Any? If not, why not?

All i know is i keep getting told im a slave by the likes of David Icke or Alex Jones, and yet have a comfortable existence, purely by virtue of being born in the right place have a better quality of life than 90% of the world population, and get to consume a lot of oil and other resources.

Maybe im happy to be a slave.

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Reasonably profound I think.

Same as "you need to know you have a problem before you can confront/solve it".

Or in order to solve the financial crsis, you need to understand what caused it (clearly Gordon does not which is why it is a joke when he has just been put in charge of the Chair of a committee to look at solutions at the IMF).

In my view, the reason why people can't agree what caused the crisis - greedy bankers, profligate politicians buying votes, trade imbalances, reckless and excessive lending, property bubble...take your pick is because the whole thing is circuitous.

What Wolf and his committee have proposed with relation to one part of that circle, namely the separation of domestic retail and international investment banks (both in terms of default/government guarantees and actually stopping the investment banks from using retail deposits) is that it should cause a break in that circle.

So overseas investors recycling their trade surpluses into our housing market via mortgage backed bonds no longer have the same guarantees as for domestic deposits. The rates on mortgages and domestic deposits should, in theory, rise over time and asset prices adjust accordingly.

I'm not saying it will work but it is interesting - but the main issue at the end of the day, will the government in the face of a crisis blink as they did before and bail out international investors as they did last time? And are they happier with marginally higher rates and even more constrained lending right now? Lots of lobbying now.

Good post and I very much agree with the circuitous point.

I think other action could/should be taken in other areas too, but within Wolf's remit, he seems to be getting it about right. It's interesting to hear that he is talking about more extreme solutions too (IMO, this could be like Limited Purpose Banking as in my sig), but I can see why it is better not to leap too far in one go.

As much flack as the likes of King and Wolf get, I'm very pleased that we have both of them sharing their views frankly.

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John Kay and Martin Wolf have been vocal supporters of limited purpose banking. John Kay was a director of HBOS and is a columnist at the FT also.

He said he could date the start of the trouble when the Treasury Department was made a profit centre (rather than one that simply helped manage the banks' risks).

EDIT:

http://www.positivem...ing-commission/

Of course his take re the latter was a little previous. By not allowing investment bank access to retail deposits, they may achieve their end in another way other than abolising frb.

I think FRB is fine as long as those using it are aware of its risks. It's when people start considering it risk free, and the government implies this through policy too, that the problems start.

It sounds like that link is over egging it too. Narrow Banking isn't about ending FRB, but to provide a 3rd party risk free alternative, thus freeing FRB to be officially risky. TBH, 'positive money' seems a bit obsessed with 'creating money from thin air' and such though, so I can see why they would spin it this way.

IMO, they should explain what is guaranteed/risky and what isn't and then let the market decide what sort of banking it wants.

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TBH, 'positive money' seems a bit obsessed with 'creating money from thin air' and such though, so I can see why they would spin it this way.

A bit off-topic, but money's a human construct. Where else do they think it's going to come from but "thin air"*? Just like laws, language, society and everything else.

More on topic, The Baseline Scenario are pushing cleaning up the banking sector, principally reducing bank size to liabilities (bank "assets") to roughly 3% of GDP (e.g. Here and also pushing for big increases in equity (bank capital),

Peter.

*Obviously, like every human construct, it's not really "thin air". It requires consenting humans and various bits of material and much else, no doubt.

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What's a bit odd is that no one ever seems to raise the issue of the disconnect between outcome and rewards in the banking sector- it's a given that even if a bank goes bust the personal wealth of those running it is untouchable.

Surely the most obvious way to prevent most blow ups is to set things up so that the entire wealth of those involved is on the line if their bank falls over- to big to fail would not be such a problem if those involved in that failure knew that even if the bank itself were to be saved

their own personal wealth would be stripped from them.

This risk to their own wealth would do more than an army of regulators to impose restraint on the system- yet no one is even suggesting this- why is that?

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A bit off-topic, but money's a human construct. Where else do they think it's going to come from but "thin air"*? Just like laws, language, society and everything else.

More on topic, The Baseline Scenario are pushing cleaning up the banking sector, principally reducing bank size to liabilities (bank "assets") to roughly 3% of GDP (e.g. Here and also pushing for big increases in equity (bank capital),

Peter.

*Obviously, like every human construct, it's not really "thin air". It requires consenting humans and various bits of material and much else, no doubt.

Money is merely a convention for attempting to compare apples with oranges (as well a multitude of vastly more different, or even completely unmeasureable things). Logically the idea is absurd but it's been a convenient tool, despite those flaws, for a long time. Because it is so absurd it's easy to abuse, particularly when it starts to become something regarded as meangingful in its own right and controls the system instead of being controlled by it. Money definitely falls in the category of a bloody stupid idea where no-one's managed to think of a better one.

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Money is merely a convention for attempting to compare apples with oranges (as well a multitude of vastly more different, or even completely unmeasureable things). Logically the idea is absurd but it's been a convenient tool, despite those flaws, for a long time. Because it is so absurd it's easy to abuse, particularly when it starts to become something regarded as meangingful in its own right and controls the system instead of being controlled by it. Money definitely falls in the category of a bloody stupid idea where no-one's managed to think of a better one.

Also a store of value, and a 3rd attribute (trade?), I think.

It's brilliant. Unfortunately, as you say, like fire, it's a good servant, but a bad master,

Peter.

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What's a bit odd is that no one ever seems to raise the issue of the disconnect between outcome and rewards in the banking sector- it's a given that even if a bank goes bust the personal wealth of those running it is untouchable.

Surely the most obvious way to prevent most blow ups is to set things up so that the entire wealth of those involved is on the line if their bank falls over- to big to fail would not be such a problem if those involved in that failure knew that even if the bank itself were to be saved

their own personal wealth would be stripped from them.

This risk to their own wealth would do more than an army of regulators to impose restraint on the system- yet no one is even suggesting this- why is that?

That's exactly how all bankers started in UK - the bank owner/s was/were held to 100% liability in case of failure ie they lost everything

(which turned them into the Govt lobbying, tax avoiding deviants they are today!)

Over 100's of years their effects on Govt laws have turned City banking into a one way bet (for a hidden set of "I'm worth it" Elites) at the expense and cost (on UK economy) of the Nation at large!

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Catch me if I'm drifting off into space, but I don't think Wolf says retail deposits are off limits for the investment side. The deposits are ring-fenced, so creditors of investment banks that rely on those deposits for leverage will be aware in future that the state guarantees so much and no more - therefore the creditors factor the risk into their lending to the investment side.

The creditors may still factor in the risk that the state will cave in when the going gets tough - risk to the taxpayer! After all, there was never an actionable state guarantee in the lead up to the 2008 disaster. Ireland had a standard guarantee of deposits in place, but showed that a guarantee of the entire system could be magicked into existence with a snap of the government's fingers. Same with Fannie & Freddie.

I wonder how Wolf proposes to deal with that expectation. If what the committee says seems vague in its consequences (never mind the actual legislation and regulation) then I guess we have a repeat of the old system, but wearing a suit and tie instead of dress-down Friday chinos.

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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