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ASI Report - ''UK Banking System an Accident Waiting to Happen''

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“It is disturbing that 10 years on from Northern Rock, the best measures of leverage – those based on market values – indicate that UK banks are even more leveraged than they were then.

“The biggest risk facing the UK banking system now is the Bank of England’s own complacency.” City Am

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Out if interest how can there be a run on a bank in a cashless society?.....anyway even now there must be more money in banks that bank notes to support.....I don't understand banking.;)

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15 minutes ago, winkie said:

Out if interest how can there be a run on a bank in a cashless society?.....anyway even now there must be more money in banks that bank notes to support.....I don't understand banking.;)

That one got me as well.  What's the difference between everyone taking all there money out in cash vs moving it to another bank (no cash).  Seems to me to be same result, no money in original bank and then isn't that a run?

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Maybe the Central banks as mentioned on another post have agreed to secretly bail out the banks if another crisis appeared. Maybe that's why Janet Yellen confidently said there will not be another financial crisis in our lifetimes. They can all flood the banks with cash without consequences. 

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4 minutes ago, giggler000 said:

That one got me as well.  What's the difference between everyone taking all there money out in cash vs moving it to another bank (no cash).  Seems to me to be same result, no money in original bank and then isn't that a run?

Yeah but as with icesave the website can have technical difficulties and you can't move your cash. I should know

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34 minutes ago, winkie said:

Out if interest how can there be a run on a bank in a cashless society?.....anyway even now there must be more money in banks that bank notes to support.....I don't understand banking.;)

The central bank is the lender  of last resort; they supply cash to pay off all the depositors who want their money there and then; when things have quietened down they would look to see whether the bank is actually insolvent or not and take it form there. If the bank is not insolvent then the CB would continue to supply support on some basis; if it is then the bank would go through a normal insolvency procedure with the CB being one of the creditors.

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35 minutes ago, crouch said:

The central bank is the lender  of last resort; they supply cash to pay off all the depositors who want their money there and then; when things have quietened down they would look to see whether the bank is actually insolvent or not and take it form there. If the bank is not insolvent then the CB would continue to supply support on some basis; if it is then the bank would go through a normal insolvency procedure with the CB being one of the creditors.

There should be no lender of last resort. If you are bankrupt you go under and pay the price.

We see now what happens when there is NO pentaly for failure.

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1 hour ago, winkie said:

Out if interest how can there be a run on a bank in a cashless society?.....anyway even now there must be more money in banks that bank notes to support.....I don't understand banking.;)

A run on the banks means people (the people who have money in the banks) can take their money out and have a bit of power. In a cashless society everything will be digital. The banks will be able to force negative interest rates on peoples accounts and they will have no option but to spend or see their money eroded, then the banks will have absolute power over money. That is why people like crypto currency, the bankers can't get thieving manipulative hands on it.

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2 minutes ago, TheCountOfNowhere said:

There should be no lender of last resort. If you are bankrupt you go under and pay the price.

We see now what happens when there is NO pentaly for failure.

Well, it's a point of view but, in banking, I'm not sure it's a sensible one.

The problem with banking is the collateral effects of a bank run; if everyone wants their money out of Norhern Rock and can't get it the depositors at Barclays are not going to sit it out; they will be after their money as well and so on. In a system the basis of which is to borrow short and lend long this can only have a catastrophic end.

You have to face it, it the present circumstances, it is not just that banks are too big to fail; they are too important to fail and you do not generally resolve a problem by turning your back on it. I believe that the measures taken to prevent another crisis are quite inadequate and need to be much more robust. The fact that the banks now have sections in their annual reports on criminal fines and regulatory breaches and spend mind boggling amounts on legal fees just shows how far down the banks have come in moral terms.

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21 minutes ago, fru-gal said:

A run on the banks means people (the people who have money in the banks) can take their money out and have a bit of power. In a cashless society everything will be digital. The banks will be able to force negative interest rates on peoples accounts and they will have no option but to spend or see their money eroded, then the banks will have absolute power over money. That is why people like crypto currency, the bankers can't get thieving manipulative hands on it.

Buy gold. Although TPTB will then know you had some.

Edited by TheCountOfNowhere

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Just now, TheCountOfNowhere said:

Buy gold. Although TPTB will then know you had some.

How will they know if you go to a gold place in Hatton Garden and pay in cash?

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1 hour ago, houseface2000 said:

Yeah but as with icesave the website can have technical difficulties and you can't move your cash. I should know

.....that would be a problem, anyway if you could, where would you move it to NS&I?

1 hour ago, crouch said:

The central bank is the lender  of last resort; they supply cash to pay off all the depositors who want their money there and then; when things have quietened down they would look to see whether the bank is actually insolvent or not and take it form there. If the bank is not insolvent then the CB would continue to supply support on some basis; if it is then the bank would go through a normal insolvency procedure with the CB being one of the creditors.

What if there is no cash, no ATMs, no bank branches that hold cash?

32 minutes ago, fru-gal said:

A run on the banks means people (the people who have money in the banks) can take their money out and have a bit of power. In a cashless society everything will be digital. The banks will be able to force negative interest rates on peoples accounts and they will have no option but to spend or see their money eroded, then the banks will have absolute power over money. That is why people like crypto currency, the bankers can't get thieving manipulative hands on it.

....so not worth the paper it is printed on then?;)

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NS&I all the way. I had a very stressful few days when icesave had £20k of my cash and had gone belly up. Its only thanks to Gordon guaranteeing they would protect depostors that I got my cash back. The Icesave was a con, it actually said it was back by the UK deposit scheme even though it wasn't.

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1 hour ago, houseface2000 said:

without consequences.

Lol. 1923 wants its economic theories back.

2 hours ago, winkie said:

Out if interest how can there be a run on a bank in a cashless society?.....anyway even now there must be more money in banks that bank notes to support.....I don't understand banking.;)

Spending all of your digital pounds on goods is the same as a bank run

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2 hours ago, houseface2000 said:

Maybe the Central banks as mentioned on another post have agreed to secretly bail out the banks if another crisis appeared. Maybe that's why Janet Yellen confidently said there will not be another financial crisis in our lifetimes. They can all flood the banks with cash without consequences. 

I think that's the case ... unlimited funds to be provided behind the scenes by the central banks to any commercial operations that would, under the actual law and finance regulations, be about to go bankrupt.  Reasoning being to prevent a crisis from developing.  It wouldn't surprise me if at least one large bank had already been bailed secretly since the financial crisis of 2007/8.  Probably more have received secret support.

 

Having all money in electronic bank credit form (ie abolishment of cash money)  would make this sort of sneaky stunt much easier to pull.  It would also make it easier for the banks to commit fraud and for the state to control people.  Therefore it's going to happen for sure.  The only question is how long it takes to wean the public off having control of cash and not wake them up by doing something really noticeable.  From what I can see, the authorities are playing the long game, chipping away at cash slowly with an ever-expanding array of laws and regulations designed to make cash harder to use.

Note:  I am not saying "Don't use electronic payments, only ever use cash".  I'm defending the need for cash to exist and be available as an option for people to use if they want to.

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1 hour ago, TheCountOfNowhere said:

How will you get the cash if it's all electronic ?

 

 

I imagine if things go electronic eventually we will return to some sort of barter system. Either that or Bitcoin innit ;).

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2 hours ago, crouch said:

Well, it's a point of view but, in banking, I'm not sure it's a sensible one.

The problem with banking is the collateral effects of a bank run; if everyone wants their money out of Norhern Rock and can't get it the depositors at Barclays are not going to sit it out; they will be after their money as well and so on. In a system the basis of which is to borrow short and lend long this can only have a catastrophic end.

100% disagree.

 

Edited by TheCountOfNowhere

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24 minutes ago, Sour Mash said:

I think that's the case ... unlimited funds to be provided behind the scenes by the central banks to any commercial operations that would, under the actual law and finance regulations, be about to go bankrupt.  Reasoning being to prevent a crisis from developing.  It wouldn't surprise me if at least one large bank had already been bailed secretly since the financial crisis of 2007/8.  Probably more have received secret support.

 

Having all money in electronic bank credit form (ie abolishment of cash money)  would make this sort of sneaky stunt much easier to pull.  It would also make it easier for the banks to commit fraud and for the state to control people.  Therefore it's going to happen for sure.  The only question is how long it takes to wean the public off having control of cash and not wake them up by doing something really noticeable.  From what I can see, the authorities are playing the long game, chipping away at cash slowly with an ever-expanding array of laws and regulations designed to make cash harder to use.

Note:  I am not saying "Don't use electronic payments, only ever use cash".  I'm defending the need for cash to exist and be available as an option for people to use if they want to.

If cash goes, people will barter, both services or goods. Probably the best thing to do right now is invest in things that take you out of the system as much as possible, like growing your own food, producing your own electricity/energy etc, making your home as energy efficient as possible, use old style systems etc. Nobody needs a 30" TV, the latest i-phone etc. Unless they start burning books, I imagine the future will revert to the simplicity of the past in many ways.

Quote

I do not know what weapons World War III will be fought, but WW IV will be fought with sticks and stones! - Albert Einstein

 

Edited by fru-gal

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1 hour ago, houseface2000 said:

NS&I all the way. I had a very stressful few days when icesave had £20k of my cash and had gone belly up. Its only thanks to Gordon guaranteeing they would protect depostors that I got my cash back. The Icesave was a con, it actually said it was back by the UK deposit scheme even though it wasn't.

Yeah, with the interest rates being offered by commercial banks near zero I decided that it wasn't worth worrying about counter-party risk and just dumped as much as I could into premium bonds as a 'holding account' for what will become a deposit on a house.

You don't get interest payments but with my previous accounts all offering <1% interest I'm not missing that.  You do get the safest place for money on deposit and you have the chance to 'win prizes' in lieu of interest payments.  So far I'm actually doing better on 'prizemoney' than I would have in terms of savings interest paid in the period of time since I moved the money in, but that's just a bonus and down to chance.

If you do need the money out, you can have it in your nominated bank account by at latest the next day - maybe sooner (I haven't tested withdrawing yet).  Given that if things were bad enough that the government restricted access to or clipped your bond holdings then the entire banking system would already be a smoking mess, I think that's not too bad.

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7 minutes ago, fru-gal said:

If cash goes, people will barter, both services or goods. Probably the best thing to do right now is invest in things that take you out of the system as much as possible, like growing your own food, producing your own electricity/energy etc, making your home as energy efficient as possible, use old style systems etc. Nobody needs a 30" TV, the latest i-phone etc. Unless they start burning books, I imagine the future will revert to the simplicity of the past in many ways.

 

This is what I'm thinking - have posted as much a few weeks ago - but you really do need to have your own property to begin with in order to do a lot of the things which will help insulate you from 'the system' and effects of it degrading or collapsing.

What would be really useful is a large garden or piece of attached land that could be used to grow useful food.  That of course pushes the price of a regular house even higher.

I do wonder about the possibilities of taking on a piece of agricultural type land and building a small dwelling for use in maintaining the land.  I'm pretty sure there's some sort of legislation out there that allows you to do this.

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  • 295 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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