Saturday, December 15, 2007

How stupid we all are!!!

Call to relax Basel banking rules

It's not IR's being too low - or lax lending - or lack of good government controls that has caused this. The solution is not a recession or change the banking laws that have been i place for 30 years - how stupid we all are after all who needs laws?

Posted by waitingfor hpc @ 11:26 AM (767 views)
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3 thoughts on “How stupid we all are!!!

  • japanese uncle says:

    It was the Basel rule (setting minimun capital requirements at 8%) that caused the banking crisis in Japan circa 1990 triggering the 15 year recession and deflation. What a dispicable double standard in the so-called fair Christian society! If those started this argument of relaxation know the meaning of the word ‘shame’, they must climb to the top of the London Eye, close their eyes and jump, to make this hopeless world any better.

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  • So it turns out that the problem with our economy is Basel bank regulations rather than excessive lending to property speculators and credit card junkies?

    I don’t recall anybody saying that Basel was a problem when house prices were booming.

    Surely, the root cause of our current problems is a combination of living beyond our means and speculating in property instead of investing in productive assets.

    I suppose we should credit Peter Spencer with giving us a hint of the next trick bankers will use to keep the bubble inflated.

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  • European-bear says:

    The interpretation is that the banks cannot “create” any more money to lend out because they have hit the Basel rules limit (look up on Wiklepedia how money is actually created …out of thin air!!!!! but the Basel regulations restrict how much money banks can create out of thin air).So it looks like the banks have lent all the money they are allowed to create, and often with very dubious security (sub prime). Extending the Basel limit will the give them liquidity, but because they would be allowed to create more money it would also be inflationary (as the true cause of inflation is too much money chasing too few goods)… but then perhaps the anglo-saxon governments want inflation to get rid of the big debts built up….
    But if banks are allowed to do this rather than go bank rupt, then it just delays the big crunch for a few more years as the banks are not taught a lesson (ultimately, if the Basel rules were relaxed to 0%, banks could create all the money they wanted and there would be instant Zimbabwe style hyperinflation….)

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