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[SG]

And so it continues.

KRudd has no idea about economic management.  The law of unintended consequences comes into play whenever politicians try to be all warm and populist instead of letting the markets sort issues out.

http://business.smh.com.au/business/perpetual-backlash-for-rudd-20081023-577y.html

Bad luck for those people losing their jobs because Kevin wanted to be seen to be doing something other than jetting off being foreign minister.

Memo to Kev:  GET OUT OF THE MARKETS.

They fucked it up, let them sort it out.

For those who want SG's solution to bank capital adequacy here it is:

Leave the banks alone.  Let them survive or fail on their own merit.  That will force them all to sort it out instead of relying on taxpayer handouts.  Best of all the banks might even be forced to do what they usually do to people who owe them money and can't pay - they should offer "discounts" to clear debt.  Something nice and simple like a 5% bonus for anyone who pays off extra (i.e. if you have a bank loan and you are up to date with your basic payments then you can make "over payments" which get a 5% bonus so paying $100 results in $105 coming off your loan etc).  If that doesn't bring in enough capital then they will have to offer a more and more attractive discount until they have enough cash to cover their own problems.

Make them suffer the consequences of their stupidity.

Which in turn will hit their profits and thus the executive bonuses that get paid.

Best of all the little person doesn't bail them out and can actually take advantage of the situation in the way banks do when the little person gets in trouble with their mortgage repayments.  The banks have never given a crap before about realising full value for repossessed property, they have always sold people up provided they get their cash back regardless of whether or not the borrower gets full value for the property.  Now it's time the tables were turned, the banks owe money and are struggling to pay.  Let them liquidate assets and let the little person buy back their debt more cheaply than would otherwise be the case.

You read it here first.

SG

[Thaluikhain]

The law of unintended consequences comes into play whenever politicians try to be all warm and populist

Being warm and populist is sort of what they are there for.

[Lord Biscuit©]

And so it continues.

KRudd has no idea about economic management.  The law of unintended consequences comes into play whenever politicians try to be all warm and populist instead of letting the markets sort issues out.

http://business.smh.com.au/business/perpetual-backlash-for-rudd-20081023-577y.html

Bad luck for those people losing their jobs because Kevin wanted to be seen to be doing something other than jetting off being foreign minister.

Memo to Kev:  GET OUT OF THE MARKETS.

They fucked it up, let them sort it out.

For those who want SG's solution to bank capital adequacy here it is:

Leave the banks alone.  Let them survive or fail on their own merit.  That will force them all to sort it out instead of relying on taxpayer handouts.  Best of all the banks might even be forced to do what they usually do to people who owe them money and can't pay - they should offer "discounts" to clear debt.  Something nice and simple like a 5% bonus for anyone who pays off extra (i.e. if you have a bank loan and you are up to date with your basic payments then you can make "over payments" which get a 5% bonus so paying $100 results in $105 coming off your loan etc).  If that doesn't bring in enough capital then they will have to offer a more and more attractive discount until they have enough cash to cover their own problems.

So, if one goes down, it's just bad luck for all the mums and dads who have their life saving in the bank? And of course, if one goes down, there will be a run on the other bank, and more will fail. A bank failure will affect everyone, in a much bigger way than the HIH failure affected everyone.

Make them suffer the consequences of their stupidity.

Which in turn will hit their profits and thus the executive bonuses that get paid.

Surely you mean "make them put up there fees to cover their stupidity! Which in turn will ensure there pay packets are not affected."

Best of all the little person doesn't bail them out and can actually take advantage of the situation in the way banks do when the little person gets in trouble with their mortgage repayments.  The banks have never given a crap before about realising full value for repossessed property, they have always sold people up provided they get their cash back regardless of whether or not the borrower gets full value for the property.  Now it's time the tables were turned, the banks owe money and are struggling to pay.  Let them liquidate assets and let the little person buy back their debt more cheaply than would otherwise be the case.

You read it here first.

SG

Yes, the bank wouldn't dream of putting up fees or interest rates to cover their loses. After all, they're there to protect the 'little person', right?

Even the US commentators are demanding more regulation, not less.

[SG]

So, if one goes down, it's just bad luck for all the mums and dads who have their life saving in the bank? And of course, if one goes down, there will be a run on the other bank, and more will fail. A bank failure will affect everyone, in a much bigger way than the HIH failure affected everyone.

Australian Bank retail deposits are essentially guaranteed anyway, refer the whole Pyramid/Geelong Building Society collapse and how people had to learn that the higher rates on offer by the Building Societies were becasue they were higher risk.

Surely you mean "make them put up there fees to cover their stupidity! Which in turn will ensure there pay packets are not affected."
Yes, the bank wouldn't dream of putting up fees or interest rates to cover their loses. After all, they're there to protect the 'little person', right?

Make competition work.  Sure they can put up fees.  They can charge a billion dollars to open an account if they like.  But somebody somewhere will do it smarter and people will move to that option.  It's called the free market.  Classic case in point - fees to own a credit card.  I pay nothing for my credit cards because I simply say I will change banks if they don't waive the fee.  Sometimes they won't but usually they do.  And if they don't then I move.

Mrs SG on the other hand has a fascination with her Platinum AmEx that is hard to fathom.  She pays the fee and still shops like a demon thus giving them even more cash.  I don't get it. 

But that's called choice.  I do it my way, she does it hers.  I believe if more did it my way then all banks would be forced to remove basic charges for credit cards, regardless of type.

Ultimately, I get no fee banking.  It's not an option for most, it's part of a professional package that provided through a professional body to encourage peopl to go to a certain bank.  They all have them, it's just a matter of qualifying.

Even the US commentators are demanding more regulation, not less.

SOME commentators, not all.

SG
[/quote]

[Lord Biscuit©]

Well OK, just the smart ones.

Trouble is, large corporates and enterprises have proven time and time again to be irresponsible and short sighted.

Regulation helps to close down areas where competition is unhealthy or too risky for the general economy. In the same way footy has rules, but of course it gets a lot more complex. It didn't used to be illegal to bowl underarm in international cricket. But Ian helped us to see that 'sportsmanship' or 'ethics' do not get in the way or some driven people, and there needs to be rules so that some mug doesn't kill the golden goose and ruin it for everyone.

[SG]

Well OK, just the smart ones.

Trouble is, large corporates and enterprises have proven time and time again to be irresponsible and short sighted.

Regulation helps to close down areas where competition is unhealthy or too risky for the general economy.

In many ways a fair call.  Problem is where money is involved somebody will always look for the loopholes where they can exploit whatever there is that's around.  SHort selling is a classic example.  Has been legit for donkeys years and rightly so.  Then some muppet gets into market manipulation using them and a whole bunch of others pile in and make a mess so the regulators attack the symptom not the cause.

SG

[Mez]

I fail at high finance, but I do know this: wealthy people get a better deal because they can exercise choice.  Your threats to your bank, for instance, probably have more clout than the threats of someone who only uses the bank as a go-between - between Centrelink and their pockets, for instance.

And poor people pay twice - the cheaper washing machine will use more water and power and will break twice as fast, but poor people can't afford the more expensive one in the first place.  Similarly, wealthy people can buy in bulk; poor people pay a relatively higher price for a lesser amount.  Et hoc genus omne (she said pretentiously).

I threatened my bank and got a better deal a couple of years ago.  I threatened my bank even more years ago - when I was dirt-poor - and they told me to fuck off.

[SG]

I fail at high finance, but I do know this: wealthy people get a better deal because they can exercise choice.  Your threats to your bank, for instance, probably have more clout than the threats of someone who only uses the bank as a go-between - between Centrelink and their pockets, for instance.

And poor people pay twice - the cheaper washing machine will use more water and power and will break twice as fast, but poor people can't afford the more expensive one in the first place.  Similarly, wealthy people can buy in bulk; poor people pay a relatively higher price for a lesser amount.  Et hoc genus omne (she said pretentiously).

I threatened my bank and got a better deal a couple of years ago.  I threatened my bank even more years ago - when I was dirt-poor - and they told me to fuck off.

In other words - get off your slack butt and do something about it!

Mr Mez may need some "assistance" to get his shit together in this respect as well.

And don't banks have no fee accounts for low income types?



SG

[Thaluikhain]

I fail at high finance, but I do know this: wealthy people get a better deal because they can exercise choice. 

Um, yeah, wealthy people are always going to be better off.  That's sort of the point of being wealthy.

[Nev Bartos]

Your concern for the little people is touching, SG.
I half expected you to throw in the term 'working families' at some point.

The point of the article seems to be that it wasn't smart to fully guarantee only some institutions.
Not that they shouldn't have guaranteed anything at all.
I guess they backed the day to day transaction banks to restore some confidence & keep the economy running.
And they fucked the rest over big time by leaving them out in the cold, actualy causing a run on them.
Must suck right now to have your life savings in an investment bank that's stopped any withdrawals.

But letting banks fail to teach them a lesson is like cutting off your nose to spite your face.
As Bix said, if banks start collapsing more people would be racing to the bank to withdraw savings, making it even worse.
Businesses would find it hard to get a loan , or even pay suppliers or employees.
Without money circulating, there is NO economy.

[Nev Bartos]

Make competition work.

It hasn't in the past, so how would you make it work now?
By letting a few banks fall over & reducing competition?
Surely, you're not suggesting regulation?   

[SG]

Your concern for the little people is touching, SG.
I half expected you to throw in the term 'working families' at some point.

The point of the article seems to be that it wasn't smart to fully guarantee only some institutions.
Not that they shouldn't have guaranteed anything at all.
I guess they backed the day to day transaction banks to restore some confidence & keep the economy running.
And they fucked the rest over big time by leaving them out in the cold, actualy causing a run on them.
Must suck right now to have your life savings in an investment bank that's stopped any withdrawals.

But letting banks fail to teach them a lesson is like cutting off your nose to spite your face.
As Bix said, if banks start collapsing more people would be racing to the bank to withdraw savings, making it even worse.
Businesses would find it hard to get a loan , or even pay suppliers or employees.
Without money circulating, there is NO economy.

Read again.

BANK deposits are already guaranteed under the Banking Act.

What Ruddley Do-Nothing did was to confuse the entire situation and as usual when teh government interferes in the market the ramifications are serious.  Rudd has once again fucked up and made the situation worse.  Legislation CANNOT envisage every consideration teh market requires, that is why teh market should be left to its own devices.

Businesses are already finding it hard to get money in teh form of loans and Rudd has made it harder.  Interbank loans are now guaranteed, loans to any other type of business are not.  What would you do - lend to another bank in a transaction that is 100% guaranteed not to cause you a loss or lend to a business that is omparitively exposed becuase Ruddley Do-Nothing has given the perpetrators of this cock up a Get Out of Jail free card?

SG

[SG]

It hasn't in the past, so how would you make it work now?
By letting a few banks fall over & reducing competition?
Surely, you're not suggesting regulation?   

Fool.

Competition HAS worked, that's why the West is and remains the dominant market player.

Bear in mind any government intervention is made available through the expenditure of wealth amassed via taxing teh recipients of income in the free market economy.  That's why the freer economies have the money to pump into their markets whilst teh more socialist countries do not.

And a free market is not unregulated.  If that were the case we would have no laws whatsoever and that is pure nonsense. 

SG

[Mez]

And don't banks have no fee accounts for low income types?

SG

No.  Of course they don't!  Haven't you been listening to me?!  Poor people get the raw end of the sav every time, with everything.

[.]

Yeah I don't understand why banks aren't offering incentives for people to pay off their debt. God..my bank were quick to ramp up the interest on my loan, sending me out three letters in the past year, but I'm yet to receive a letter handing down the interest rate cuts.

Surely getting people to pay *something* off their debts is better than crashing and burning? Though maybe banks figure that if they hang around long enough, the government will bail them out, so they can have their cake and eat it too.

Having said that...these lending organisations are complete fucktards. I am in an horrendous financial position, yet I got one of those "pre-approved loan" letters from Flexirent the other day for $5k or something (naturally it went straight in the bin). But honestly, what are these companies thinking?