[martin14]

Lemmy Lemmy:

Read the agreement you signed when you opened your account. Bank runs are a thing of the past.

Except in Greece.

[Zipperfish]

Lemmy Lemmy:

Incorrect. The banks were given liquidity support, not a bailout. A bailout means the government taking an equity position, which never happened and, at no time, were any banks in danger of failure, despite the conspiracy theories to the contrary. All loans given to the banks were paid back. No bailout.

Liquidity support is banker's language for bailout. Semantics.

[Lemmy]

Not at all. Liquidity support is providing cash to keep the credit markets afloat without fucking consumers. A bailout is saving a dying business. The banks weren't dying. But as the seas got rough, they were about to make it very difficult on their customers. Not even close to the same thing. Without that support, the banks would still be in business, but they'd have owned a lot of real-estate and a lot of small businesses would have gone tits up.

[CanadianODST]

Yes, cause Germany's done SO much to help the world.

[Zipperfish]

Lemmy Lemmy:

Not at all. Liquidity support is providing cash to keep the credit markets afloat without fucking consumers. A bailout is saving a dying business. The banks weren't dying. But as the seas got rough, they were about to make it very difficult on their customers. Not even close to the same thing. Without that support, the banks would still be in business, but they'd have owned a lot of real-estate and a lot of small businesses would have gone tits up.

Not buying it, sorry. They shouldn't have gotten a dime.

[Lemmy]

Think of it this way: the US bailed out its banks. What happened? The executives at those banks took the cash, foreclosed on businesses and homeowners and fucked the economy for a second time. In Canada, the banks got liquidity support, which allowed the banks to stay in business without stealing people's home and shutting down mom & pop operations. And, in the end, the money came back to the government in Canada. Every penny of it. The US bailout money went straight into the bankers' bank accounts and everyone else got fucked. It's not semantics at all.

[Zipperfish]

Lemmy Lemmy:

Think of it this way: the US bailed out its banks. What happened? The executives at those banks took the cash, foreclosed on businesses and homeowners and fucked the economy for a second time. In Canada, the banks got liquidity support, which allowed the banks to stay in business without stealing people's home and shutting down mom & pop operations. And, in the end, the money came back to the government in Canada. Every penny of it. The US bailout money went straight into the bankers' bank accounts and everyone else got fucked. It's not semantics at all.

So was the money given to the bank and going interest rates? And is part of the issue that banks lend moeny they don't have?

[Lemmy]

Zipperfish Zipperfish:

So was the money given to the bank and going interest rates? And is part of the issue that banks lend moeny they don't have?

1. Depends what you mean by "the going rate". Banks get ALL their money at the bank rate. It's 1% and has been for several years now.
2. No, banks didn't lend money they didn't have, because they don't really HAVE money, in an ownership sense. The amount of money they're allowed to draw from the Bank of Canada to loan out is determined by the value of the deposits they hold, at lending/reserve ratios prescribed by the Bank Act. So, no, they didn't lend money they didn't have. They lent money to borrowers who couldn't pay it back, especially in the VERY short-term. Canada got fucked significantly less than the Americans in part because that reserve ratio is defined by the Bank Act here. It's the Wild, Wild West in American credit markets, when it comes to lending and reserve requirements.

[Zipperfish]

Lemmy Lemmy:

1. Depends what you mean by "the going rate". Banks get ALL their money at the bank rate. It's 1% and has been for several years now.
2. No, banks didn't lend money they didn't have, because they don't really HAVE money, in an ownership sense. The amount of money they're allowed to draw from the Bank of Canada to loan out is determined by the value of the deposits they hold, at lending/reserve ratios prescribed by the Bank Act. So, no, they didn't lend money they didn't have. They lent money to borrowers who couldn't pay it back, especially in the VERY short-term. Canada got fucked significantly less than the Americans in part because that reserve ratio is defined by the Bank Act here. It's the Wild, Wild West in American credit markets, when it comes to lending and reserve requirements.

I see that as a pretty good deal for the banks. Borrow money at 1% and loan it out a higher rate, and there doesn't seem to be much in the way of risk since the Bank of Canada is basically there to pump more money in if there's any trouble. Plus they got to dump a bunch of bad debt on the CHMC.

I guess that's what they menat by "too big to fail." A collpase of the bank would result in finanical chaos nationally or globally. On the other hand, it's tough to sell this whole austerity package to workers given the sweet deal the banks seem to be getting.

[Lemmy]

Zipperfish Zipperfish:

I see that as a pretty good deal for the banks. Borrow money at 1% and loan it out a higher rate, and there doesn't seem to be much in the way of risk since the Bank of Canada is basically there to pump more money in if there's any trouble. Plus they got to dump a bunch of bad debt on the CHMC.

Which is why Canadian bank stocks are the safest, best yielding investment one can make. They're all currently undervalued and, given that the Euro crisis is far from over, their share prices are likely to slide some more yet, making them an even better bargain for investors.

Zipperfish Zipperfish:

I guess that's what they menat by "too big to fail." A collpase of the bank would result in finanical chaos nationally or globally. On the other hand, it's tough to sell this whole austerity package to workers given the sweet deal the banks seem to be getting.

The government gets a pretty sweet deal out of it too (making interest on every nickel in circulation).

[bootlegga]

In some sense, it understand why we should help out Europe. Germany simply can't do it all by herself, and let's face it, many other countries in Europe are just as terrible at managing money as the Greeks are. And if Europe goes down the toilet, it could drag the rest of us down, simply due to the inter-connectedness of world trade (China needs Europe to buy goods, they don't, so China stops buying raw materials from us, etc).

However, we gave so much of ourselves in the 20th century to Europe (two worlds wars plus decades more during the Cold War) that I have a hard time justifying giving them billions of dollars, especially when parts of Europe are still on a spending spree, increasing entitlements (like lowering the retirement age) and spending, instead of doing the opposite and getting their own house in order.

If, and it's a big if, Europe got their house in order first, I might be willing to toss some loss change their way - say $5 - 10 billion. But they've got to take the first step themselves.

I look at it the same way I look at the homeless. If the bum on the street corner wants a hand up, he has to take the first step himself and deal with his problems. Then, and only then, will I be willing to donate something so he can turn his life around. Otherwise, my change is just going straight towards another bottle of Jack Daniels...

[BartSimpson]

Lemmy Lemmy:

Bailouts don't work. Government stimulus schemes only stimulate the economy if that money gets into the hands of the people. The US bailout of Citi went straight into the pockets of the same people that created the crisis. If you want to bail out a bank, you give money to the people who use the bank's services, not to the bankers.

And on a more personal scale, welfare programs don't work for the exact same reasons. If all you're doing is subsidizing someone else's profligate ways then you're not helping them at all.

[Lemmy]

BartSimpson BartSimpson:

And on a more personal scale, welfare programs don't work for the exact same reasons. If all you're doing is subsidizing someone else's profligate ways then you're not helping them at all.

I guess we'd need to define "work". Welfare programs work, in the sense that they allow impoverished people to eat when they otherwise likely would not have. So in the short term, I think they "work". But I'm not sure you can characterize most people on welfare as having "profligate ways" (nice adjective, btw ). They're most often victims of circumstance. True, in some measure of their own doing, but unintended just the same.

But I certainly agree with your implication that we don't help people, in the longterm, if we help them too much by the dole. If the supports are too cushy, then they do act as a disincentive to improve ones circumstances (which is one of reasons I so strongly oppose minimum wage programs). There's a fine line between state-encouraged laziness and good old fashioned Christian charity.

[Zipperfish]

Lemmy Lemmy:

The government gets a pretty sweet deal out of it too (making interest on every nickel in circulation).

Is this what the "money is debt" folks are talking about? I'm not big on 9/11 conspiracy theories pr the JOO$ controlling the world, but I am intensely suspicious of the banks. Partly because I'm a reasonably intelligent person, yet I don't understand how the monetary system operates, and partly because something seems fishy about invesntment banks and the growing income divide.

Sorry to keep bugging you with questions.

[andyt]

I would like to hear those answers too. How can trillions of dollars in assets disappear overnight, but the debt incurred to replace those assets is real and can destroy a country? Where did all that lost money that was there one day and not the next go? Money seems like a real confidence game, in both senses of the word.