You make me sick!

[DBoy]

Banks.

I do not understand how 100,000's of Americans are going without yet the banks are reporting profits and still paying out multi-million dollar profits.

I do not understand how Banks can claim poor in Australia and defy the gov. by putting up interest rates above the Reserve - because they need to maintain the interests of their shareholder etc. Then report 33% increase in profits. It is robbing from the blind - yet they are telling them they are doing it.

The system is not working.

How can banks and the Government be competing for loans from the Reserve while people go hungry and service availability for the disadvantaged continue to become more sparce and harder to access.

I don't understand this stuff but I do know the system ain't working.

[almax]

here here!
We are always going to be screwed when the number 1 priority is profit.
Capitalism eh, certainly needs a re-think, its been great, got us where we are, but can it take us further?
I think it can, but not all of us, and thats the problem, the rich get richer.

[Fents]

what irks me is the $2 fee to withdrawl from another banks ATM. My persoanl banking is with NAB and they closed down that many ATM's last year that my closet ATM is over 10kms away!

[quiet roar]

It's called deregulation, DBoy, which basically means they can do what ever they want. And almax mentioned, they will claim it's all done in the best interests of the shareholder.

In the end however, it's the public's fault for being stupid and allowing this kind of shit to continue.

[Hardy]

Life is unfair, get used to it.

[C.I.A.]

Next correction will occur within the next 2-3 weeks.

Was possibly told by someone who could also be a close relative who pretends to be the director of Macquarie Bank to get out now, but this is just hypothetical advice from him to me and only considered my financial situation, and even then it was all just a dream. Do your own research.

[mrj]

I think it's a very complex topic. Clearly it is broken but there's so many factors involved.

Something that is clear from the Global Financial Crisis is that the financial sector is the lubricant of our economy. When banks get nervous and freeze credit the economy seizes up, and that kind of thing is tough on everyone.

We have an economic model that is based on infinite exponential growth, and the assumption that all firms are (and should) be profit maximising. I think the financial sector's behaviour is merely symptomatic of this.

If you want to change way the financial sector operates, then really you need to change the underlying model for the economy globally, regulation and government intervention will always be ineffectual and only contribute economic loss for little actual outcome.

One important thing to remember is that the financial sector comprises such a large part of our economy (consider their value in terms of % of the ASX 200) that we all have a vested interest in their success. All working Australians have a superannuation account, and guaranteed unless you self manage your super when the financial sector doesn't perform likely your super doesn't perform. When you consider the number of Australian's due to retire in the next 10 years then unprofitablility in the financial sector becomes quite a scary notion.

[DBoy]

Are there not ground up ways of shifting corporate cultures from the inside out. Get them while they are young so when they are at the top they have different outlooks.

Work it like other businesses need to work - the culture should reflect the product - the product should reflect the values of the customer.

Not - the culture is about something that does not reflect the customer and actually harms them.

[quiet roar]

regulation and government intervention will always be ineffectual and only contribute economic loss for little actual outcome.

Bollocks!!

[mrj]

regulation and government intervention will always be ineffectual and only contribute economic loss for little actual outcome.

Bollocks!!

haha i sense a left vs right argument coming on here.

I'm actually quite lefty on a lot of social stuff, but quite righty when it comes to the role of the government (at least within the confines of the existing system). When it comes to choosing systems or overall framework i prolly swing back left again.

[same o]

But at the same time if you don't believe in regulation wouldnt you be against goverment bailouts? you would have to agree that goverment help, did help the whole economic situation.

[mrj]

But at the same time if you don't believe in regulation wouldnt you be against goverment bailouts?

Yes. and I am against government bailouts.

[same o]

lol i edited not in time, so you think that the banks should have been left to fall? do you think that any economy could have withstained having all those banks crash? what about all the people who had their life savings in those banks? what about all the major companies who have major investments in those banks? what about all the super that is managed by those banks?

[same o]

example I work for AXA, AXA's bank is westpac, if westpac went down what happens to AXA's money? sure they are insured, but what happens to AXA's reinsurers, and the companies insuring the reinsurers..
One falls, then so do many at no fault off any company but one that has been badly managed.
I mean AXA does have other investments, stocks, bonds etc and this is a very simple way of looking at it, but..

[ghetto kitty]

Can you guys who know about all this shit just let me know when I should bury my cash in the ground again?

Wanted to convert to gold bullion & bury recently, cant even do that anymore.

[same o]

generally, the safest thing to do is put your money in a guaranteed super portfolio not high gains not high loses.

but you should generally ask a financial adviser not melbourne beats.

[ADD_Boy]

^^^ ing is for the win.

apart from that :no comment:

[system]

example I work for AXA, AXA's bank is westpac, if westpac went down what happens to AXA's money? sure they are insured, but what happens to AXA's reinsurers, and the companies insuring the reinsurers..
One falls, then so do many at no fault off any company but one that has been badly managed.
I mean AXA does have other investments, stocks, bonds etc and this is a very simple way of looking at it, but..

limited liability covers those situations, as does insurance.

[DBoy]

This is the point - the fuking bailout - to save the poor banks.

And now they are all reporting $300million profits.

JOKE>

[system]

This is the point - the fuking bailout - to save the poor banks.

And now they are all reporting $300million profits.

JOKE>

the problem is deregulation - the business model banks work under is to make money.

[ghetto kitty]

generally, the safest thing to do is put your money in a guaranteed super portfolio not high gains not high loses.

but you should generally ask a financial adviser not melbourne beats.

i was kind of kidding.

[mrj]

lol i edited not in time, so you think that the banks should have been left to fall? do you think that any economy could have withstained having all those banks crash? what about all the people who had their life savings in those banks? what about all the major companies who have major investments in those banks? what about all the super that is managed by those banks?

I think that too is a complex question.

I believe the following things
- Government intervention is a bad thing
- Governments are inefficient and cannot run businesses
- Bad businesses should be allowed to fail

Of course Petey as you have identified whilst this is nice in principle, the failure of a large business is always going to have a social cost, and the flow on effects that you alluded to as well. The bigger the business, the bigger the cost and associated effects, when we are talking about entire sectors, particularly the financial sector, then obviously the social outcomes of such a failure would be catastrophic. This is the true function of the current system, they privatise profit whilst socialising risk.

So like I said, its complex.

[Lil MiSbreaks]

example I work for AXA, AXA's bank is westpac, if westpac went down what happens to AXA's money? sure they are insured, but what happens to AXA's reinsurers, and the companies insuring the reinsurers..
One falls, then so do many at no fault off any company but one that has been badly managed.
I mean AXA does have other investments, stocks, bonds etc and this is a very simple way of looking at it, but..

limited liability covers those situations, as does insurance.

Cept when its the insurers themselves that need bailing out...

Bad business should be able to fail, I agree. If your shit at your job, then you lose it. Why should Joe Blogs be held responsible and not the massive manager, making millions of dollars and sitting pretty in amongst all the poor choices. Bollocks.

Instead of bailing out the fuckers, spend the money on something else (a new company owned by the Government, a small busines scheme or something) that will give the people who lose those jobs an income and not fuck them over.
Then those that cant cut it sink.

[same o]

example I work for AXA, AXA's bank is westpac, if westpac went down what happens to AXA's money? sure they are insured, but what happens to AXA's reinsurers, and the companies insuring the reinsurers..
One falls, then so do many at no fault off any company but one that has been badly managed.
I mean AXA does have other investments, stocks, bonds etc and this is a very simple way of looking at it, but..

limited liability covers those situations, as does insurance.

I know that insurers reinsure themselves etc, I work closely with re-insurers however, in the case of a major company failing and going bust then you are always going to have other companies either taking a big hit or failing themselves. Re-insurers will only re insure a portion of the amount that you are insuring for (well that is the case for life insurance, TPD, trauma etc).

lol i edited not in time, so you think that the banks should have been left to fall? do you think that any economy could have withstained having all those banks crash? what about all the people who had their life savings in those banks? what about all the major companies who have major investments in those banks? what about all the super that is managed by those banks?

I think that too is a complex question.

I believe the following things
- Government intervention is a bad thing
- Governments are inefficient and cannot run businesses
- Bad businesses should be allowed to fail

Of course Petey as you have identified whilst this is nice in principle, the failure of a large business is always going to have a social cost, and the flow on effects that you alluded to as well. The bigger the business, the bigger the cost and associated effects, when we are talking about entire sectors, particularly the financial sector, then obviously the social outcomes of such a failure would be catastrophic. This is the true function of the current system, they privatise profit whilst socialising risk.

So like I said, its complex.

This is why I think that de-regulation is not the way to go, in the ideal world the idea that the goverment does not get involved is great, however it just does not work, the recent economic crisis and fall out that it created shows that.

Dont get me wrong I really dont know shit, but just from pure observation thats what the whole situation looks like to me.

[mrj]

The key problem with not letting bad businesses fail, as Sammy has identified above, is that it does not leave room for a better business to take it's place.

A prime example would be the failure of ABC Learning Centres last year. There were a number of reasons for the failure of this business and I'm not sure I understand them all, but from what I remember at the time some failed investments, an attempt to grow too quick, overleveraging both from the business and also personally for their CEO left the company in a vunerable position. It then looks like some market players exploited this vunerable position to short the stock heavily, resulting in a drop in market capitalisation, loans got called in due to the lower company value, which they couldn't pay, and administrators got called in. So all up I guess bad financial management. To be honest I don't fully understand the whole scenario.

What should happen here is that ABC fails, and there is a fire sale of it's assets to pay back creditors. It's at that point that a new player can enter the market, buy the assets and set up a better more viable business. In this case potentially a business that would be designed with more than one person's interest in mind which one might argue was the case with ABC.

However what actually happened was the Government intervened. They propped up ABC so they didn't have to close (a least not in the short term). Of course its easy to understand why they did. The news was filled with stories of parent's who now had no place to send their children to day care, and the ongoing provision of these services is definitely a valid concern. It would have been political suicide to stand idly by. Of course, therein lies the problem with all that stuff.

[FoundationStepper]

I very much agree with your thinking mrj

But I think the itnervention on ABC, the gubbermint did the right thing, not just from a political perspective, but the knock on effect to the employment of many people. and they didn't actually take on the debts etc, they just kept the services running I think. Its not the same sort of propping up as our car industry, print industry or the 'green socialism' of today

if you listen to a right winger, a lot of the problems with the financial sector came from the wrong regulation, in terms of the encouragement of lending to people who were a credit risk. I don't buy it wholesale but i think there's an element of truth perhaps

On your list:
- Government intervention is a bad thing
- Governments are inefficient and cannot run businesses
- Bad businesses should be allowed to fail
* Governments should not pick winners

[Blaxter]

Agreed capitalism is supposed have less market regulation by govt.
It needs to fail or die if it cant sustain itself.

[Blaxter]

double post

[Lephrenic]

Again I recommend credit unions (of which I am a happy customer) or community banks like Bendigo Bank. If you don't like what the banks do, don't give them your money.

[elysium]

Pyramid building society anyone?

I am all for community banking and mutual structures that focus on members rather than shareholders...and credit unions and building societies are subject to the same strict prudential regulation as banks which are designed to ensure the safety and soundness of these institutions (so good news for us).

but they can go wrongtown too.

Under the mattress

[mrj]

They've raised the price of my dreams
Now they own non negotiable bonds
Why should I have to be a wage slave
To my dreams I don't care to recall
Cos I can't afford to live, and now I can't afford to die.

[same o]

[flippo]

[same o]

hahahahhahaha

[elysium]

We make savings fun and easy
whatever the amount
a dollar might go further in a Dollamite account
........at the Commonwealth Wank

glad that at least the long term memory appears to functioning, even if filled with useless jingles

[nic]

has stood test of time well imo
banks went bad the day teh dollamite was killed off

[378834]

Banks.

I do not understand how 100,000's of Americans are going without yet the banks are reporting profits and still paying out multi-million dollar profits.

I do not understand how Banks can claim poor in Australia and defy the gov. by putting up interest rates above the Reserve - because they need to maintain the interests of their shareholder etc. Then report 33% increase in profits. It is robbing from the blind - yet they are telling them they are doing it.

The system is not working.

How can banks and the Government be competing for loans from the Reserve while people go hungry and service availability for the disadvantaged continue to become more sparce and harder to access.

I don't understand this stuff but I do know the system ain't working.

Do some research on fractional reserve banking.

Fractional-reserve banking is the banking practice in which banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand.[1][2] Fractional reserve banking necessarily occurs when banks lend out any fraction of the funds received from deposit accounts. This practice is universal in modern banking, and is to be contrasted with full-reserve banking which died out over two centuries ago.

By its nature, the practice of fractional reserve banking expands money supply (cash and demand deposits) beyond what it would otherwise be. Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the excess reserves kept by commercial banks.

Central banks generally mandate reserve requirements that require banks to keep a minimum fraction of their demand deposits as cash reserves. This both limits the amount of money creation that occurs in the commercial banking system, and ensures that banks have enough ready cash to meet normal demand for withdrawals. Problems can arise, however, when a large number of depositors seek withdrawal of their deposits; this can cause a bank run or, when problems are extreme and widespread, a systemic crisis. To mitigate these problems, central banks (or other government institutions) generally regulate and oversee commercial banks, act as lender of last resort to commercial banks, and also insure the deposits of the commercial banks' customers.

From wiki

Basically banks can lend out and pay money they don't have

[378834]

look up fractional reserve banking

[SONUS]

.

[gnat]

lol at that new function for st george- text to find your nearest ATM


bet the answer is 'the closest ATM is 5kms away. suck up another $2 fee'

[deviant]

what irks me is the $2 fee to withdrawl from another banks ATM. My persoanl banking is with NAB and they closed down that many ATM's last year that my closet ATM is over 10kms away!

^^^ ing is for the win.

I switched to ING back in Oct last year.... best thing ever.. I got $60 in bonuses just for starting the account... then they pay back the $2 from ANY ATM (withdrawals over $200)... and they GIVE you 50cents for every eftpos over $200... no monthly or yearly fees...

WIN

I think my entire fees for the last 6 months is like $15 and that includes overseas withdrawals.

[tee193]

needs moar dollarmite bankbooks imo.

[elysium]

Basically banks can lend out and pay money they don't have

Which works until the short term commercial paper market dries up and your asinine financial model tanks a la Northern Rock:

http://forum.melbournebeats.com/viewtop ... k+#p486133