Italy’s teetering banks will be Europe’s next crisis • Hacker News Board

Re: Italy’s teetering banks will be Europe’s next crisis

#201

Post by speeder » Mon, Jul 11, 2016, 5:13 PM UTC

hx87 wrote: post #195

speeder wrote: post #155

Earlier quoted context omitted.

This is not just a EU problem. I personally think the social changes, coupled with gold standard being dropped are good part of the culprit. For example I am in Brazil, that have "nothing to do" with EU and US. Yet I have a mountain of debts, negative net worth, finished university in 2009, and I am yet to get a legal job. Brazil, even at its "height", when people were praising Lula because it reached 7% of GDP growt…

> coupled with gold standard being dropped What exactly does the gold standard have to do with economic troubles around the world? All the gold standard would do is subject any country that adheres to it to crippling deflation whenever the economy grows and crippling inflation whenever it contracts.

> All the gold standard would do is subject any country that adheres to it to crippling deflation whenever the economy grows and crippling inflation whenever it contracts.

If that was true, then why US, that of course had a recessions and booms at the time, still had prices mostly stable for more than a hundred years, while its population was expanding very quickly?

Or the same, for several other countries.

Gold, doesn't mean the money supply is completely static and constant. You can still have fractional reserve, can still debase your coins physically to cause inflation (Roman Empire in its last throes did that for example), Gold is still mined, and used to non-monetary products.

But Gold Standard also means you can't "inflate your way" out of problems 100% of the time, as is the default right now, we are seeing central banks all over the world with balooning balance sheets, while if you look the numbers for individual income since 1970s in advanced countries, you see the individual income is falling, meanwhile various financial items that are out of reach of the "average" person are balooning in value, and making the wealthy look even more wealthy (only "look" more wealthy, most of that wealth is purely theoretical, mostly money tied up in stocks, bonds, derivatives...)

From my point of view, all the lack of gold standard did was increase overall inflation, and create the most gigantic debt bubble in history, where all countries are accumulating ever increasing amounts of debt, not only from the governments, but individuals being more and more indebted.

I fully expect that the entire debt house of cards will collapse some time soon (ie: in decades scale at most, not centuries scale as most other major social change), and that people will realize how stupid it was to create an entire civilization based on debt and trust, something that breaks down when serious war show its head (I mean, why country A, would honor debts to country B during a war? Those are only numbers and derivatives, there is no "real" assets there!)

Re: Italy’s teetering banks will be Europe’s next crisis

#202

Post by AnimalMuppet » Mon, Jul 11, 2016, 6:01 PM UTC

adrenalinelol wrote: post #196

matwood wrote: post #146

Earlier quoted context omitted.

For the EU to work, the countries need to function more as states. Maybe this is just the hard road for the EU to get to something resembling the states, or it will fall apart as a failed experiment.

You can rephrase: > ...the EU to get to something resembling the states, as: EU member nations need to have their sovereignty diminished. That's extremely hard to swallow if you're the one losing rights/protections to a foreign institution.

It's hard to swallow if you don't trust the foreign institution you're losing your rights to.

And that's a problem for the EU, because many people don't feel like it does a very good job of listening to people (or even countries). Instead, they feel that it does what it wants, and runs over people who don't like the EU's self-decided plan.

That would be a problem for the US, too (see the approval ratings of either Congress or the president), but we're not having to hand over much new power to either one at the moment, so inertia is working for the US. It's working against the EU.

Re: Italy’s teetering banks will be Europe’s next crisis

#203

Post by blahi » Mon, Jul 11, 2016, 6:04 PM UTC

ZenoArrow wrote: post #170

blahi wrote: post #159

Earlier quoted context omitted.

You definitely don't sound like you hqve.

Looks like you were mistaken then. If you want to make a substantial point, you'll need to address the content of the points I raised rather than wasting our time with ad hominems. Why do you find it far fetched that people can choose to vote for those that will represent their best interests?

I already addressed what needed addressing.

I told you that "people to choose democratic representatives that stick up for the interests of the masses" is an impossible task. You prefer to ignore that and/or pretend that it is not true.

So I told you that your idea cannot be put in practice because we don't live in a perfect world but you don't acknowledge that. What is left there to say?

Re: Italy’s teetering banks will be Europe’s next crisis

#204

Post by mseebach » Mon, Jul 11, 2016, 6:19 PM UTC

sonnhy wrote: post #200

mseebach wrote: post #161

Earlier quoted context omitted.

Putting cash in a bank account is actually you lending money to the bank (for them to lend to other people), not a neutral store of an asset, like if you put physical bills or gold or whatever in a safe. If the bank goes bankrupt, that mean it's creditors (you) don't get paid, or get paid less than they're owed. To prop up trust in the banking system, governments insure bank deposits, in the Eurozone up to a value of…

Thank you for the quick anwser. I understood your answer to my first point, but, if you know, can you clarify the answer to my second question? If the bank fails, and my account in the bank, where I manage my investments, gets deleted.. where all my investments goes to? How can I manage them?

They don't "get deleted". When a bank manages your stock holdings, it's actually a different part of the business from the bank that you deposit cash into. All they do is hold in their computer systems (for a fee) the document that certifies that you own a piece of stock in company X. Just like you don't lose your stored stuff if a self storage business goes bankrupt (they or their creditors never have a claim on the stuff, the stuff is unequivocally yours), you don't lose your stock certificates if the bank goes bankrupt.

Re: Italy’s teetering banks will be Europe’s next crisis

#205

Post by selectodude » Mon, Jul 11, 2016, 6:30 PM UTC

djschnei wrote: post #168

jkot wrote: post #15

Banks have enough cash to cover 20% of their obligations. I think that is not that bad.

Good ol' fractional-reserve banking. Wouldn't it be nice if we could all do that?

Ever taken out a loan with nothing more than a down payment?

Re: Italy’s teetering banks will be Europe’s next crisis

#206

Post by johnchristopher » Mon, Jul 11, 2016, 6:42 PM UTC

glenndebacker wrote: post #42

guelo wrote: post #24

It’s easy for Merkel to insist that Italy has to strictly follow EU rules since she doesn’t have to win an Italian election. The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment. The problem is that each EU national leader is accountable only…

"The Euro just seems like a complete failure. Giant economies are limping along with 20% unemployment, unable to recover 8 years after the recession. In contrast the US has managed an OK recovery, now closing in on full employment." You are aware that the problem with the EU banking reforms (or lack off) was also that the UK didn't wanted stricter rules with regards of the city of London... ? They even wanted an exem…

That's not true. I have just read an interview with Juncker and Van Rompuy where they clearly stated that the UK didn't slow down the decision process and actually implemented directives faster than most countries.

I am not pro UK in the EU though.

Re: Italy’s teetering banks will be Europe’s next crisis

#207

Post by djschnei » Mon, Jul 11, 2016, 6:48 PM UTC

selectodude wrote: post #205

djschnei wrote: post #168

Earlier quoted context omitted.

Good ol' fractional-reserve banking. Wouldn't it be nice if we could all do that?

Ever taken out a loan with nothing more than a down payment?

Yes, in fact about $100k worth in order to learn about the very subject you're incorrectly making a snarky comment about!

A down payment on a loan? That makes zero sense. I think you're talking about unsecured loans (i.e when there isn't an asset that can be repossessed if the debtor defaults). The fact that the loan is "unsecured" is precisely why the resulting interest rate will be higher. I am paying to borrow that money, and it's more expensive to borrow because of the increased risk assumed by the bank.

However, fractional reserve banking is entirely functionally different.

Re: Italy’s teetering banks will be Europe’s next crisis

#208

Post by jazzyk » Mon, Jul 11, 2016, 7:03 PM UTC

speeder wrote: post #201

hx87 wrote: post #195

Earlier quoted context omitted.

> coupled with gold standard being dropped What exactly does the gold standard have to do with economic troubles around the world? All the gold standard would do is subject any country that adheres to it to crippling deflation whenever the economy grows and crippling inflation whenever it contracts.

> All the gold standard would do is subject any country that adheres to it to crippling deflation whenever the economy grows and crippling inflation whenever it contracts. If that was true, then why US, that of course had a recessions and booms at the time, still had prices mostly stable for more than a hundred years, while its population was expanding very quickly? Or the same, for several other countries. Gold, doe…

Why is the above downvoted? The inflation taking place since 1970s is a fact, not an opinion.

See for yourself, here is the graph (from BusinessInsider, but the source is Bureau of Labor Statistics) :

http://www.businessinsider.com/chart-inflation-since-1775-20...

Re: Italy’s teetering banks will be Europe’s next crisis

#209

Post by sonnhy » Mon, Jul 11, 2016, 7:03 PM UTC

mseebach wrote: post #204

sonnhy wrote: post #200

Earlier quoted context omitted.

Thank you for the quick anwser. I understood your answer to my first point, but, if you know, can you clarify the answer to my second question? If the bank fails, and my account in the bank, where I manage my investments, gets deleted.. where all my investments goes to? How can I manage them?

They don't "get deleted". When a bank manages your stock holdings, it's actually a different part of the business from the bank that you deposit cash into. All they do is hold in their computer systems (for a fee) the document that certifies that you own a piece of stock in company X. Just like you don't lose your stored stuff if a self storage business goes bankrupt (they or their creditors never have a claim on the…

Thanks for clarification.

Re: Italy’s teetering banks will be Europe’s next crisis

#210

Post by AnimalMuppet » Mon, Jul 11, 2016, 7:18 PM UTC

blahi wrote: post #203

ZenoArrow wrote: post #170

Earlier quoted context omitted.

Looks like you were mistaken then. If you want to make a substantial point, you'll need to address the content of the points I raised rather than wasting our time with ad hominems. Why do you find it far fetched that people can choose to vote for those that will represent their best interests?

I already addressed what needed addressing. I told you that "people to choose democratic representatives that stick up for the interests of the masses" is an impossible task. You prefer to ignore that and/or pretend that it is not true. So I told you that your idea cannot be put in practice because we don't live in a perfect world but you don't acknowledge that. What is left there to say?

> I told you that "people to choose democratic representatives that stick up for the interests of the masses" is an impossible task. You prefer to ignore that and/or pretend that it is not true.

You made a large claim that was completely unsubstantiated. ZenoArrow didn't ignore the claim; he/she didn't believe it. On HN, that's your cue to provide some evidence to back up your claim. That's what's left to say. Provide some evidence that "people to choose democratic representatives that stick up for the interests of the masses" is an impossible task.