31–40 of 112 posts
Can someone explain this, Matt Levine-style? I mean, if someone offered to pay me interest to take out a loan, I'd immediately request MAXINT.
But changing the base rate from 0.1% to -0.5% incentivises the banking system to loan to consumers and businesses at lower rates
Can someone explain this, Matt Levine-style? I mean, if someone offered to pay me interest to take out a loan, I'd immediately request MAXINT.
> I'd immediately request MAXINT. Would you really though. They're trying to avoid deflation, if/when that happens the value of property and shares falls each year. What would you do with your loan if all assets fall in value each year?
After 5 years, I return the cash. I earn $500k. Subtract off the $500 it cost me to set up and that's a pretty tidy profit for 2 days of my time. The chance of theft is well under 1% as long as nobody else knows where it is, so I still make a tidy profit even with a risk premium.
So if I take a loan, it would pay itself off after a while?
I don’t think so. All loans have terms and minimum payments. So if you borrow $1000 over a year at -1% you still have to make $990 in payments, or you will default.
If chartered banks charge for ... holding cash ... don't people next create a new industry of unchartered financial institutions to hold money without charging so much? Like, safe deposit? Or insurance? This seems like an ivory tower exercise that has not yet met the messy realities of the world.
Can anyone counter my impression that we are witnessing in the Western world the exact same course of events that happened in Japan in the 1990s? (low growth, high debt, ageing population, low interest rates, rising of average P/E ratios). Am I wrong to expect that corporate valuations in Europe and the U.S. will not appreciate in the coming decades as they have in past decades? Edit: Yes, the U.S. and Europe are ind…
Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?
Earlier quoted context omitted.
My understanding is that Dutch banks already have negative interest rates. They charge a negative interest to large account holders (over 1M euros) and a minimal positive rate for less wealthy clients. In reality I suspect that few end up in the 1M+ category since you can spread your money and keep the rest invested in the stock market or T-Bills if you really want security.
Any idea what happens when T-Bills go negative as happens in Germany? Do people hoard physical cash or gold?
Can someone explain this, Matt Levine-style? I mean, if someone offered to pay me interest to take out a loan, I'd immediately request MAXINT.
So if you take your max int loan, where are you going to put it? Anywhere you store it has risk. Cash under the mattress can get robbed and investments can go bad.
If you really really want to be sure you get your money back then banks are the only option and in this case it's worth it to pay them.
Its about time it became normal in the UK for accounts to carry fees. I dont know how retail banking can continue without them. Esp the new fintechs they will have near-zero revenue coming in and have to pay to hold cash.
Why? Many banks are already making lots of money, regardless if you know how they make their money or not. I definitely do not agree that "its about time" to pay for having an account.
I think you mean some UK banks made money before rates went negative. The ones that made the most are in corporate and investment banking. Retail is a disaster zone.
Earlier quoted context omitted.
My understanding is that Dutch banks already have negative interest rates. They charge a negative interest to large account holders (over 1M euros) and a minimal positive rate for less wealthy clients. In reality I suspect that few end up in the 1M+ category since you can spread your money and keep the rest invested in the stock market or T-Bills if you really want security.
Any idea what happens when T-Bills go negative as happens in Germany? Do people hoard physical cash or gold?
Its about time it became normal in the UK for accounts to carry fees. I dont know how retail banking can continue without them. Esp the new fintechs they will have near-zero revenue coming in and have to pay to hold cash.
If you go to your local branch and ask to pay some fees, I'm sure they can find a way to accommodate.
I dont even have one any more. And I imagine most will be shutting down very quickly now.