11–20 of 28 posts
The banks made unqualified loans to people and made money. The banks sliced and diced these toxic loans (derivatives) and sold them as Triple A investments... and made money. The banks then bet against those toxic investments and made money. The banks had their clients invest in these toxic instruments, and made money. The banks were then bailed out by the taxpayers and made money. The banks now own all the foreclose…
Tell us something we're not already #Occupying about, please.
They only win because we let them. If the majority of people weren't so politically indifferent, there would be a higher probability of change. The highest vote count on PlainSite ( http://www.plainsite.org ) under Banking & Finance is...20.
It seems like there's no way for the majority of people to care. I wish I could explain this better, but... I've been living in the Midwest area for the past few years. The day-to-day lives of the people here are just so incredibly different from the vibrant and politically-active crowd in NY, or the tech scene in SF. My wife's father is in a desperate struggle to prevent his family from going bankrupt. He owned a bu…
And there's me. I think you're right to an extent. One mistake, or stroke of bad luck, and you're almost under water. At the very least, you are almost sure to feel like you have absolutely no opportunity to better your situation. (Me also, and my argument of what "Occupy" is about, the lack of opportunity...)
The greater argument of "socialism for the rich, capitalism for the poor" also fits the student loans scenario. You can't go bankrupt on them. Period. I've paid what I borrowed and still owe more than I borrowed, and now I've lost my job.
I'm hoping I do well and can pay what I owe. But damn, what's this going to actually cost me?
Capitalism can't work properly if risk-takers are insulated from the consequences of bad bets. The #1 priority should be making sure that no institution is "too big to fail" next time we get what is effectively a global margin call.
And yet, that'll get you labeled a "socialist" in most parts of the country.
Where? Actual citations needed, not just handwaving about "conservatives".
I note that the tea party is very opposed to bank bailouts.
They only win because we let them. If the majority of people weren't so politically indifferent, there would be a higher probability of change. The highest vote count on PlainSite ( http://www.plainsite.org ) under Banking & Finance is...20.
They only win because we let them. If the majority of people weren't so politically indifferent, there would be a higher probability of change. The highest vote count on PlainSite ( http://www.plainsite.org ) under Banking & Finance is...20.
I think of it as temporal theft. The theft being private losses socialized via bailouts, govt deficits to prop the economy, and QE. It occurred at time t, but the loss isn't felt till t+n, so there's a lag during which most people grumble but mostly are indifferent.
t+n will be when either:
1. Prices begin to hyperinflate commensurate with the multiple rounds of Federal Reserve QE. This could happen if Bernanke, Krugman, et all turn out to be wrong about the ability to hyperinflate the currency into a liquidity trap without commensurate price rises, then contract the money supply again as the economy emerges from the liquidity trap, thereby avoiding price hyperinflation. It could also happen if their exit strategy is wrong.
2. Foreign governments stop buying US debt en mass, forcing higher interest rates to entice buyers (or more Fed buying, further increasing money supply, see #1), leading to a slowdown and recession or depression.
3. Despite the Fed's best efforts to the contrary, a deflationary debt collapse domino effect happens anyway, possibly started by the European PIIGS taking the Icelandic route and defaulting on their debt to private banks, and ending with US states doing the same thing, leading to another recession or depression. Most unlikely scenario.
There's nothing free in this world, and those losses are going to paid for by someone, one way or another. The financial system has already ensured it won't be them. When it happens the majority of people won't be so indifferent anymore.
First we create a monetary system in which private banks are instrumental in both distributing and creating new currency, making it possible for them to reap huge gains and grow abnormally large. Then we get angry at the banks when they use this power for financial gain. How about not giving them this power in the first place?
I'm reading a very interesting book on monetary systems called "Paper Money Collapse" by a German named Detlev Schlichter who worked in the financial sector for 20 years. We're used to the system working this way, but a thorough explanation of the system - like the one in this book - really shows what a strange and cumbersome system it is we've created. It's as if on the area of the production of goods and services we've come to the conclusion that it's best to let private companies produce these, as the state is simply too inefficient to accomplish anything the market is able to. But in the area of money production we still advocate a state monopoly.
As progress marches forward, products need to be made obsolete, whole industries need to vanish, and government institutions need to be voted out of existence, to make room for new growth. And we have very poor means for doing so gracefully; no one wants to start over, go back to school, and learn a new career, all on their own dime. So we get bureaucrats, unions, corporations, and citizens themselves protecting obsolete institutions which are a drain on real economic activity.
If we don't have mechanisms for absorbing failure on a vast scale, to re-inject capital and redirect human talent to productive output, we're going to continue incentivizing people to put up with broken systems, whether it's BofA or TSA. I frankly don't care whether it comes from top-down or bottom-up: our society needs to feel comfortable with regularly firing organizations and finding other ways for its employees to feed their families.
It's easy to focus on the rich assholes who pulled the strings and robbed the public treasury. But there will always be jerks who game the system; what really matters is identifying what they hold over us that allows them to get away with it.
For example, a non-bank service where you pay a monthly fee to get the the convenience of a debit card and checking, but your deposit doesn't contribute to a bank's reserves, which enables banks to lend and thus empowers the banking system. A service like this wouldn't have the overhead of banks because it wouldn't have to support lending or investment divisions.
Simple (https://simple.com) comes close in that it provides a debit card, but it uses banking partners to store deposits and makes money off the deposits rather than from a monthly fee.
Is there a service where you can deposit money that doesn't increase a bank's power to lend? For example, a non-bank service where you pay a monthly fee to get the the convenience of a debit card and checking, but your deposit doesn't contribute to a bank's reserves, which enables banks to lend and thus empowers the banking system. A service like this wouldn't have the overhead of banks because it wouldn't have to su…
That's the most significant way banks make money. It costs money to have branches, tellers, and armed guards (let alone websites, security teams, forensic-level accounting, marketing, ATMs everywhere, electricity, etc). The way that banks cover all this overhead is to take your deposit at 0% or 1%, then lend it out at 5% (mortgages) to 15% (personal loans). The difference between 0% and 15% gets split between covering bad loans that don't get paid back, and keeping the lights on.
It's not that the deposit department supports a loss-making lending division; it's that the two are inseparable.
If you wanted a bank that didn't lend out deposits, you'd have to pay a hefty monthly fee for the privilege. It'd be more like a safety deposit box than a "bank" in the way we know of them today.
That said, check out credit unions if you prefer a more local banking option that is less likely to make extremely leveraged bets. There are good and bad sides of credit unions, but many people who dislike traditional banks prefer credit unions.
Is there a service where you can deposit money that doesn't increase a bank's power to lend? For example, a non-bank service where you pay a monthly fee to get the the convenience of a debit card and checking, but your deposit doesn't contribute to a bank's reserves, which enables banks to lend and thus empowers the banking system. A service like this wouldn't have the overhead of banks because it wouldn't have to su…
> Is there a service where you can deposit money that doesn't increase a bank's power to lend? That's the most significant way banks make money. It costs money to have branches, tellers, and armed guards (let alone websites, security teams, forensic-level accounting, marketing, ATMs everywhere, electricity, etc). The way that banks cover all this overhead is to take your deposit at 0% or 1%, then lend it out at 5% (m…
That's the way things have been done, but I don't believe the two are inseparable.
You can eliminate much of the overhead you mention by not having branches and thus no need for tellers or armed guards. For ATMs, you could partner with something like the Allpoint ATM network (http://www.allpointnetwork.com) -- I believe Simple does this.
Because you are not lending money or making investments, you reduce your overall risk and requirements.
You're right though, it would be like a safety deposit box -- a digital safety deposit box that's linked to your debit card. A service like this would be disruptive.