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Italy approves 40% windfall tax on banks for 2023 as profits soar

theguardian.com

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Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#151

Post by danudey »

dj_gitmo wrote: post #145
jntvjnvutnuvt wrote: post #97

Earlier quoted context omitted.

Most Americans have access to AT&T, Verizon and T Mobile. They also have a choice of insurance plans and healthcare providers.

> AT&T, Verizon and T Mobile. These are mobile providers. For home internet with a physical connection you usually don't have a choice and it is not outlandish to consider them a "natural monopoly" like you would electricity and water.

And in cases where there are competitors, they'll often have similar prices for similar offerings, with equally poor service or reliability.

After all, if you're Time Warner, you could compete with Verizon by improving your infrastructure or lowering your prices, but that would spur them on to do the same thing, and then it's a race to the bottom where "everybody loses" (by which I mean consumers win a bit more and corporations win a bit less).

If you instead take the gentleman's agreement to not make any substantial changes, then you both get to gouge customers for poor service as much as you want, keeping profits high without having to do any work to maintain it. Sure, you might lose some customers to your competitor, but they also lose customers to you and everyone is happy (except the customers).

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#152

Post by danudey »

bko wrote: post #75
madballster wrote: post #21

This is an old European disease. Corporate profits are often seen as an adverse result; of consumers being taken advantage of unfairly. Taxing excess profits beyond what are already high tax rates is popular amongst voters (e.g. see poll results in the UK, 2022). However, this lowers the appeal for new entrants to enter these markets to compete for these excess profits through better and more efficient products and s…

I think that's correct. I have a theory about bullshit jobs in highly regulated or profitable industries. Places like Google have a ton of employees that don't contribute anything but make work projects. Why don't they just cut the workforce in half? Because their profit margin would be too high. It's already 25% with all the bloat. Imagine if their profit margin shot up to 50%? They would likely be dragged in front…

I'm in my 40s now, and would be pretty content to get up and remote to work every day with no impact on anything. Let me save that energy up for my family instead.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#153

Post by danudey »

concinds wrote: post #37
madballster wrote: post #21

This is an old European disease. Corporate profits are often seen as an adverse result; of consumers being taken advantage of unfairly. Taxing excess profits beyond what are already high tax rates is popular amongst voters (e.g. see poll results in the UK, 2022). However, this lowers the appeal for new entrants to enter these markets to compete for these excess profits through better and more efficient products and s…

Your assumption, that if without these extra taxes, more banks would be created and the industry would become less concentrated, seems untrue. The banking industry seems to be becoming hugely concentrated in every Western country, regardless of windfall taxes.

The opposition to these extra taxes runs surprisingly parallel to trickle-down economics.

If we pass these windfall taxes and then use that money to help individuals who are struggling, those individuals then benefit; however, if we let all that money to go to the millionaire/billionaire shareholders, then there's a chance that, instead of adding it to the excess wealth they're already hoarding, they might decide to spend it on business or projects that they could already have afforded but didn't. Those businesses or projects could then theoretically create work opportunities which would then employ some more people, and maybe some of those people would be the people who are struggling, and maybe the pay would be a bit better than the market rate they're already getting paid for their labor for some reason and so they'd get paid a bit more, and maybe that would help them to struggle less. Didn't you ever think of that?!

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#154

Post by Silhouette »

jntvjnvutnuvt wrote: post #114
Silhouette wrote: post #109

Earlier quoted context omitted.

Banking! If there are meaningful competitors then that implies there is meaningful competition. But many financial services firms have been making huge windfall profits by creating a wide interest rate spread even though they would still be (very) profitable with much lower spreads and their customers have a clear incentive to go with a competitor offering a better interest rate. So clearly there is not effective com…

Well, there are thousands of banks in the US alone that offer mortgages and loans.

And are they offering them at competitive rates or are they all mysteriously making enormous profits despite the "competition"? Because in much of Europe it's definitely the latter that is happening. There are lots of banks but evidently they are not really competitors.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#155

Post by cykotic »

gruez wrote: post #137
cykotic wrote: post #131

Earlier quoted context omitted.

I think you don't understand what the word suffer means. Those entities don't lose anything. It's not possible to lose something you don't have. In an alternate universe where the windfall tax did not occur those entities have more money. But in this universe they don't lose anything. They don't suffer. To call it a loss means that money was taken from them. If someone promises to leave me $1 million when they die an…

>I think you don't understand what the word suffer means. 1. You haven't heard of the saying "suffering a loss" in the context of finance? 2. see definition 3: https://en.wiktionary.org/wiki/suffer#Verb > Those entities don't lose anything. It's not possible to lose something you don't have. In an alternate universe where the windfall tax did not occur those entities have more money. But in this universe they don't l…

According to the definition you linked to no suffering occurs because no one lost anything. You can’t lose something you never had.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#157

Post by imtringued »

brmgb wrote: post #29
nequo wrote: post #5

Earlier quoted context omitted.

> I would much rather see regulation forcing banks to raise interest rate on deposits Regulation that increases competition would be even better. It seems like that would be the underlying problem.

I am not sure myself. The past two decades have shown that banking is a sector which needs to be tightly regulated and bankers can never be trusted to not do utterly stupid things if there is even the slighest hint of profits. Honestly, I would be fine with the banking sector being nationalised at this point at least for the retail part. We are already bailing out banks when they fail so let's be coherent. It's entir…

If you think about running your own bank, guess what, the entire business model is inherently fragile. The payment services banks offer do not pay for themselves. People expect bank accounts with zero fees. This means that the payment infrastructure has to be cross subsidized from something unrelated to the payment infrastructure and that in turn means that the availability of the payment infrastructure is dependent on the actual cash cow of the bank.

Lending to borrowers and diverting interest means your payment infrastructure is now tied to the creditworthiness of debtors. Even worse, what if the margins are so thin the bank does investment banking instead? Now your payment infrastructure is tied to the erratic stock market!

The obvious solution is to stop the cross subsidy and start demanding that people pay for payment services separately. This doesn't guarantee proper and competent management. It merely makes it possible in the first place. Of course the problem is that various consumer protection agencies lobby for legislation that appears on its face to protect consumers but only by making the entire system less stable.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#158

Post by imtringued »

all2 wrote: post #78
bastardoperator wrote: post #46

Earlier quoted context omitted.

What kind of competition would you like to see in the banking sector? All banks look exactly the same from this vantage point...

The fractional reserve system and its associated fiat currencies will always drive "banking" as a service in the same direction: loans that become increasingly predatory. The root problem isn't the banks, per se, rather the problem is the underlying system that modern banks are incentivized by. Remove usury (loans at a profit) and base the national currency on something (anything is better than nothing, but the Socia…

They wouldn't because you literally changed nothing. The USD is on a failed gold standard. We are still living the aftermath of a failed gold standard. Also, in theory a gold standard does absolutely nothing. All the theoretical benefits you think that come from a gold standard can be implemented today. The only difference is that a gold standard collapses when you go out of its modus operandi.

The obvious problem is the concept that money from this period should be valid in any future period with no decay or costs associated with holding the money. This leads to a compression of the economy along the time dimension. It manipulates time preferences because money can be transported into the future at no cost which artificially subsidises low time preferences. The market no longer properly integrates the time preferences of all participants and this then leads to people who met their needs to assert their low time preference over people with unmet needs who by mere necessity, and not because of psychological or personal failure as many claim, have a higher time preference. A recession can be viewed as shifting production into the future even as people have unmet needs in the present.

The only known solution is to get rid of cash or to introduce some sort of time bound money like demurrage currencies. A demurrage currency cannot be carried into the future at no cost. This binds the currency to a specific time period which in turn means that people with excess money can no longer impose their patience onto people who are impatient by circumstance.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#159

Post by l33t7332273 »

gruez wrote: post #54
l33t7332273 wrote: post #14

Earlier quoted context omitted.

But what does regulation that makes it easier to start a bank look like? It seems hard to do without reducing requirements for cash on hand which, which can be a disaster.

> But what does regulation that makes it easier to start a bank look like? https://en.wikipedia.org/wiki/Narrow_banking

I have to wonder how competitive these banks are. Without being able to invest in anything other than government bonds, they lose out on a lot of money that bigger banks get.

Re: Italy approves 40% windfall tax on banks for 2023 as profits soar

#160

Post by imtringued »

scotty79 wrote: post #117
tensor wrote: post #32

This is a bit strange as presumably interest rates were raised in the first place to prevent inflation. Turning around and scolding the banks for doing what the government wanted in the first place seems counter productive. Wouldn't redistributing these profits back to mortgage holders just undermine the raising of interest rates in the first place?

I'm not sure why people think higher interest rates reduce inflation by removing money from the economy. Main reason high interest rates reduce inflation is that they disincentivise taking new loans and each new loan take is new money printed. So higher interest rates is just putting breaks on money printing.

You are absolutely correct but you are forgetting one thing. The entire system ratchets itself back to a zero money supply automatically as debts are repaid. This means the money supply shrinks overall if the interest rate is sufficiently high and the rate of repayment exceeds the rate of new loans being taken on. This is a very slow acting way of doing things and it can lead to debt deflation. If there was a way to avoid debt deflation, then total debt wouldn't have to rise permanently.
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