What should Greece do?

[Jack]

Jim, why do you always insist on making this a left vs right issue when the people who are doing this to us are all damned bankers!?!

Don't blame it on the bankers, blame it on your elected politicians who generally have no grasp of any financial issues and are willing to take long term debt (with a maturity extending well beyond their few years of service) in order to pay for the promises that got them elected.

That is why the people are to blame.

[[KMA]Avenger]

No mate, you know as well as i do that we are presented with candidates to choose from and most people choose the opposition just to punish and remove from office the previous people they chose.
The trouble is that regardless of who you vote for, they all work for the same stinking bankers!

Knowledge is key to understanding how our political and financial systems are bought and paid for. there's a reason why Rothschild said...

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.


“That this House considers that the continued issue of all the means of exchange – be they coin, bank-notes or credit, largely passed on by cheques – by private firms as an interest-bearing debt against the public should cease forthwith; that the Sovereign power and duty of issuing money in all forms should be returned to the Crown, then to be put into circulation free of all debt and interest obligations…”
Captain Henry Kerby MP, in an Early Day Motion tabled in 1964.

“Banks lend by creating credit. They create the means of payment out of nothing. ” Ralph M Hawtry, former Secretary to the Treasury.
“… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.” The Earl of Caithness, in a speech to the House of Lords, 1997.

“The bank hath benefit of interest on all moneys which it creates out of nothing.” William Paterson, founder of the Bank of England in 1694, then a privately owned bank

“I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.” Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.


“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.” John Kenneth Galbraith (1908- ), former professor of economics at Harvard, writing in ‘Money: Whence it came, where it went’ (1975).


People just don't get it, and those who work in the banking system get it even less than the average person.

[MEZZANINE]

Jim, why do you always insist on making this a left vs right issue when the people who are doing this to us are all damned bankers!?!

Don't blame it on the bankers, blame it on your elected politicians who generally have no grasp of any financial issues and are willing to take long term debt (with a maturity extending well beyond their few years of service) in order to pay for the promises that got them elected.

I actually agree that the politicians shoulder a large portion of the blame, I think KMA, Kit & I all said the same thing about their shortsightedness in the previous 'types of government' thread where we pointed out the problems with democracy, though we all agreed that democracy is the best of a bad selection of government types, the lesser or several evils.

BUT

You cant let bankers of the hook, their greed, both personal & systemic selling unsuitable debt products and making unsecured & unsustainable loans means they deserve to have these debts go bad/unpaid, and they deserve to go bust. The fact they deliberately integrated their bad investments with the high street banking we all need forcing the people to bail them out instead of letting them go bust as we do with other badly run businesses, and using money from pension funds which are meant top be used only in safe investments meaning them going bust would drag all the workers hard earned money is what makes us most angry.

[deni]

Jim, why do you always insist on making this a left vs right issue when the people who are doing this to us are all damned bankers!?!

Don't blame it on the bankers, blame it on your elected politicians who generally have no grasp of any financial issues and are willing to take long term debt (with a maturity extending well beyond their few years of service) in order to pay for the promises that got them elected.

I actually agree that the politicians shoulder a large portion of the blame, I think KMA, Kit & I all said the same thing about their shortsightedness in the previous 'types of government' thread where we pointed out the problems with democracy, though we all agreed that democracy is the best of a bad selection of government types, the lesser or several evils.

BUT

You cant let bankers of the hook, their greed, both personal & systemic selling unsuitable debt products and making unsecured & unsustainable loans means they deserve to have these debts go bad/unpaid, and they deserve to go bust. The fact they deliberately integrated their bad investments with the high street banking we all need forcing the people to bail them out instead of letting them go bust as we do with other badly run businesses, and using money from pension funds which are meant top be used only in safe investments meaning them going bust would drag all the workers hard earned money is what makes us most angry.

Fixed income securities, especially government bonds, are considered low yield low risk product. In order to have "high street" banking as you call it (I assume you mean private banking by that - deposits, loans etc from/to natural persons) you NEED (as per regulations) to have a portfolio of fixed income bonds. These government bonds are used as collaterals for your own capital market debt (as banks finance the loans they give not by equity, but with debts). Even if banks did not finance the loans they give out by debt, they would need government bonds in their portfolio as collaterals for the interest rates swaps they go into in order to hedge away interest rate risk.

Banks are not interested to hold low yield governemt bonds per se. They do it, because they are forced to by regulations.

The same applies to pension funds or insurances offering capital life insurances - they are FORCED to hold government bonds (low yield) in addition to their stock portfolios (high yield) because government bonds are considered low risk.

[Legendary Apophis]

No mate, you know as well as i do that we are presented with candidates to choose from and most people choose the opposition just to punish and remove from office the previous people they chose.
The trouble is that regardless of who you vote for, they all work for the same stinking bankers!

Knowledge is key to understanding how our political and financial systems are bought and paid for. there's a reason why Rothschild said...

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.


“That this House considers that the continued issue of all the means of exchange – be they coin, bank-notes or credit, largely passed on by cheques – by private firms as an interest-bearing debt against the public should cease forthwith; that the Sovereign power and duty of issuing money in all forms should be returned to the Crown, then to be put into circulation free of all debt and interest obligations…”
Captain Henry Kerby MP, in an Early Day Motion tabled in 1964.

“Banks lend by creating credit. They create the means of payment out of nothing. ” Ralph M Hawtry, former Secretary to the Treasury.
“… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.” The Earl of Caithness, in a speech to the House of Lords, 1997.

“The bank hath benefit of interest on all moneys which it creates out of nothing.” William Paterson, founder of the Bank of England in 1694, then a privately owned bank

“I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.” Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.


“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.” John Kenneth Galbraith (1908- ), former professor of economics at Harvard, writing in ‘Money: Whence it came, where it went’ (1975).


People just don't get it, and those who work in the banking system get it even less than the average person.

Thanks for all these quotes, but I know how bank system works, and I'm sure some others do, I'm getting more and more annoyed that some assume that if nobody revolts it's because they ignore how it is.
However, I do agree with Mezzanine that financial banks should be split again from deposit banks and we should have another sort of Glass Steagal Act in nations. Probably that the regular failing from the financial side of banks nowadays will make it clear that a backwards walk in this would be needed, at least for the time being. As I don't think one could forbid deposit banks to play with high risks derivatives and permitted to stick only with 'low risk' bonds. (and even low risk bonds aren't always secure, as we see nowadays). I think the main problem in this being these derivatives with complicated formulas (requiring a level of mathematics and financial knowledge that buyers don't always have to know what they go for when getting it) and sort of insurances on the results of this or that thing (sorry I don't know the translation, I'm talking about these financial products where you get more or less paid depending on the result expected by the product x years later from now on, not talking about simple shares).

[[KMA]Avenger]

Blah blah blah! All window dressing.


Debt is the problem, and where does that debt start and to whom do we owe this money to and for what???


It drives me mad when i hear on TV and radio or read in the papers this term "the national debt", what gets me so mad is that people don't stop to think how firstly a nation can be in debt. and 2ndly, to whom are we indebted to.

It staggers the mind and beggars belief people can be so asleep that they never ask the question...WHY DO WE HAVE A NATIONAL DEBT!?!


@Jim, does it not anger you that you have a Govt which borrows money at interest from a private bank, spends all that money VERY badly, and then YOU have to pay that debt back through taxes, does that not anger you?

[Legendary Apophis]

Blah blah blah! All window dressing.


Debt is the problem, and where does that debt start and to whom do we owe this money to and for what???


It drives me mad when i hear on TV and radio or read in the papers this term "the national debt", what gets me so mad is that people don't stop to think how firstly a nation can be in debt. and 2ndly, to whom are we indebted to.

It staggers the mind and beggars belief people can be so asleep that they never ask the question...WHY DO WE HAVE A NATIONAL DEBT!?!


@Jim, does it not anger you that you have a Govt which borrows money at interest from a private bank, spends all that money VERY badly, and then YOU have to pay that debt back through taxes, does that not anger you?

Nations were already 'in debt' in XIXth century, they looked for loans and among the ones providing them were one of your "favorite" families: the Rothschild.

Anger me? Oh well, that left wing oriented speech by newspaper Guardian try to condemn the fact of "living beyond their needs" as a false reason. But the fact is, welfare state is being abused in France (and not only there, ie Greece), along with public sector being a temple of lazy people who have secure jobs, these cost a lot and they aren't always providing services expected from them. I'm not really against "welfare state", but this should be much more policed to avoid deficits (yes I know I'm getting off national debt there) due to overspending and badly spent resources. And among the ones receiving subsidies, you have the group of the greedy parasites who live off the subsidies while working on underground black market to get more income than they should, have multiple children to expect to get more subsidies. Which in the end is a production of suburbs thugs dealing drugs who will later cry the society is evil and that they are stigmatized by it every day. Yes I'm derailing a bit from the subject but that's something I consider to be among the reasons of bad spending: many people who receive subsidies (not all, fortunately..) are greedy parasites who want to profit off the system and don't want to contribute to it. However, I wouldn't change the system altogether because of them, but just that (much) more controls and policing on where the subsidies go should be done. I just stick to that example because otherwise it would be too long!

[[KMA]Avenger]

On other fronts...
It seems Italy is up crap-creek without a paddle racing towards a waterfall!
http://www.google.co.uk/url?sa=t&rct=j& ... qQ&cad=rja


things will only escalate and accelerate from here on

[Legendary Apophis]

#-o

I know you believe only the elites are "greedy scums", but I'm sorry to tell you that greedy people also live among the "masses", I know it's a problem for the scheme of "elites=bad; masses=poor enslaved people", but that's how it is. You also have these lazy people in some public sectors, said public sectors cost a lot to be run and these people working there often provide poor service because they don't give a damn as they see being part of it just a secure job and the least they would do the better for them it will be.


Regarding Italy, well, the problem is that Italy is a much bigger nation economy wise than Greece, therefore if it was to suffer the same way, it would be a big problem. But on the other hand, considering it's one of the biggest EU nations, it's not like it couldn't have possibility to gather more resources, and Italian firms are much more succesful than Greek firms. Problem also happen to be who will be the successor of Berlusconi?

[[KMA]Avenger]

Jim, understand that benefits are the creation of the bankers to get people dependant. but that's a whole other debate.
the problem is the central banks and those that run these central banks, it's that simple.
Remove these central banks, elect responsible and educated leaders in finance and you can solve upwards of 90% of the worlds financial problems.

It's not that hard to understand, WE make it complicated in our heads by saying "what about this or that", that's not the way to look at the problem.
The debt starts with the central banks and our Govts borrowing money at cost, that is where you start.

[MEZZANINE]

@ KMA, I agree in an ideal world there should be NO national debt.

The wealthier western nations at least should have reserves built up over several years to cover the costs of large scale infrastructure projects but again it comes down to politics, no political party will save money to hand over to the next party to take power if they can spend spend spend to buy an election victory. Also no country should borrow to spend public services, if you cant pay the public service bill one year, you certainly wont be able to pay it the next if you also have repayments to make.

Banks should only lend to countries on the same basis they lend to companies and individuals, on the ability to repay within a fixed term. Right now they lend on the basis that if the country cant repay then other countries will have to bail them out to prevent the knock on effects which is scandalous and irresponsible, I dont see why the hell I ( who live within my financial means ) should pay for others who spent frivolously, basically subsidising stupidity.


@ Deni, you say banks have to buy government bonds, not true. Banks have to hold capital and prefer to hold governments Bonds ( which the law allows them to call capital ) at low interest income than hold cash reserves earning no interest.

[Jack]

@ Deni, you say banks have to buy government bonds, not true. Banks have to hold capital and prefer to hold governments Bonds ( which the law allows them to call capital ) at low interest income than hold cash reserves earning no interest.

This is cute.

[deni]

@ Deni, you say banks have to buy government bonds, not true. Banks have to hold capital and prefer to hold governments Bonds ( which the law allows them to call capital ) at low interest income than hold cash reserves earning no interest.

Cash reserves earn at least the EONIA/SONIA/USONFFE/... and can be liquidated overnight. Bonds earn more, but they bind liquidity long term. Considering liquidity cost (and not even credit spread risk), you might realize that banks do not "earn" that much by holding government bonds.

Further, bonds are NO capital. You will find the "capital" on the right hand side of a balance sheet. Bonds are assets and as such, they belong on the left hand side. Bonds are thus as much "capital" as the mortage your house bank gave you. You can look up your basic accounting text book

What makes governement bonds different from your mortage loan, is that their risk weight is zero thus holding governement bonds does not cost you (tier 1)capital (and yes, thats the most costly one).

Your mortage on the other side, has a risk weight of 100%, meaning that for every 100 € of it, a bank has to hold 8 € of capital and can finance the other 92% through taking debt itself.

And guess what, the debt the bank takes is covered by what? Right, government bonds!

The calculation is simple: covered debt is cheaper than uncovered one, means less re-financing cost, less re-financing cost means cheaper interest rates for the mortage you take.

Simple, isn't it?

In the end, by setting the risk weight of government bonds to 0 procent, the regulator and thus the law, are forcing banks to buy governemnt bonds in order to provide coverage for their own debt without contracting their lending business and thus avoiding a credit-crunch and whatever comes from it

[[KMA]Avenger]

All i know is-Govt should be barred legally for all time from borrowing money from ANYONE or ANY bank...PERIOD!

And interest (usury) should be outlawed. anyone caught charging interest for a loan should be jailed for a LOOONG time.

*Waits for the obvious*

[Jack]

I guess you are also in favor of welfare states, eh Avenger? If banks could not charge interest on loans, then what us the point in lending?