Energy minister will hold summit over peak oil

[emordnilap]

Natural monopolies can be run effectively but more often than not are pushed from all sides; some want privatisation; some want higher wages; some want to 'create' jobs; some want to siphon off profits. A ring-fenced, well-regulated and accountable public monopoly should create enough profit to stay balanced without any rip-off.

The Irish state electricity board did just this, connecting every home, charging some of the lowest rates in Europe, paying excellent wages and benefits and generally running an efficient service that the Irish were proud off.

Then Fianna Fáil and the EU decided this role model is not the way we do business these days; they split the company up, upped the prices to make it more attractive and tried to sell bits of it off. No takers, though in fairness, a spin-off is that it kick-started 'greener' electricity generation. That could have been done anyway. Ireland is too small for competition in this market.

We now have some of the highest-priced electricity in Europe, media moaners complaining about skilled workers getting a decent wage and an uncertain future for the infrastructure due to being a bankrupt country.

[Blue Peter]

Natural monopolies can be run effectively but more often than not are pushed from all sides; some want privatisation; some want higher wages; some want to 'create' jobs; some want to siphon off profits. A ring-fenced, well-regulated and accountable public monopoly should create enough profit to stay balanced without any rip-off.

I think that this would be especially hard with banking, since by definition, you are having to pick winners and losers (giving money or not), and even if there weren't political interference, there would be huge numbers of accusations of it occurring,


Peter.

[emordnilap]

Natural monopolies can be run effectively but more often than not are pushed from all sides; some want privatisation; some want higher wages; some want to 'create' jobs; some want to siphon off profits. A ring-fenced, well-regulated and accountable public monopoly should create enough profit to stay balanced without any rip-off.

I think that this would be especially hard with banking, since by definition, you are having to pick winners and losers (giving money or not), and even if there weren't political interference, there would be huge numbers of accusations of it occurring,


Peter.

No more -probably less - of a gamble than the current system.

[Cabrone]

Banking could be seen as a public utility and a state bank set up. However, in the past few years, most utilities have been sold off. It's not clear to me that it would be necessarily cheaper.

I think if you got rid of the profit aspect then the whole service should be significantly cheaper.

I also think that the govt would be able to get away with leaner salaries because of the extra job security that they could offer.

A cheaper money system should be of great benefit to the real economy by spreading the cash out to many more people. Joe public would keep more of their own money rather than it being syphoned into the banks.

However it wouldn't be suitable for everyone (business startups\large corporations?) so I'd imagine the existing banks would pay their way by servicing these specialist clients instead.

I think that those go to people who do rather different things than the plain vanilla banking which I have described. I doubt that they are merited, but it's a different argument, I believe.

The trouble is the retail\merchant\trading wings of banks have all been mixed up.

At the very least the retail side should be split apart from the more gambling wings. Why should ordinary people have their money gambled away without them even knowing it.

Could you have sacked your local electricity board manager?

No - but I could sack his\her political boss.

They would need to employ people to do the checks, manage accounts; they would have to buy/rent buildings. Was the old electricty board significantly cheaper than the current lot?

Not sure but a nationalised system couldn't have done a worse job.over the last 2 years. How much is that debt?

So how would they pay for this?

I think that if the tax system was greatly simplified maybe by looking at introducing a flat rate across all taxes with a decent exemption amount (I believe the Lib Dems are looking at a combined flat rate of tax\NI after something like £11k) tax collection costs could be greatly reduced and the savings used to set up a fair banking system.

Heck - why not be totally radical and lump all incomes together (income\cap gains\inheritance etc,etc) and flat rate the whole lot.

Not sure if accountants (and the wealthy people that employ them to fudge their tax bills) would like it though .

Again, compare the previous nationalized utilities. And, in general, you can't get 'owt for nowt.

Agreed. That's why I think a nominal amount of interest would need to be charged to keep bad debts under control but you could get a much leaner system if the profit motive was removed.

A small amount will be for admin checks etc. Most of it is the amount they have to pay to borrow the money, plus run the bank and pay dividends

Yes but why would a nationalised system need to 'pay' to lend money?

Personally I think that if the govt wants our cash then they should be up front about it and charge it via tax. At least we could then make a clearer judgement on whether we think it's money well spent.

As for the costs - see my response above.

[emordnilap]

Good thoughts, Cabrone. Same hymn sheet.

[UndercoverElephant]

And, again, the bank's balance sheet must balance so the bank will need to have a corresponding borrowing to go with the loan.

Again, on the magic-money theory, why does the inter-bank lending market exist? What would be the point of a bank borrowing from another bank if it could just magic up a bit more money whenever it liked?

Peter,

Sorry, missed this one. The banks can only magic money out of nowhere to lend to mugs like you and me, and then only rule to prevent them doing this ad infinitum is that they have to have a certain percentage (10% or 15% I think) of that money as deposits. However, most banks also try to make money out of short-term currency trading and speculation, and in order to do this they lend money to each other overnight so that the money is always where there are people who are awake. At least I think that's how it works..


Geoff

[UndercoverElephant]

Banks can't magically create money; they have to balance their assets and liabilities. They can only loan out what already has been loaned to them,

Peter.

You'd think so, wouldn't you? Unfortunately this is not true. Banks really do "magically create money." When you go to a bank and borrow £100,000 to buy a house all that the bank does is put £100,000 into your account. It doesn't come from anywhere. Nobody loaned them the money. They just invent it out of thin air, and then charge you interest on it.

Unbelievable, isn't it? All these people had to do was make sure they did not lend stupid amounts of (invented) money to people who had no hope of paying it back in the event of a house price crash, and they could not even manage to get this right. Quite frankly, I think they should be lined up against a wall and shot.

http://video.google.co.uk/videoplay?doc ... 3790090544#

I see it as effectively a tax on the workers (but the workers haven't clued on to this particular scam).

The bankers are like middle men who for some historical reason have been granted the right to 'create' money and then charge the customer for it.

I've always wondered why the government couldn't run the money supply instead and charge 0% interest on it.

Why is society paying bankers so much for nothing?

I have no idea. I agree. Get rid of the banks and let the government make the loans.

[emordnilap]

Denis Casey, who was embroiled in financial contortions with bailed-out Anglo Irish Bank, left Irish Life & Permanent in February last year and took nearly €5 million with him. Reward the crooks, eh? Not bad for two months.

Small potatoes, I suppose, when around €80 billion (more than half GDP) is being handed over to the banks (and still they remain private!).

Oh, and three swimming pools are being shut in Dublin. The council can't afford to keep them open.

Oh, and the pressure is on to reduce the minimum wage.

Sigh.

[Blue Peter]

Peter,

Sorry, missed this one. The banks can only magic money out of nowhere to lend to mugs like you and me, and then only rule to prevent them doing this ad infinitum is that they have to have a certain percentage (10% or 15% I think) of that money as deposits. However, most banks also try to make money out of short-term currency trading and speculation, and in order to do this they lend money to each other overnight so that the money is always where there are people who are awake. At least I think that's how it works..


Geoff

Leaving aside the arguments about magic money creation, banks currently operate under capital adequacy rules*. That is, rules state how much capital (the bank's own money) a bank must hold to make a loan of a certain value. I think that the rough values are that capital should be between about 4% and 8% of the loan amount (4% for safer loans such as mortgages, 8% for more risky loans).

The banks spent a lot of effort to get round these rules using off-balance sheet vehicles (SIVs).


A deposit is just a loan you make to a bank; there's nothing special about it,


Peter.

* I believe, but may be wrong and didn't want to introduce this into the preceding discussion that capital adequacy rules rather than fractional reserve banking is what we have at the moment. That is, a bank can loan out the whole of the amount that it borrows (rather than the, say, 90% of FRB), but the total amount that it can loan out is a fraction of its capital (the banks own money which it can notionally afford to lose - though over a government's dead body).