Bank Watch ...

[RenewableCandy]

I was wondering whether the cancer was literal (they're going to finish us all off with a virus that triggers cancer) or metaphorical (they're going to take advantage of the corrupt state of affairs to take the rest of us to the cleaners).

[UndercoverElephant]

(they're going to take advantage of the corrupt state of affairs to take the rest of us to the cleaners).

They will try, but they cannot do this. Their problem is that the majority of their wealth is intractably tied up in the fiat money system. All of the 1% can't turn all of their wealth into hard assets, because there aren't enough hard assets to do so without the 1% being the only people who are able to afford any hard assets at all. TPTB will keep fighting to preserve The System right up until the moment it collapses. If they head for the exits beforehand (in order to protect their own backsides at the expense of other members of the 1%) then that will trigger a collapse.

[Little John]

(they're going to take advantage of the corrupt state of affairs to take the rest of us to the cleaners).

They will try, but they cannot do this. Their problem is that the majority of their wealth is intractably tied up in the fiat money system. All of the 1% can't turn all of their wealth into hard assets, because there aren't enough hard assets to do so without the 1% being the only people who are able to afford any hard assets at all. TPTB will keep fighting to preserve The System right up until the moment it collapses. If they head for the exits beforehand (in order to protect their own backsides at the expense of other members of the 1%) then that will trigger a collapse.

That's the point when we get war. I mean the big kind.

[RenewableCandy]

Making banks pay money to ordinary people stimulates the economy better than QE: official!

[UndercoverElephant]

http://www.positivemoney.org.uk/2012/08 ... e-banking/

[SleeperService]

Just goes to show there's nothing new under the sun as my granny used to say.

British banks won't like that idea as their huge and borderline fraudulent bonuses will evaporate.

Mira obviously studies history...

[emordnilap]

http://www.positivemoney.org.uk/2012/08 ... e-banking/

Wow.

[raspberry-blower]

A Waiting Game gives an excellent commentary on the current financial state

The point is to ask why all the banks are hoarding cash? Why are they willing to accept zero return rather than put it to work?

The standard answer is that the banks know they have many more bad loans and rotten ‘assets’ whose value could suddenly plunge if they are ever forced into the open and valued. So it is prudent to have cash around to cover any sudden forcible recognition of losses. Hidden losses are fine. A bit like illegal libor rates or money laundering. All in a bankers day and fine as long as it never comes to light. It is only getting caught which is frowned upon. Mea culpas are so irritating after all and some of the fines are actually large enough to nip a little out of the bonus pot!

Point is, that if all the banks were forced to admit these positions, they would be declared insolvent overnight.

But I have felt over the last few weeks that something about this on-going debacle and attack on our democracy and sovereignty has changed. I do not believe the banks and other financial entities are hoarding cash just as a safety measure.

Let’s look at where we are. According to ECB board member Benoit Coeure, speaking officially in July,


Europe may be sliding back into its second recession since 2009 and growth is also slowing in the United States and China.

“I don’t think we are moving toward a global recession; we are moving toward very low growth or no growth at all,” he said.

A masterful, mouthful of understatement. Rates have been held at close to zero for a couple of years now. The so called extra-ordinary measures have become fixtures, without which the chances of the big, debt-riddled banks surviving, is zero. The problem is, while essential for their survival, such low to zero rates are also killing them. Long periods of very low rates mean the banks can’t find a return on their money through any sort of regular lending. Thus the very measures which keep the banks alive, so they can ‘start lending again’, guarantee they won’t.

Entering a period of low/no economic growth is one of the consequences of Peak Oil - developed countries' economies cannot properly function with oil trading at $100+. There will be another crash in the Stock Market - oil will drop as it did at the tail end of 2008/09 with all that entails. Rinse and repeat.

[UndercoverElephant]

Point is, that if all the banks were forced to admit these positions, they would be declared insolvent overnight.

http://www.businessinsider.com/steriliz ... ing-2012-9

So it's just technical accounting stuff. The ECB can buy unlimited volumes of sovereign debt, provided the country whose debt its buying remains in good compliance with reforms.

http://en.wikipedia.org/wiki/Hyperinfla ... r_Republic

The cause of the immense acceleration of prices that occurred during the German hyperinflation of 1922–23 seemed unclear and unpredictable to those who lived through it, but in retrospect was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, but this caused the German Mark to fall rapidly in value, which greatly increased the number of Marks needed to buy more foreign currency. This caused German prices of goods to rise rapidly which increase the cost of operating the German government which could not be financed by raising taxes. The resulting budget deficit increased rapidly and was financed by the central bank creating more money. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. This increase in monetary velocity caused still more rapid increase in prices which created a vicious cycle.[9] This placed the government and banks between two unacceptable alternatives: if they stopped the inflation this would cause immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection, and revolution.[10] If they continued the inflation they would default on their foreign debt. The attempts to avoid both unemployment and insolvency ultimately failed when Germany had both.[11]

The difference this time is that foreign currencies are going to be useless, because all of them are being devalued and they have no choice but to competitively devalue to preserve exports. Apart from that, I'm now tending towards a hyper-inflationary scenario. The genie will be let out as large numbers of people decide that inflation is coming, and instead of sitting on cash they should spend it on stuff they will either need or can sell later - anything that fits that description. At that point something resembling hyperinflation can take off even with a massive deflationary force still acting on wages, and on prices of non-essential, non-useful crud. And it ends when the entire western world has both mass unemployment and mass insolvency.

[UndercoverElephant]

http://en.wikipedia.org/wiki/Hyperinfla ... r_Republic

One of the important issues of the stabilization of a hyperinflation is the revaluation. In its customary sense it refers to the raising of the exchange rate of one national currency against other currencies.

So what happens this time? If all the fiat currencies are in trouble at the same time, what do you revalue against?

There is surely only one answer to that one, and the regulars here don't need telling what it is.

I think that even if it was decided in the long-term for some other monetary system to be implemented, the only way out of an inflationary end to the current impasse will be to price all other major commodities, such as oil and wheat, in gold. That's the only way people could come to an agreement on what anything is worth, because there would be no stable fiat currency to price anything in. And it seems to me that this would be the default outcome. Nobody would have to make it happen. Rather, they'd have to legislate to prevent it, by making it illegal to own/trade gold.

[UndercoverElephant]

There is a new bank bombshell going off on Newsnight...

ETA: big one.

[frank_begbie]

http://www.positivemoney.org.uk/2012/08 ... e-banking/

Funnily enough I was watching this earlier.

http://www.youtube.com/watch?v=PKmqAX0F ... plpp_video

[acman]

Went into the bank today, Santander, a sticker on the window of each serving window, informing that your money is safe, up to £85,000, it's guaranteed by the 'fscs', I asked the teller, whats with all the notices, oh just informing customers that their money is OK, I ask, who guarantees it?, The fscs, the government, she replies, my answer is that this concerns me,
I think I'll move, co-op bank anyone?, Is it OK?
Regards, Alan

[Tarrel]

FSCS = Financial Services Compensation Scheme.

Basically, the government commits to reimburse your funds if the bank goes under, up to £85,000 (or double that for joint accounts). The maximum amount applies to one banking group, so if you're lucky enough to have more than 85 grand saved and you spread the risk across several banks, make sure they are not owned by the same group (e.g. Lloyds / Birmingham Midshires / Halifax / Bank of Scotland - all owned by Lloyds Banking Group).

Maybe I'm naive, but I feel this is a reasonably safe guarantee, at least while HMG's borrowing credentials are healthy. If it was the Spanish government making the pledge I'd be a little more sceptical.

What's interesting about the Santander experience is the fact that they feel the need to plaster the information all over the windows. I know a few weeks ago there was a lot of chatter about how exposed Santander is to the Spanish problem (they are Spanish, after all). The bank put out lots of assurances at the time that the UK operation was completely ring-fenced and funds were safe. Who knows?

[acman]

Yes Tarrel, I did mention the fact that they were Spanish owned, again a concern, but the teller said 'we re a British bank', but does that mean that they are a British subsidury of a Spanish bank?, I assume the fact they have the notices up, that they are covered by the fscs, so your money is 'safe' & you would get it back, but I've never seen it so prominently displayed in a high street bank like that, really at an unmissable eye level, with the state of the financial situation at the moment, it's like we're being prepped.
As has been said before, things are changing faster than politicians can react, and how the Euro is surviving I don't know, no doubt we'll wake up one day and it'll have gone.
Regards, Alan