Thursday, 27 June 2013

Bank Reform Rant

Hi David,

In this situation I think a debt jubilee along with protecting savings is the answer.

Increase interest rates and make getting your hands on money competitive.
The savings you are talking about freeing up will be redirected fairly quickly by a functioning banking system to those who are most competitive and that will drive a recovery as the best will survive and grow and bring with them people that want to part of something positive.

Those that fail, fail. We all do, but if they see that really trying to make it is being rewarded and the value of their work wont be undermined in the long run then people will go and live the life they want to, and in the end the majority of people do want to be net contributors and not visa versa, and that is what will really direct an economy.

People and their ability to innovate and create and invest in that which they believe, not money. Money is the tool for that, but the tool can never direct the work.

Savings are just the reflection of an ability to generate excess money through what you do.
Banks are there to reallocate that excess to allow investors to back the next productive idea.
Government is there to ensure we have a free and safe society to carry this out in.
Both Banks and Government are now so far outside their area of ability that we are seeing this lunatic money printing because both banks and government are corrupt to the core. Then need to go back to their core capabilities. Stick to what they can do right.

I think that the debt jubilee used in conjunction with a “quantitative easing” type event will just shift the debt burden, and those savings you want to free up will be sucked into paying off the debt of the money printed, because current money printing is just increasing the debt pile. It’s a short term injection, and yes I do think it would work in the immediate depending on how it is implemented, but once we move out a few years, how long until we are told we just need another little hit because of a liquidity trap, or some other bubble that the print off caused and we now need to cover the losses on that..and we go again. Little by little the excuses are made and we end up back at square one.

but ya, I’m not an expert, I am unsure…It’s more a general perception I have that it would be a cloaked ponzi event to free up savings now to bail out the money printers, or the vested interests closest to them.

Just do it right first time, and que sera sera. Don’t sugarcoat the medicine, and lets get on with it

-> jubilee on all “non-secure” debt, let the house of cards fall on all the many many layers of scam out there
-> Secured “top-tier” debt. Tough, you are getting cents on the dollar. You knew the risks of investing. Nothing is ever AAA, credit ratings are just advertising. There is nothing guaranteed in this life. Let the big babies throw their toys out of the pram!
-> Break up all the banks, have 20/30 locals banks in Ireland competing for business. Perhaps amalgamated with credit unions.
-> small dynamic competitive banks with good knowledge of the area they are in with the remit to drive small business and productivity
-> Make the central bank of Ireland the “money printer” with a hard currency, interest free to the economy of Ireland for the benefit of the people, or with strong currency rules so people can save and it can insure their savings are not devalued. Let it ensure nothing else [CDS, CDO, Municipal bonds, whatever! Investors get burned].
-> Have 3 or 4 investment banks competing for investment on the large projects. Still with the remit of creating business and not derivatives. let it be clear. You are investing with these. You may lose there is no guarantee. But I don’t know enough on investment banking so I defer to those who do
-> Let the interest rates and debt and usuary take part in the competitive lower banks system, but let the central bank not be an ever expanding balance sheet for losers.
-> The interest paid on loans taken out covers the cost of banks service + the interest the bank pays to savers. A fully functioning banking system should natually balance this. I think?
-> This would put a bit of a gap between lending/investing returns and saving, so if there is more profit to be made investing it will free up the savings you wish to free and the money will flow to productive means and not sit in an e-vault on your internet banking site!

-> Make the system work for us. Not us for the system

As for how this fits in with Europe. Who cares. Lead by doing the right thing. I couldn’t care less what “Europe” wants, because the “Europe” we hear about isn’t the average Austrian, German, Spaniard like you and me. It is their Anglo, and the crony’s included in their own versions of Deutsche-Anglo and Anglo-de-casa and BNP-Anglo. Everyone of those countries has/had an Anglo and they will need to face up to it sooner or later.
All the Emperors are naked!

You want a dynamic, creative, innovative economy. Let the engineering be functional not financial.

Maybe there is some merit in what I say. It isn’t perfect I know.
But right now we are going nowhere, and printing our way there


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