I'm happy you have defined your terms - I see nothing to argue with in general, but the poverty in Africa comment is a non-sequitur. I don't want to get into the rape of Africa's resources by western powers and their cultural destruction of peoples by colonialism and the division of the continent by imposed boundaries that did not reflect tribal boundaries.
We either had light regulation or no regulation which you could argue was wrong intrinsically.
I agree with you that the colonial impact and interference of the "white man" has had a detrimental effect. My point was that creating money out of thin air does not create wealth, as this would mean a very simple solution to global prosperity.
Governments have bought into the "free market" fantasy, claiming markets self-regulate, failing to acknowledge that "self regulation" of a system isn't designed to support all of a given population - for example. it is based on large numbers of deaths and extinctions in the natural world
No, governments have not bought into free markets. Governments have bought into controlling and interfering with everything. Governments control the money supply and interest rates. Governments enforce legal tender laws. Governments guarantee banks. Governments regulate all aspects of economic life. Governments decide who can register as a bank. Governments bail out entire industries. Nothing in this picture is free market, it is all interventionism.
High rates, and therefore large profits are generated when there is limited freedom of choice. The Banks in Ireland operated an effective cartel for decades. Limited choice and lack of competition is what allows these rip-off rates to be charged.
That seems to be such a naive thing to post - its never that simple, but at least you seem to agree its a lack of competition that allows high interest rates to be charged.
Yes indeed, limited choice due to lack of competition is what drives up prices. But the reason there is limited choice when it comes to banking is because the cost of entry into the financial industry is so high that it is impossible for a new small bank to be set up. Why do you think banks are not complaining about new or increased regulations? Existing banks have the financial capacity to absorb costs of new regulations, which make it more difficult for new competition to emerge. Competition would make the lives of bankers more difficult.
AFAICS putting more printed money in circulation is not the same as providing credit to borrowers.
If by "money supply" you mean availability of credit, I agree.
Credit is built upon the money supplied by central banks. Fractional reserve banking allows banks to lend out more money than they have, i.e. creating money out of thin air. The only way you can increase credit is by increasing the base money suply, which is controlled by central banks. The different measures of money supply show the effect of fractional reserve banking based on M1, which is the base supply. Increasing the base money supply and lowering interest rates causes an increase in credit, which is why we are in such a mess.
The ECB is heavily influenced by the Bank for International Settlements in Switzerland, the Central Bankers Central Bank.
You may need to research this before suggesting that Government control central banks.
The ECB and all other central banks are members of the BIS and control it. The BIS is not some omnipotent, super-natural being that tells banks what to do. It's like the ECB is to € member central banks.
The whole central banking system is however a very fraudulent system, but it is ultimately controlled by government appointed central bankers.
Fine
I know very little about it, just that the interest isn't unlimited, and its this unlimited charging of interest that leads to the destruction of debtors in our own banking system.
What leads to the "destruction" of debtors, is debtors taking on too much debt. How much debt a person or organisation takes on is ultimately the responsibility of the debtor. Banks carry the responsibility of risking not getting the money back, but the bail outs (past and present) have ensured that they do not need to fear such losses.
It seems to be a fundamentally inequitable system, with the justification being given that the banks run the risk of default and so charge higher interest on loans as a result.
In fact the fractional reserve systme factors in the risk of default and of a run on the banks.
But banks do not run risk of default, as they will always be bailed out by governments and central banks. That is what is inequitable about the system, i.e. that the system cannot stand on its own two feet without implicit and explicit government guarantees. What other industry do you know of that is in a constant state of government protected insolvency, as the fractional reserve banking system. And if the system factored in bank runs then we wouldn't be in such a mess now.
The banks also reinsure the loans, they don't provide for defaults out of their own funds.
Its this massive potential for defaulting on loans that nearly destroyed AIG and therefore the insurance industry and thereby the banking industry in the last two years.
The reason this occured is partly becauase of the repackaging of toxic debt as securitized assets/loans, and partly because of the interrelationship of all sectors in the financial system.
Yes indeed, the entire financial system made extremely bad mistakes, but all of it was only possible because the money was supplied to them ultimately from central banks. And the banks knew they didn't have to account for a risk of default because there was a lender of last resort if their system came collapsing down.
Its like a Windows server without adequate anti-virus measures.
Once an attack gets underway, there is no way to prevent it spreading except by disconnection.
Except in this case the infection was widely spread before it was triggered - like a stealth virus.
I think that a more apt analogy is setting up a windows server with a virus built in deliberately. If all it takes is a situation where people want to collect what is rightfully their property, i.e. their cash deposits, to bring an entire system to its knees, then the system has a fundamental flaw or disease built in.
The uncharitable migh say someone did this deliberately, just like somone repackeged the Greek Loan as a sale of Greek currency, but that would point the finger towards American companies like GOldman Sachs and our own, our very own, Peter Sutherland and Peter would never do that, shure he wouldn't?
That is why this whole sector, insurance and banking, and the relationship between the two - needs serious oversight, leading to review and remedy.
Otherwise the next attempt at the financial end of Full Spectum Dominance will become full spectrum Meltdown.
Yes indeed, the more the financial industry is consolidated into fewer companies the higher the value of risk is within one company. But the bail outs have achieved exactly that. There are fewer banks now world wide, and regulations are making it impossible for new companies to enter the market. Regulations are also always one step behind, so there will never be an end to new risks created by financial institutions, as they know they do not carry the risk alone. The taxpayer will always be there. Unless you allow the full force of the profit and loss system to apply to the financial sector you will never ever see an end to financial crises.
Its quite celear that the BIS and the Masters of the World have no clue what they are at any more.
Actually I think they know exactly what they are doing, i.e. defrauding the public of the value of their money to the benefit of large financial institutions.
Who is "forcing" a price ceiling?
You suggested it by saying that 2% interest above the ECB rate was more than enough for banks to work with.
We were talking about the Irish situation where there was hardly any regulation, never mind forcing.
I was talking about the two stimuli that drove the market higher and the fact that they weren't addressed.
This isn't about sending conflicting signals.
- The banks aren't lending
- NAMA isn't making decisions to release certain monies which it is apparently supposed to do
- government departments are not spending their allocated amounts
These three things together are preventing recovery and forcing a recessionary spiral upon us.
Half of the shops in Patrick Street in Dun Laoghaire are closed - Limerick according to reports on another forum, is like a wasteland.
1) The banks aren't lending because (a) they are broke and (b) the risk of default is too high at the moment.
2) I thought NAMA was meant to take bad loans off the banks' books, maintain the collection of payments and sell them on in the future. I never heard anything mentioned about them actively lending money.
3) The result of the artificial boom was that too many businesses came into existence that should never have been created. The unfortunate thing is that a lot of them will have to shut down, as we simply do not need their services.
That has to be the most nonsensical thing I have ever seen posted on the internet.
Getting ripped off for a necessity for human life is never beneficial except to the person doing the ripping off.
But like most rip-off merchants they are short sighted enough to fail to see that this will eventually come back to haunt them.
Could you please explain how it is "nonsensical"? Here is an example from New Orleans after the hurricane hit. People in neighbouring unaffected areas came with truck loads of water because they knew it would be needed. But because their intention was to sell it FEMA turned them away. The result was that rather than having some water at a price, people in desperate need of water got no water. And what happens when "huge profits" are available is that more people will come increasing supply and pushing down prices. This is the very basic effect of supply and demand imbalances. If on the other hand FEMA had made a public announcement welcoming anybody that can bring water to charge whatever they wanted, you would have seen thousands of people filling up cars and trucks with essential items, which is exactly what was needed at the time.
How is having something at a cost worse than having nothing?
The banks appear to have gone from "lending stupidly" to "not lending stupidly".
Of 22 loan applications made through one branch on Q1 this year only 10% were approved by Head Office.
I told Robert Mulhall of AIB at the 2010 Photo Journalism Awards in AIB Corneslcout in the spring of this year, that if they banks didn't stop mouthing platitudes about "partnering" people through this recession and start lending again the economy would shrink, the recovery would fail and next year THEY would be the ones ending up on the Jobseekers.
The frightening implication of this massive restriction of loan approval to 10% of applications is that they expected 90% of applicants to default.
This was relatively recently at a time when only the building industry was looking like it was taking a hit, but the implication is that they expect 90% of applcants to default.
And of course, by not lending to the economy which had come to depend on the easy availability of credit our banks are feeding into a self-fulfilling prophecy - the destruction of Ireland Inc.
But what you are suggesting is like treating an alcoholic with alcohol. It is precisely the dependence on easy credit that has to be ended. Yes, in the short term the effects of this will be harsh, but at least the economy will be able to be rebuilt based on real savings and productivity, not consumer spending.
Ireland has the largest level of foreign debt on earth. Adding to that level will only make things worse. And as I have mentioned before, Germany is recovering by increasing production and decreasing levels of debt. By your argument this shouldn't be possible.
Light regulation of imprudent lending practices led to this recession - now no regulation of the banks who have been bailed out by the taxpayer is leading us downward into a ten year recession.
Someone needs to give the banks, NAMA and the government departments a good kick in the proverbials or take their powers away from them - the banks are nearly nationalised, NAMA is ours, we are the government - let them get on with it.
No, what caused this mess was too much cheap credit being available. And the only reason banks were able to lend so much and so cheap was because the central banks provided it. And the only reason banks' behaviour was not reigned in by bond holders, was because bondholders knew their investments were not at any risk. The riskier a business, the more a bond holder will require in interest, but when it comes to banks there just is no risk to bond holders.
No.
You cannot.
What is the viable alternative you are offering?
Borrowing the money from a third party government or institution - what changes?
I am aware of no means of providing the amount of credit required except through the fiction of the fractional reserve method.
No body or group of bodies has the funding to lend the amounts needed - are you expecting some rich Sheik to finance lending - even they don't have enough.
Unless you can explain why this is not possible you are only showing your ignorance of existing and alternative banking systems. You have on many occasions posted with criticism of the BIS, which I agree with. But yet you do not think that the only reason the BIS exists, i.e. to ensure that the fractional reserve system is kept alive internationally, is reason enough to put an end to.
My alternative would be at the very least a non-fractional gold standard, but ideally a free banking system. This would not require foreign funding.
You seem to have read a couple of books and think you are competent to look at the long term effects of fractional reserve banking on currencies - maybe you are, I don't know, but what you say here bear little relevance to the problems Ireland faces.
Your comments aren't helping in a dicsussion about the short term effects of withdrawl of 90% of credit from an economy which had come to rely on credit, the apparently tardy management of funds by the largest financial institution in the state [NAMA] and the massive underspend by government departments which represents the final betrayal of taxpayers trust.
I have read many books on the topic and have many more on a pile waiting to be read. And my suggestions certainly bear on Ireland's problems of having too much debt, both public and private. I don't know why people think that the solution to a problem of too much easy credit is more of the same.
The short term effect of no or lack of credit is exactly what the solution is. The economy has to rid itself of the phony system and idea of consumer and credit driven "growth". This has ended in tears already, and re-igniting it is not a solution. An alcoholic has to go through withdrawal to become sober, the same is the case with an economy hooked on credit.
The Banks, NAMA and the Government Departments fail to realise that an economy that is shinking will never recover.
Money spent increases economic transactions and the multiplier effect takes over, regardless of the intrinsic value of those transactions.
Economic activity and therefore strength depends not only on the total amounts exchanged but also on the number of transactions - which involes the multiplier effect.
Now unless people stop focussing on "money supply" and start seeing this lack of credit, lack of spendng and resultant lack of activity for what it is, our economy will be worse in two years than it is now.
In fact it'll be worse in two months that it is now, with no hope in sight for another other than a paper recover based on sales figures for international companies based here which are not translating into economic activity or jobs.
In America, their own "jobless recovery" is seen for what it is, and Baldy Noonan was bang on the button when he said we're skipping along the bottom.
Except the "bottom" is tilted downward into Depression, from Recession and the reason the stone is still skipping is that its still falling doen a slope.
I agree that worse is to come, not only here, but in all countries that are trying to spend their way out of a recession/depression. The economy will hit bottom no matter what. Prolonging the inevitable is not a solution.
I agree 100%, but for different reasons.
I'd guess that you're right, the MRSA rates are probably lower in private hospitals. But as I said, this is an unfair comparison. Private hospitals don't take in A&E patients, they pick and choose the patients they like, and the patients who will pay. Infection control rates are directly related to overcrowding. It is a bit easier to manage infections when you have private rooms. It is a bit easier to manage infections when you don't have six patients squeezed into a 4-bed room with little space between beds, and another two patients on the corrider. If you can pick and choose your patients coming in, it is much easier to manage infections. That's a luxury that public hospitals don't have.
As I said before, that is no reason for bad infection control and cleaning practices. My wife's experience with cleaning staff has shown that cleanliness in public hospitals is more than lacking. You have staff that will not clean above a certain height because it was against union rules. Waiting 4 hours for a blood stained toilette to be cleaned because cleaning staff would not respond to calls. Introducing new cleaning agents was impossible without "union approval". Any reprimands by management for not sterilising instruments properly (which could kill someone having an operation) resulted in an "I don't care shrug" followed by the arrival of a union official on the ward. In the private hospital she worked this simply did not happen. Everything was scrubbed top to bottom on a daily basis without any complaints from cleaning staff.
I think you're getting caught up with ideology and you are forgetting about the practical issues. So you're proposing that AIB and BOI should have been allowed fail, along with Anglo and INBS. So explain it to me like I'm 10 years old. What happens on the morning after?
What happens when 70% of the country can't get money for food? What happens when 70% of the shops can't process credit card or laser payments? What happens when 70% of the employers can't pay their staff? What happens when 70% of landlords stop getting rent?
Tell me clearly what damage would be caused and how this could be unwound? How long would it take for alternative banking services to be available?
You are wrongly assuming that the doors would just be shut. What happened when Quinn was declared insolvent? An administrator was appointed, but it was business as usual. People's deposits were "guaranteed" by the state up to €100000. If you are saying that this guarantee would not have been practical to implement or work then it wasn't worth the paper it was written on.
Now I am not suggesting that everything would be fine and rosy, there certainly would be quite a few difficulties. But what you would achieve in the long term would far outweigh the short term effects. In the long term, you would send a clear message to banks operating here that they cannot expect to get paid and not bear any of the risk. You would put an end to banking and financial crises of the magnitude the world has become so accustomed to.