Occupy The Senate - now discussing: a world without banks

Discussion in 'Archive: The Senate Floor' started by SuperWatto, Oct 22, 2011.

  1. SuperWatto Manager Emeritus

    Member Since:
    Sep 19, 2000
    star 5
    I came upon the Occupiers in Amsterdam yesterday. And they're in Rotterdam, Frankfurt, Brussels, they're everywhere. It's an infestation! I guess this thing is now officially global. So I'd like to bless it with its own Senate thread, even at the risk of once again coming across as anti-Americanocentric.

    Because there's some things we need to discuss besides income inequality in the US.

    Greek Default and a World Without Big Banks.
    The clamor is getting louder. More and more, you hear people declaring that the demise of big banks should be looming. But does anybody think that's remotely feasible, or a good thing to strive for at all? Isn't the trust in software doing a better job than people what got us into this mess in the first place? And are the banks really the problem, or is it their products?
  2. Mr44 VIP

    Member Since:
    May 21, 2002
    star 6
    Well, I'll trade you the iron ore that I have for the tuna that you have. Although you better start stocking up, because 1 ore load = 25 tuna.

    Isn't life without banks great?
  3. SuperWatto Manager Emeritus

    Member Since:
    Sep 19, 2000
    star 5
    I'm all out of tuna, but I can whip you up some spiffy artwork for any project, not necessarily excluding gay weddings. I´m very experienced and professional, so we need not discuss any price under one ore load a day.

    Seriously though, not taking any sides here but banks =/= currency.

    Meanwhile, in other news...
    European governments have made strong progress on a ?100 billion deal to recapitalise European banks hit by lending to Greece. The money will be pumped in to bring lenders' core cash reserves up to a newly raised nine percent of holdings.
  4. Ghost Chosen One

    Member Since:
    Oct 13, 2003
    star 6
    There is already a solution/alternative to banks, especially the giants like Goldman Sachs, Citigroup, Bank of America, etc. It's an easy solution too.

    Everyone concerned about Wall Street and the Big Banks should just put all their money in local credit unions.

    If people stop using these banks, transfer their money to their local credit union, and cancel their bank accounts, then the Big Banks will collapse under their own weight. Problem solved. It's easy, peaceful, and legal.

    Credit Unions aren't perfect, but they're a whole lot better than banks.
  5. Mr44 VIP

    Member Since:
    May 21, 2002
    star 6
    Seriously though, not taking any sides here but banks =/= currency.

    No of course not. But Banks equal access to currency for 99.9% of the world.

    Banks also equal economic growth for any collective larger than a small hippie commune tucked away in a remote section of Vaalserberg... And BTW, I reject your artwork offer, at least without seeing a buyer sample first. But since I'm from the rootin' tootin' US, I'll just use my large collection of guns to take your artwork away.... [face_mischief] Banks =/= anarchy either, but they certainly keep it in check.... [face_whistling]


    EDIT: Ghost, I don't mean to be the kill joy to your plan-If people stop using these banks, transfer their money to their local credit union, and cancel their bank accounts, then the Big Banks will collapse under their own weight. Problem solved. It's easy, peaceful, and legal. Credit Unions aren't perfect, but they're a whole lot better than banks.

    But if everyone took their money out of banks and put them in credit unions, wouldn't the credit unions become just as big as the banks? All you're doing is swapping terms, which is pretty meaningless. I mean, what's the difference between Bank of America, with 10 million members (or whatever the figure is), and your "small, local credit union," if the same credit union suddenly takes on 9 million of that 10 million figure?

    Banks aren't the problem here.

  6. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    Goldman Sachs is only technically a bank. They converted themselves into one to access the bailout funds.
  7. LostOnHoth Chosen One

    Member Since:
    Feb 15, 2000
    star 5
    What is wrong with banks?
  8. Mr44 VIP

    Member Since:
    May 21, 2002
    star 6
  9. SuperWatto Manager Emeritus

    Member Since:
    Sep 19, 2000
    star 5
    I guess the complaint is that they´ve become too... maverickish? And then when their luck runs out, the people need to pay to keep 'em alive. Something like that.

    But I'm no spokesperson. We need a real live on on here. Don´t they have Wifi?
  10. LostOnHoth Chosen One

    Member Since:
    Feb 15, 2000
    star 5
    What banks, insurance companies and public companies generally need is good prudential regulation and oversight. That is the job of government.
  11. Ghost Chosen One

    Member Since:
    Oct 13, 2003
    star 6
    Credit Unions are city-based, or state-based. They won't be able to become just as big. Besides, they're just run and organized more democratically; they're cooperatives, not for profit.
  12. Mr44 VIP

    Member Since:
    May 21, 2002
    star 6
    No, you're missing the point. Currently, credit unions are typically alternatives linked by a set criteria that members have to meet-such as "Chicago Teacher's Credit Union..." and so on. They're specialized by design.

    However, if you're telling everyone to remove their money from banks and put them in credit unions, credit unions would organically become larger. It would be a natural consequence. If there were originally 200 members in the above hypothetical Chicago Teacher's Credit Union, and that number jumps to 300,000 people on the West side of Chicago who all pulled their money out of Citibank, how do you suggest the additional people are handled? What's the difference between a bank branch that has 300,000 depositers and a credit union that is now open to those same 300,000 depositers? Or are you suggesting that you would put artifical limits on each individual credit union so they wouldn't be big? So for instance, each credit union could only service 200 people....(because you seem to be of the opinion that "big" means bad for some reason) In a city like Los Angeles, or New York, or Chicago, that means that there would be literally thousands upon thousands of individual credit unions trying to do the jobs of banks.

    Who would regulate all of these credit unions? What about account portability? Would an ATM card for Illinois Credit Union #4567 work in Maine? If a major company like Motorola wanted a capital investment loan, would it have to apply to dozens of credit unions in each state it operates in to reach the total? (after all, a specific credit union isn't going to be able to handle a 100 million dollar technology improvement loan. Such a loan would have to be split among 20 credit unions for 5 million each...) How about how the federal reserve controls the monetary supply? Would each small credit union pull an armored car up to a federal reserve bank to get just enough cash to fulfill the needs of its limited membership? What about international investment and loans? Again, instead of working financing through Bank of America, would an emerging nation have to come looking to literally dozens of credit unions to put together a total package of foreign investment?

    Your suggestion just seems to be more at home if the year was 1811 and not 2011, because there are a whole host of reasons why banks make sense (yes-pun intended here) and it doesn't have anything to do with being bad simply because they're banks.
  13. Raven Administrator Emeritus

    Member Since:
    Oct 5, 1998
    star 6

    The solution is clearly not a world without banks. Banks are just too darn useful. However, that doesn't mean that the system is fine as is. I can see at least three changes that would improve things overall, in my opinion.

    A) Tighter regulation. The highly regulated Canadian banks posted record profits during the financial crisis meltdown.
    B) Make bank executives criminally liable if they knowingly engage in risky behavior with other people's money. This is obviously the hardest to actually legislate, as the expression "you have to spend money to make money" is with us for a reason.
    C) If a bank is going to fail, let it fail.
  14. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
  15. Fire_Ice_Death Chosen One

    Member Since:
    Feb 15, 2001
    star 7
    I dunno, when a bank gives out risky loans and then asks for a government handout because those loans went south then who is the problem? Do we blame the sucker who got suckered into a loan for wanting to better their lives or do we blame the bank for giving them the loan knowing they were a risky client? As for what's the difference between a credit union and a bank I think I heard it explained that the credit union is its members and nothing more. They don't make risky investments at the expense of their members and they don't charge ridiculous fees. Or at least that's what's been advertised. I will agree with you that the banks aren't a problem, but they are a big chunk of it. The other part is a government (which was run by Republicans) that didn't do its job and regulate risky behavior.
  16. SuperWatto Manager Emeritus

    Member Since:
    Sep 19, 2000
    star 5
    I've started up an investigation at my bank to find out where some money that I sent to a Royal Bank of Canada account went. They lost it. So I'm not too sure how these profits come about...
    I think there's a plan on the table at the EU for a financial transaction tax. That could be a start. But it would need to be implemented worldwide.
    Anybody here oppose that idea?

    My government already bailed out our two biggest banks, ABN and ING, in 2009.

    :rolleyes:

  17. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    No, I've argued for several years that the FDIC should have taken over a number of U.S. banks, reorganized them, replaced the top management, restructured their debt and set them free. Suspending marked-to-market accounting in the U.S. remains a ticking time bomb.

    Banking may actually be too important for capitalism to put into the hands of capitalists:

    What We Can Learn from Germany: How Countries With Publicly Owned Banks Do Better Than America
    The public bank model remains a viable alternative to the private profiteering being protested on Wall Street today.

    Interesting comment:

    In the US, North Dakota is the only state to own its own bank. It is also the only state that has sported a budget surplus every year since the 2008 credit crisis. It has the lowest unemployment rate in the country and the lowest default rate on loans. It also has oil, but so do other states that are not doing so well. Still, the media tend to attribute North Dakota's success to its oil fields.
    For the record, North Dakota's success IS entirely due to its oil and gas fields. They are experiencing the nation's only statewide economic boom solely because of energy.
  18. Alpha-Red Force Ghost

    Member Since:
    Apr 25, 2004
    star 5
    Eh, good luck finding a politician who's willing to support this now that "regulation" is now a dirty word in American politics.

    Edit: oh right I forgot, you're Canadian >_>
  19. Jedi Merkurian Episode VII Thread-Reaper

    Manager
    Member Since:
    May 25, 2000
    star 6
    The simple solution, and one that the U.S. (Democrat-controlled at the time) Congress wussed out on legislating, is too big to fail = too big to exist.
  20. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    The banks that aren't too big to fail continue to fail (in the U.S.), though not at as face a pace as in 2010

    2007 - 3 banks closed
    2008 - 25 banks failed
    2009 - 140 banks failed
    **2010 - 157 banks went under**
    2011 - 84 banks to date.

    We're living in a world with at least 400 fewer banks than in 2006.
  21. SuperWatto Manager Emeritus

    Member Since:
    Sep 19, 2000
    star 5
    I'm starting to think that we'll be left with only the too-big-to-fail ones.
    [face_worried]

    Interesting article about public banks. We haven't had one here for over a decade. I guess I'd be interested if we did. Strange thing with privatization; you'd think that, after its demasqué, politicians would be making a move back towards (some) nationalized institutions... but I don't see any.
  22. DarthBoba Manager Emeritus

    Member Since:
    Jun 29, 2000
    star 9
    I'd submit that more midsize banks that focus on a specific group of customers will continue to do well. USAA is an example; they focus on military customers and haven't changed a thing about their operating procedures through the financial crisis. I have BoA right now, but I'm seriously considering switching to USAA simply because they aren't out to rob you blind.

    USAA on wiki



  23. Lowbacca_1977 Force Ghost

    Member Since:
    Jun 28, 2006
    star 6
    You've not defined that statement yet, as it doesn't take into account new banks.
  24. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    I knew someone would call me on that, but I thought it would be Kimball.
  25. Kawphy Jedi Master

    Member Since:
    Aug 17, 1999
    star 4
    So I spent a week in 2007 as the house guest of Paul Sheard, the Global Chief Economist for Lehman Brothers (at the time). At one point, while I was smoking a cigarette in Central Park (across from his apartment), I asked him if he feared a global collapse.

    I don't remember his exact answer, but one thing he said really stuck with me. Basically, he said there's nothing to fear in a collapse because all the debt in the world ultimately sums to zero. For every dollar owed, there is someone that is entitled to a dollar. So if everything collapses, wealth doesn't actually collapse. It becomes a question of legality and fairness, how to divvy up the very real resources and assets that will persist despite all the math failing.

    If we can avoid falling into global war, and avoid falling into violent class conflict, we can sort this stuff out.

    It will require a hell of a conversation, though. And a lot of planning.

    That's what OccupyWallStreet represents, to me. I've not spoken directly with Mr. Sheard since my visit (I'm close friends with his daughter), but I'd like to think he agrees. We need to preserve what humanity has built, so we can continue to stand on the shoulders of giants. Clearly our present system is working against that aim.