Tuesday, May 24, 2022

How I Learned To Stop Worrying And Love Shadow Banking... — Brian Romanchuk

I had an article planned and started, but I got caught up with events. Instead, I just wanted to make a few comments about the dreaded “shadow banking” sector — non-bank finance. I had seen a few articles complaining about lack of regulation and risks posed by shadow banks, which I think is just extrapolating the last financial crisis.

I had written a sequence of articles on banks (first one here), in which I emphasised that financial flows are circular. If the flows are not circular, things break, and you get a crisis. The issue is that shadow banking is outside the view of regulators, and hence things can blow up.
Bond Economics
How I Learned To Stop Worrying And Love Shadow Banking...
Brian Romanchuk
http://www.bondeconomics.com/2022/05/how-i-learned-to-stop-worrying-and-love.html

20 comments:

Footsoldier said...

The forecast of the SOMA Transactions model -- risk-on liquidity conditions until end of May - early June.


https://static.seekingalpha.com/uploads/2022/5/24/910351-16533930452132752_origin.png


Footsoldier said...

Question...


Running government budget surpluses under certain conditions acts like any other tax, the way Warren Mosler describes taxes. That is to move workers from the public sector to the private sector. Without having to actually increase taxes?


Could be wrong won't be the first or last time.


Made my case on Billy Blog that it is once it gets passed the moderators.

Why the EU was set up the way it was and why the treaties were written as they are and the four freedoms are the corner stone of the system.

Footsoldier said...

I used public broadcasting, healthcare and social housing as examples of why I think Running government budget surpluses under certain conditions acts like any other tax, the way Warren Mosler describes taxes. That is to move workers from the public sector to the private sector. Without having to actually increase taxes?

Footsoldier said...

And Train companies within Europe.

Footsoldier said...

Running government budget surpluses under certain conditions acts like any tax, the way Warren Mosler describes taxes. That is to move workers from the public sector to the private sector. Without having to actually increase taxes.

For me that is exactly how they have been used. Regardless of the fairy tales They have created to hide the fact.

They slash the budgets of the government sector and use the ” how are we going pay for it question” to create job losses in the public sector, so the skills and real resources can be moved into the private sector.

Just 2 examples but their are many many more in sectors where skills and training and education can take years to develop.

Public broadcasting and healthcare.

When they do everything they can to slash budgets in both public broadcasting and healthcare. They make really experienced people unemployed. It is exactly how they set up Aljazeera and Murdoch set up Sky. When at the start they got their employees from and in most cases at a lower wage. It would have taken them years to do it from scratch. To train students without any broadcasting experience to fill those roles.

Once the new privatised companies become established they start selling parts of the public sector off that the Private companies then buy.

Now when they slash the budgets in Public broadcasting the workers have nowhere to go and mainly become free lance. Offer their experience to smaller independent broadcasting companies. Who then sell their output back to Public broadcasting or Sky to be shown.

Private healthcare was set up the same way by slashing the NHS budgets. Who now use Ex NHS staff to sell their services back to the NHS.

You can go through the list of the public sector and see clearly this is how the majority of privatisations were carried out.

To move workers from the private sector to the public sector they implement a tax. To move workers from the public sector to the private sector they run government budget surpluses under certain conditions. That has become their tool of choice.

Footsoldier said...

All just to profit from once there no profits to be made. Nothing to do with creating jobs as they destroyed just as many jobs at the same time. Nothing to do with creating competition to make public services cheaper.

Nothing to do with saving government money that can then be used in the future that saves our children and grandchildren.

Complete fairy tales created by the banks and the leisure class with capital to create as many opportunities as they can from which to extract rent.

Think the process through of social housing from the start right though to the end. Same model has been used, as benefit payments for rent are now transferred directly into the hands of the rent seeker. After the budgets of social housing were slashed and the experienced skills and real resources were transferred to the private sector. Why some landlords only accept people on benefits they can charge as much as they can.

Not just, so that your home grown rentier class can extract rent after turning the public sector into rent extracting monopolies. But foreigners can join the party and why the EU was set up the way it was and the EU treaties read like they do. Why the 4 freedoms are the corner stone of the system.

When foreign train companies enter your country under the myth of competition. Where are they going to get the staff ? All foreign companies enter your country where are they going to get the staff ? Get the experienced staff from quickly and as cheap as possible ?

It’s embedded in the treaties. All governments must try and run budget surpluses as soon as possible and not run deficits greater than a certain amount. Slash the public sector budgets To be able to move workers from the public sector to the private sector. Their version of Warren Moslers tax.

That is exactly how they view a just transition in my opinon.

Could be wrong and it won’t be the first or last time.

But there is enough evidence to show the whole current economic paradigm was built on the foundation of the East India trading company. Running budget surpluses are used like any other tax.

Footsoldier said...

My wife is an Editor for the BBC


Why I know so much about what happened and is happing. All her friends are now free lance serving the small independents.

And both Aljazeera and Sky was set up by sacked BBC staff.





Peter Pan said...

The 'just transition' will go the way of the 'peace dividend'.

/cynical old bastard mode

Footsoldier said...

Aye, their idea of a just transition is completely different to what MMT'rs idea of one is.


Well I've made my case rightly or wrongly on the basis of - " of course they know how it works"


The reason why they say they run budget surpluses is not the real reason why they run them. They can plan the economy the way the want just as good as the commies.



Matt Franko said...

“ Well I've made my case rightly or wrongly on the basis of - " of course they know how it works"

Without any evidence as usual for all you “neoliberal conspiracy!” theorists…

Matt Franko said...

At end of trumps economic program in December 2019 (just before Democrat Covid) the US deficit was down to 13B for that month …

ie zero…

So the Laffer stuff can appear to work..,

Peter Pan said...

Never attribute to incompetence what can be explained through malice.

Footsoldier said...

Even Oswald Mosley 's blackshirt fascists basically knew how it worked.


If you can ignore the jew hating within the text.



https://www.oswaldmosley.com/usury-is-the-cancer-of-the-world/


Sounds similar to a job guarentee


https://www.oswaldmosley.com/unemployment/


When you read all the articles there is a cigarette paper between communism and Fascism. How they became enemies is anyone's guess. Probably argued over who has the real power like the church.


https://www.oswaldmosley.com



















Footsoldier said...

Really difficult to define different ideologies when they cross over on so many issues. Today is even worse to figure out what is what.


Like trying to figure out a bowl of alphabet soup.


Some expert will have come up with a definition of each ideology somewhere. That won't be as clear cut as they make out.




Peter Pan said...

They became enemies due to ideological differences over nationalism.

Footsoldier said...

Was Hitler an MMT'r would make a good quiz question.


When you look at his fiscal and employment policies.


Footsoldier said...

He certainly tried to create the very first "Euro" when you study the occupation of the Netherlands and Scandinavia and look at his monetary policies.

Peter Pan said...

Has Bill Mitchell written about Hitler?

Footsoldier said...

No but Warren and Phil have written about the Weimar Republic


https://gimms.org.uk/2020/11/14/weimar-republic-hyperinflation-through-a-modern-monetary-theory-lens/


Peter Pan said...

Thanks Foot.