tag:blogger.com,1999:blog-2761684730989137546.post5077095101085746414..comments2024-03-29T07:30:30.121-04:00Comments on Mike Norman Economics: Is the purpose of banks to generate profits for their owners?mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger86125tag:blogger.com,1999:blog-2761684730989137546.post-10115960222275904442012-06-29T14:29:15.624-04:002012-06-29T14:29:15.624-04:00More Colonic irrigations from MMR:
"Banks ar...More Colonic irrigations from MMR:<br /><br />"Banks are essentially harnessed as agents of the government"<br /><br />HYPOCRITE.<br /><br />"Few things are more important than understanding precisely how the US government is able to eliminate solvency crisis through its institutional arrangements. One of the key Monetary Realism contributions is understanding these relationships and how they create the autonomous currency issuer." <br /><br />Contributions?<br /><br />Ha ha ha ha ha ha ha ha ha.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74235499185489454132012-06-29T14:21:43.741-04:002012-06-29T14:21:43.741-04:00And some more information for those confused by th...And some more information for those confused by the Colon:<br /><br />Warren Mosler:<br /><br />"The public purpose of banking as a public/private partnership is to allow the private sector to price risk, rather than have the public sector pricing risk through publicly owned banks."<br /><br />http://moslereconomics.com/wp-content/pdfs/Proposals.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61758637748660952192012-06-29T14:14:54.937-04:002012-06-29T14:14:54.937-04:00Just to set the record straight for MMR people who...Just to set the record straight for MMR people who believe the garbage that flows out of Colon Roach's mouth:<br /><br />Warren Mosler:<br /><br />"U.S. banks are public/private partnerships, established for the public purpose of providing loans based on credit analysis."<br /><br />Notice: NOT CHARITIES.<br /><br />Don't listen to Roach's hypocritical nonsense, please.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-49262029605386411862012-06-27T14:14:29.068-04:002012-06-27T14:14:29.068-04:00We live in a market determined world? Really!?
Ma...We live in a market determined world? Really!?<br /><br />Market driven as for that mythical 'free market'? Or markets created by government intervention and action (sometimes through war)?<br /><br />Yes, we live is a corporatists (state insures and creates profit opportunities for private entities) world, but not in a market-driven world.<br /><br />Finance has legalized mechanisms to counterfeit state fiat money by issuing credit for profit purposes, that's how it works, there is no public utility involved by design. They just have the legal capability to 'lever' fiat money while being insured by the state (specially in case of big money who can buy politicians).<br /><br />In this the gold standard + free-banking era was way superior at least, but bankers had to accommodate their position by several iterations on central banking experiments which got us finally to the travesty of 2008.<br /><br />Nowadays we would only need some dealer services, brokerage firms and with the grade capital markets have reached the capacity to 'lever' using mortgages on real estate as main vehicle of banking could easily stop. Banks financing of productive enterprises is ridiculous right now so they may as well disappear.Leveragenoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-87580127101375938552012-06-27T11:44:48.215-04:002012-06-27T11:44:48.215-04:00Matt: "One thing I always wonder when these b...Matt: "<i>One thing I always wonder when these banks lose all this money in trading, like JPM did out of it's London office recently is who had the other side of the trade? Easily could have been insiders right at JPM perhaps thru a foreign hedge fund account... so as the position moved against JPM, they let it run...</i>"<br /><br />This is how money "disappears." Where did the MF Global funds "disappear" to. Most anyone with half a brain knew it went into JPM accounts, but it took the investigators how long to find it.<br /><br />Due to lack of transparency trillions denominated in various currencies untold amounts "disappear" yearly due to fraud and corruption.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-60671737190779115832012-06-27T09:46:25.936-04:002012-06-27T09:46:25.936-04:00Cullen (from pragcap comments):
"I’m not pr...Cullen (from pragcap comments): <br /><br />"I’m not promoting a policy agenda... To me, it’s all about teaching a message about the way things are."<br /><br />- Ok, I really going to have to nail this rank hypocrisy once and for all because it's starting to grate.<br /><br />Cullen:<br /><br />"Banks are private profit seeking entities who play an important role in our society, but are not public servants and should not be public servants (a government managed loan system would almost certainly be a disaster waiting to happen)." <br /><br />Did you notice your phrase there Cullen? "Banks.. SHOULD NOT be public servants". This is a recommendation, an assertion of your opinion. <br /><br />You are not only "teaching a message about the way things are", you are also saying how you think things SHOULD and SHOULD NOT be!<br /><br />You have made two completely contradictory statements on the same page!<br /><br />Do you understand??<br /><br /><br />And now here's some policy:<br /><br />"we must understand that this is a component of the economy that requires great oversight and better regulation... Better oversight of the institution of money might not be able to fix our current problems, but it can certainly ensure that future generations don’t have to suffer through these same events."<br /><br />You are recommending "better oversight and regulation" of the banking sector! This is a POLICY you are advocating!<br /><br />Stop saying you're "not promoting a policy agenda... To me, it’s all about teaching a message about the way things are." This isn't true! <br /><br />You'd have to be blind not to see that!ynoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-64394434390577128842012-06-27T08:22:37.345-04:002012-06-27T08:22:37.345-04:00"if banks make credit standards too lax, fail..."if banks make credit standards too lax, fail to properly asses risks and make credit plentiful they can create an imbalance within the system (by lending to people who can’t service their debt)"<br /><br />People often say that in the run up to the 2008 crisis "people borrowed more money than they could afford".<br /><br />However it could also be said that in actual fact "banks lent more money than they could afford".<br /><br />It was actually the banks' overstretching themselves which was the systemic problem, rather than poor people overstretching themselves. Top down right-wing authoritarian types prefer to see it the other way round though.ynoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24929752492550964462012-06-27T08:13:13.810-04:002012-06-27T08:13:13.810-04:00Cullen: "That might not be the most pleasant ...Cullen: "That might not be the most pleasant way to think about it, but it is what it is."<br /><br /><br />Ok, so you've described how you think "it is".<br /><br />Now could you please clarify whether you believe "how it is" is also necessarily "how it should be". <br /><br />Often you seem to confuse the two.ynoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-39357413935291664092012-06-27T08:13:10.078-04:002012-06-27T08:13:10.078-04:00One thing I always wonder when these banks lose al...One thing I always wonder when these banks lose all this money in trading, like JPM did out of it's London office recently is <i>who had the other side of the trade</i>?<br /><br />Easily could have been insiders right at JPM perhaps thru a foreign hedge fund account... so as the position moved against JPM, they let it run...<br /><br />Dimon doesnt think it was a big deal as JPM still "made money" in the quarter, just around $2B less than otherwise, meanwhile insiders could have robbed out the $2B "trading loss" thru an external account.Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72513373063662117622012-06-27T08:07:42.860-04:002012-06-27T08:07:42.860-04:00Cullen: "a government managed loan system wou...Cullen: "a government managed loan system would almost certainly be a disaster waiting to happen"<br /><br />I think state-owned or community-owned banks could work well alongside private banks. Examples of successful state- and community-owned retail banks and state-owned investment banks can be found in several european countries. <br /><br /><br />"Obtaining money is a privilege, not a right. And a private profit seeking banking system serves to regulate the ability to obtain money before one has necessarily earned it"<br /><br />Precisely. Banks are given privileged access to government money. And they can obtain money from the central bank before they have necessarily earned it. As such the government and central bank have to regulate the banks, and necessarily create the terms under which banks can continue to enjoy these privileges.<br /><br />You've made my point for me, thanks.ynoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-811710980699124652012-06-27T02:29:59.053-04:002012-06-27T02:29:59.053-04:00I don't think a bank is a "purely private...I don't think a bank is a "purely private enterprise". Nor a bakery; or any other business down to the guy who mends your bicycle tyre on a street stall in Delhi. Simply because at the core of all of these businesses are human beings, affecting through their world views and actions, other human beings. So "purely public/private enterprises" are just a division in peoples' minds - like drawing a line through water! In juxtaposition to the sovereign reality of human existence - 'vapour' (can be whatever you want it to be) ....jrbarchnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-27543870071777903362012-06-27T00:50:50.756-04:002012-06-27T00:50:50.756-04:00I guess you don't read Matt Taibbi's stuff...<i>I guess you don't read Matt Taibbi's stuff.</i><br /><br />That was me Tom. Was logged out of my google account and didn't notice. And yes, I am very familiar with Taibbi's work. ;)<br /><br />'Anonymous' was connecting dots (wonder who THAT could be) to draw a conclusion that doesn't exist. And so it goes: Because of Goldman Sachs overall "mission" and no mention of "community", therefore the entire banking industry solely exists to maximize shareholder wealth. Or however it was worded.<br /><br />Except when you go to the description of their banking "subsidiary" at the same website, you find no mention of shareholders or wealth. Want to see the word "community"? Open http://newyorkfed.org/banking/cra_pes/2011/752503_Rvsd_PE_GS.pdf from that same page and find 124 instances of "community development". No mention of shareholder, wealth, and superior returns.<br /><br />GOTCHA! This "debate" is so silly, it's hard to know where to begin. <br /><br />Banks are private/public partnerships. There is no denying that. FDO's internal memos of "maximizing profits" doesn't mean the various regulatory agencies of the gov can't shut you down this weekend if they don't like the way you part your hair. <br /><br />Our congress has been bought. That's all there is to it. As evidenced by Dimon's "hearing" with the Senate Banking Committee in which he received a pedicure.Trixiehttps://www.blogger.com/profile/17763994914034770622noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10988128999529738522012-06-26T23:30:19.033-04:002012-06-26T23:30:19.033-04:00http://bobcesca.com/blog-archives/2012/06/victory-...http://bobcesca.com/blog-archives/2012/06/victory-for-the-epa.htmldavenoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46174984448436940422012-06-26T22:58:37.157-04:002012-06-26T22:58:37.157-04:00Golman Sachs is involved in a lot more than bankin...<i>Golman Sachs is involved in a lot more than banking. See them talk about their banking subsidiary here:<br /><br />http://www.goldmansachs.com/what-we-do/investing-and-lending/banking/index.html<br /><br />Here they talk about gov supervision, committed to helping communities through the work of the Urban Investment Group, and even brag about their outstanding CRA rating.</i><br /><br />Well, we all know that GS is "doing God's work." Lloyd told us so.<br /><br />I guess you don't read Matt Taibbi's stuff.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-80332128539542189912012-06-26T22:56:40.284-04:002012-06-26T22:56:40.284-04:00Jonf, if you are correct, the human race can pret...Jonf, if you are correct, the human race can pretty much kill its ass good-bye. We are fouling the nest too fast to clean it up in time the longer we follow this insane path based on false premises. The negative externality is huge, and we remain in denial of its effects while we cling to this path.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-2139445161827144422012-06-26T22:51:58.767-04:002012-06-26T22:51:58.767-04:00I don't care about the owners of banks and wha...I don't care about the owners of banks and what they feel they are entitled to. They basically made investments into regulated utilities. They're not entitled to outsized returns, period.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15488013468897845572012-06-26T22:37:44.720-04:002012-06-26T22:37:44.720-04:00"The neoliberal label is a bit unfair, Tom.&q..."The neoliberal label is a bit unfair, Tom."<br /><br />Maybe. But in my understanding this position underlies the notion that private firms maximizing utility as their chief objective results in optimal outcomes in aggregate. Knowingly or unknowingly, intentionally or unintentionally, CR is embracing that view of a market economy IMHO. Of course, everyone is entitled to their own opinion.<br /><br />Furthermore, IMHO this position goes a long way in accounting for the failures of market capitalism to deliver on his promises socially, politically and economically in terms of democratic governance and distributed prosperity, i.e., distributed aggregate utility. It has resulted in plutocratic oligarchy and increasing inequality with dire social consequences that we have not yet even begun to imagine, let alone experience, as the consequences of this debacle play out over the next several generations.<br /><br />The premise is based on a gratuitous assumption that has been shown to be lacking. See Bill Mitchell's post linked to here today for starters.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-76524334567591272492012-06-26T22:34:35.212-04:002012-06-26T22:34:35.212-04:00Tom, to be clear, if the banks violate laws then t...Tom, to be clear, if the banks violate laws then they should be held to account. But I do not think we have anything today to prevent what just happened a few years ago. Dimon is the prime witness to that. Meanwhile, if they are obeying the law then they will pursue profit. I don't want them to do otherwise out of the goodness of their black hearts. If our government is so weak it cannot do it, then we are all F'd.Jonfhttps://www.blogger.com/profile/08422916863145293925noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-67394649842186188872012-06-26T22:28:56.285-04:002012-06-26T22:28:56.285-04:00Tom, thanks. About what I also suggested I think. ...Tom, thanks. About what I also suggested I think. Sell them credit insurance and keep em out of secondary markets.... Great. But you gotta get the regs past congress or dimon et al will keep on speculating, er hedging. They gotta keep up with the joneses.Jonfhttps://www.blogger.com/profile/08422916863145293925noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10967086631986563732012-06-26T22:28:10.138-04:002012-06-26T22:28:10.138-04:00PaulJK: "Isn't it really more accurate to...PaulJK: "<i>Isn't it really more accurate to say that we all wish banks served public purpose and that we're dissatisfied with the extent to which they actually do this?</i>"<br /><br />According to Bill Black, banks flouted the law and govt has held almost no one of note to account, in contrast to Pecora under FDR and the 1000 + people that were prosecuted and convicted as a result of the S&L debacle. The requirements are not being enforced and there is little accountability so moral hazard continues to increase.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-79840139712974250912012-06-26T22:26:09.428-04:002012-06-26T22:26:09.428-04:00"Greg, if Blankfein was honest that's exa...<i>"Greg, if Blankfein was honest that's exactly what he'd say since the Goldman Sachs mission statement mentions nothing about community, public purpose or anything similar. In fact, it directly says:<br /><br />"OUR GOAL IS TO PROVIDE SUPERIOR RETURNS TO OUR SHAREHOLDERS."</i><br /><br />Golman Sachs is involved in a lot more than banking. See them talk about their banking subsidiary here:<br /><br />http://www.goldmansachs.com/what-we-do/investing-and-lending/banking/index.html<br /><br />Here they talk about gov supervision, committed to helping communities through the work of the Urban Investment Group, and even brag about their outstanding CRA rating.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-2042895743877351652012-06-26T22:21:39.090-04:002012-06-26T22:21:39.090-04:00Jonf: "Tom, which of Warrens proposals did yo...Jonf: "<i>Tom, which of Warrens proposals did you have in mind. I see he wants the fed to sell insurance to the banks. That's good. But I don't want banks speculating to maximize their profits and risk taking down the economy as they very nearly did, o wait, they did. Time to reel them in or break them up as Jamie Dimon just proved to us</i>."<br /><br /><a href="http://www.moslereconomics.com/wp-content/pdfs/Financial%20Architecture%20Fundamentals.pdf" rel="nofollow">Financial Architecture Fundamentals</a><br /><br />See banking proposals contained therein.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-63394875734594709972012-06-26T22:05:02.382-04:002012-06-26T22:05:02.382-04:00I think one has to agree that CR has it right. Cor...I think one has to agree that CR has it right. Corporations are there to increase shareholder value. At least that is the paradigm up until now. If they do not do that then their competitors will ultimately put them out of business (assuming they don't put themselves out). <br /><br />What I think I am hearing here is that we think banks have a public purpose and therefore should behave differently. Not gonna happen. That would require regulations or the break up of the big money center banks. But then you will have the problem of competition with foreign banks. <br /><br />I would add that the "invisible hand" in this scenario is the mandate to keep up with your competitor in profits. That is a fiduciary responsiblity to your shareholder. You would not want it any other way, unless you can describe the new paradigm. <br /><br />All of which leads back to some form of regulation, like a public utility, or a dismantling,if we are to avoid this nonsense in the future.Jonfhttps://www.blogger.com/profile/08422916863145293925noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46511752388784258042012-06-26T21:59:11.525-04:002012-06-26T21:59:11.525-04:00The neoliberal label is a bit unfair, Tom. The pu...The neoliberal label is a bit unfair, Tom. The purpose of Cullen's article is to highlight the need for greater regulation. Neoliberals would never support this position.SSnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15098528280919090772012-06-26T21:43:06.564-04:002012-06-26T21:43:06.564-04:00Isn't it really more accurate to say that we a...Isn't it really more accurate to say that we all wish banks served public purpose and that we're dissatisfied with the extent to which they actually do this?PaulJKnoreply@blogger.com