Global banking rules won't stop next meltdown

Global banking rules won't stop next meltdown

www.newscientist.com

IT IS like storm-proofing a building with a paper towel. From 2015, the world's banks will be forced to keep a proportion of their assets in reserve, to prevent a repeat of the 2008 banking crisis. But economists say the rules will make little difference.

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I am often amazed that we allow the same economist who endorse the "Central Banking Cartel" dogma, to asses and even construct the "approach" and "strategy" which our "government representatives," "world leaders," and "media talking heads" virtually 'sell' to us like a pleasant bed-time story.

Apparently, in a bid to convince the world that the Global Banking Cartel is "doing something" to "protect" us from future crisis, the kingpin bank "The Bank of International Settlements (BIS)" has promoted something "new"....

But what they are selling sounds like something it is not.

It's called "Liquidity Coverage Ratio" and it is intended to convey an idea..... the idea being that a Bank (unlike any bank) should have enough access to liquid assets (that's fast cash for real folks) to cover any future wide scale banking crisis....

Heh.... right.

What they don't tell us is that this entire exercise is only necessary because banks - by current Central Banking Cartel standards - are allowed to create and circulate currency for which they have absolutely NO backing other than a notional potential to be paid back.... eventually.

Fractional reserve banking causes our economic problems world-wide.... the entrenched strategy - supported by the thespian politicians - that a nation of sovereign people are, for unbelievably occult reasons, somehow obliged to borrow the currency they use from a privately held - global central banking cartel.....

Now they are pretending - with verbal trickery - they are remedying the flaw by "key reforms to strengthen global capital and liquidity regulations with the goal of promoting a more resilient banking sector." When if fact, all they have done is codify a route any banking entity "may" take... based upon the banking cartel's own rationale, for which they are unaccountable.

When someone starts talking about manipulating the "rate" of a "rate" and how it "may" be applied.... you know it means nothing.

Especially since the oversight is proprietary information, and there is no redress... as they are "privately" owned.



www.newscientist.com
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In the study: Liquidity and Solvency Shocks in a Network Model of Systemic Risk: The Impact of Minimum Capital and Reserve Requirements which was apparently published via the Institute of Global Finance at the 25th Australasian Finance and Banking Conference 2012, I found some disturbing things....

... A small number of studies have investigated the macroeconomic implications of these new rules and shown the adverse impact on GDP growth...

These monopoly-holders of monetary policy all around the globe are stating unequivocally that their "profit" supersedes the importance of their client nation's GDP. Since they decide the value of currency via inflation and deflation of currency supply, and they unilaterally control interest rates which banks 'charge' between themselves (and anyone else) they are telling us that they would prefer to negatively influence GDP than restructure their operation in such a way as to make currency more available.... why? Because the truth is that currency has NO value other than whatever they want it to be.

A particular feature of the credit crisis 2008 were the importance of financial links between banks, either through interbank loans, payment systems or OTC derivatives positions.

Notice where they go from here...

While such links have received significant attention in the literature in recent years, the impact of capital and liquidity regulation on bank failures and systemic risk propagating through these links is still outstanding.

Which is to say that even though they know exactly what the real problem was (greed) they have yet to 'study" it.... do you wonder why?

A common feature of all of these models is that they view banks as isolated entities through focussing on accounting ratios of these banks. It is not taken into account that banks are highly interconnected with each other through interbank loans, derivatives positions and payment systems. Hence the failure of one bank can have an impact on the default of other banks and even threaten their survival. This systemic risk and its implications has been ignored in the literature on bank prediction thus far, although much of the empirical work referred to above is conducted during time periods of sustained systemic risk. Furthermore, it is clear from the data on bank failures that most failures occur as part of banking crises rather than being isolated events.

About 100-years after the establishment of the effectively global central banking scheme they discover that they are interconnected? It took that long to come out and say it?

The lack of publicly available data on actual bilateral exposures makes it more difficult to obtain a model that captures fully all empirical aspects of interbank loans, relying on additional assumptions to make it operational.

I think the words they avoided using here was "lack of transparency." "Transparency" being the anathema of modern banking.

More if interest demands it....

Rules don't curb greed, especially when they are not enforced. Why are rules sometimes not enforced? Greed. Greased palms, in other words. I want to have as little to do with banks and accountants and Wall Street anything and more to do with fitting in responsibly with the Earth and producing more of my own stuff.

It is not just greed at fault here, but the distribution of power as well. If you control banking policy and get to decide which loans are approved and which are declined then there is immense power in directing the workforce of a nation, eg war, manufacturing, housing, ect...

I do find it some what inaccurate to describe that the effect of inter loans are only being identified now in macro economic policy, but do understand that the issue of transparency is important to gauge a realistic picture of the actual environment.

The Liquid Coverage Ratio has been a big issue going all the way back to the gold traders in the past and how new money is created. The actual limit has been unregulated as there are many complex issues involved depending on the actual business undertaken. Increasing the ratio increases profits, as well as increasing the risk of bankruptcy. There has been more global pressure on this topic since the GFC in a better attempt to regulate it.

In defense of the banking cartel, most of the worlds population does have running water, electricity, a roof over their head and food on the table. The systems of authority, power and organization is fairly stable leading to gradual improvements in international relations. I know there are still plenty of problems and abuses going around as well and the picture is not perfect as a lot of potential is still wasted. Trying to define and resolve the actual problems is not easy in such a complex system.

The policy of austerity is well tried and known in its effects. National GDP does suffer as banks try to balance their books. The issue of how money is created through book entry credit creation and how the public pays for it through bonds is an important aspect for how the banks and nations get into these positions.

In trying to understand what is needed to get to a stable economy, the policy of interest very much looks to be driving this increasing and uncontrollable numbers. I know there will be a lot of resistance to outlaw the charging of interest as many powerful positions have been attained from it. But when looking at the alternative that the USD will have to fall of this cliff at some near future point as its interest repayments become untenable I do consider that such an option does have a good case to be made.

Originally posted by kwakakev
It is not just greed at fault here, but the distribution of power as well.

Greed is the fundamental cause for the uneven distribution of power, or even the desire to hold "power" over another creature.

It sounds like the bastards...I mean bankers want the keys to your life's savings.The next crises can be like in the depression where the banks locked their doors preventing people from their own money!I have the feeling widespread violence would quickly ensue this time.

reply to post by jasonl1983

Greed is the fundamental cause for the uneven distribution of power, or even the desire to hold "power" over another creature.

So are all dog and other pet owners greedy? I know on on the surface this could be considered a case of semantics or interpretation, but considering the gravity of the situation lets explore it further.

All social animal species develop their own hierarchy or pecking order, chickens, dogs, people, ect... A strong reason for this is based on the genetic algorithm and has been working for millions of years. With peoples abilities and communication, small groups have very successfully been able to sit down, talk through all the issues and arrive at a group consensus. This has been demonstrated by the survival of the nomadic aboriginal tribes for 100,000's of years in Australia as one example.

However as the group does grow, so does the length of discussion and difficulty at reaching a common consensus, take the long and ongoing abortion issue as one example. To rectify such social disharmony, Kings as absolute rulers entered the stage to help resolve conflicts and clarify the social direction. As society continued to grow parliaments took over to help the public voice and ease transitions of bad rulers.

I do appreciate the negative connotations and abuses that have come with 'control' and those who seek it. But in a world of so many billion there are a lot of responsibilities and organization that must be done to continue its growth and survival. The separation of powers in government was an important part to limit the abuse and damage that incompetence delivered. Maybe some kind of holy trinity also needs to be established for the banking sector and power of money?

reply to post by kwakakev

Maybe some kind of holy trinity also needs to be established for the banking sector and power of money?

By this I do not mean make money god, even though that is how some people feel about it. What I mean is when you look at powerful forces like fire, electricity and government there is a core separation of the interactions involved eg:

Government: Executive, Legislative & Judicial
Electricity: Voltage, Amps & Resistance
Fire: Heat, Oxygen & Fuel

When we look at how money works there is no core separation of powers to help keep the force regulated and in check.

Originally posted by kwakakev
reply to post by jasonl1983

 

Greed is the fundamental cause for the uneven distribution of power, or even the desire to hold "power" over another creature.

So are all dog and other pet owners greedy?

Personally I would never keep a trapped animal for my own amusement, I believe that is greedy/selfish. I also believe it is greedy to turn yourself obese on the flesh of dead animals. It's one thing to get by, it's another entirely to take more than you need from the Earth.

reply to post by jasonl1983


So what about having a family? The parents have control of their baby until it grows and learns enough to find its own way. Wither control is good or bad depends on how responsible it is employed. Greed is a common factor when control goes wrong, look what happens to a persons income when they have ability to decide their own pay. But also look what happens when control goes right, we can now communicate across the world in real time.

To get back on topic, the issue of Liquidity Coverage Ratio is one where there has been no control on, just a determination from which banks have lived or died to help set the guidelines as each bank set its own mark for the day. This move by itself will not stop a global meltdown should a significant event arise, but as with tuning a car engine the better it is running the less risk there is of a breakdown.

Love or hate fractional reserve currencies, it is the reality of the situation. They have been around for hundreds, if not thousands of years and have global dominance of the banking system. For the cities, society and technology that has grown the system of money has played an important part in the organization and distribution.

Seeing out of control government debt with incomprehensible numbers is very concerning. Knowing that civilizations do rise and fall throughout the ages adds to the inevitability. As for when and how it is hard to say. The more aloof the public is the quicker the corruption will rust out the infrastructure, the more diligent and aware the public remains, more attention and focus can be put on the exact problems. The future is everyone's responsibility.

I cited this thread in a topic I started in the global financial meltdown forum entitled Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable.

These articles, both here in the OP and the other thread, complement each other well.