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Why do governments allow the banks to behave as they do?


Disillusioned democrat

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All across Europe and North America governments have allowed banks destroy their citizens lives time and time again in a business cycle as old as capitalism and seem to collectively shrug their shoulders and ask - "what do you expect us to do about it?".

That the CEO of a failed Irish bank that 24 months ago needed tax payers money to survive earns 4 times the salary of the Taoiseach and gets to do the 2 finger wave in relation to salary caps goes a long way to demonstrating the contempt banks have for governments, but more importantly the complete lack of authority governments exert on banks.

These banks have systematically worked through Europe bringing more destruction than an invading army, but ultimately bar a few casualties at lower and middle management the big guys are still either pensioned off with golden parachutes or still calling the shots.

I know governments and banks shouldn't mix and governments need to leave the "free market" alone for it to work properly, but it seems no matter what they do it's tails I win, heads you lose for the bankers and the only loser is the tax payer or bank customer. Now the trust in banks has hit a new ebb that may well destabilize the global economy at a time when growth is very much required, but still government seem powerless to intervene to protect their citizens.

Simple question - why?
 

tigerben

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I wondering why we elect governments , pay them , advisors and drivers, when it seem s it's the bankers are running the country and making the rules.
 

ger12

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Lack of courage and too tied to vested interests.
 

Lúidín

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Maybe we should look at governments as the agents of the banks and not the other way round. Government Ministers and leading bankers belong to the same group in society and act in their mutual interest.
 
D

Deleted member 17573

All across Europe and North America governments have allowed banks destroy their citizens lives time and time again in a business cycle as old as capitalism and seem to collectively shrug their shoulders and ask - "what do you expect us to do about it?".

That the CEO of a failed Irish bank that 24 months ago needed tax payers money to survive earns 4 times the salary of the Taoiseach and gets to do the 2 finger wave in relation to salary caps goes a long way to demonstrating the contempt banks have for governments, but more importantly the complete lack of authority governments exert on banks.

These banks have systematically worked through Europe bringing more destruction than an invading army, but ultimately bar a few casualties at lower and middle management the big guys are still either pensioned off with golden parachutes or still calling the shots.

I know governments and banks shouldn't mix and governments need to leave the "free market" alone for it to work properly, but it seems no matter what they do it's tails I win, heads you lose for the bankers and the only loser is the tax payer or bank customer. Now the trust in banks has hit a new ebb that may well destabilize the global economy at a time when growth is very much required, but still government seem powerless to intervene to protect their citizens.

Simple question - why?
1. Banks cannot be allowed fail because of the effect that would have on the economy. 2. Banks operate in the free market. These two facts are not compatible.
Firstly the retail banks should be nationalized, or at least government run banks should be created, that will provide an alternative to the private sector banking that has proven itself incompetent and untrustworthy.
But this is not enough, though many believe it is, because investment banks control finances such as pension funds, so the same approach will be required as for the retail banks.
This will provide choice between private and public banking - and those who opt for the private banks should be exposed to the full rigors of free market capitalism, no bailouts, no recaps, no guarantees.
 

Disillusioned democrat

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I wondering why we elect governments , pay them , advisors and drivers, when it seem s it's the bankers are running the country and making the rules.
Seems like it - the simplest solution to the banking crisis would have been to create a new bank, new bank license, capitalized by the government instead of the stupid bank guarantee and bailout and culd have been up and running in a matter of two months to secure deposits and provide loans, allowing the bad banks to fail.....instead our government rowed our money and future in behind the bankers who had been lying to us for years and committed my, and my kids future to keeping the zombie banks alive by sucking the k=life out of our economy.

A fool could have foreseen the inevitable, but the government sleep-walked us into this without a whimper. They're doing fine, the bankers are doing fine, but the country is ruined.
 

Disillusioned democrat

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1. Banks cannot be allowed fail because of the effect that would have on the economy. 2. Banks operate in the free market. These two facts are not compatible.
Firstly the retail banks should be nationalized, or at least government run banks should be created, that will provide an alternative to the private sector banking that has proven itself incompetent and untrustworthy.
But this is not enough, though many believe it is, because investment banks control finances such as pension funds, so the same approach will be required as for the retail banks.
This will provide choice between private and public banking - and those who opt for the private banks should be exposed to the full rigors of free market capitalism, no bailouts, no recaps, no guarantees.
I completely agree with that sentiment.

Outside of state run "retail" banks NO bank should ever have been allowed to become systemic or too big to fail and NO private bank should ever have been baled out.
 

EUrJokingMeRight

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Sep 28, 2009
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Government licenses banks to trade. Governments are there to regulate the industry. They dont. Why? Well governments get all the money they want to deficit spend. imho 'too big to fail' banks and derivatives particulary should be outlawed as well as the fractional reserve banking model and domestic community banks with no licence to invest or speculate on the market, with lending practices exclusively based around a solid deposit base should only be licensed to accept retail deposits.
 

Disillusioned democrat

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Government licenses banks to trade. Governments are there to regulate the industry. They dont. Why? Well governments get all the money they want to deficit spend. imho 'too big to fail' banks and derivatives particulary should be outlawed as well as the fractional reserve banking model and domestic community banks with no licence to invest or speculate on the market, with lending practices exclusively based around a solid deposit base should only be licensed to accept retail deposits.
You're probably right about that - so it's a double blow to the tax payer because (a) governments overspend and (b) banks get to fail and be bailed out by the tax payer.

If governments spent within their means and transparently had to raise taxes to fund incompetence they would be far more cautious with our money AND be able to regulate banks, so the tax payer would be far less likely to be called on to pay on the double.

We need a government with the balls to live within budget and regulate banks.
 

flibbles

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Jun 12, 2011
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They control the money, ergo they control the power. Pretty simple really.
 

SPN

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"Give me control of a nation's money and I care not who makes the laws." Mayer Rothschild


also, see my sig.
 

ManUnited

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"Give me control of a nation's money and I care not who makes the laws." Mayer Rothschild


also, see my sig.
That line is all over the internet, loads of different wordings. I think it is a fiction. I've never seen any reference to where he said it, or who he was supposed to have said it to. It doesn't make alot of sense either, if bankers didn't care who makes the laws why do they spend untold millions every year 'lobbying' politicians?
 

Disillusioned democrat

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They control the money, ergo they control the power. Pretty simple really.
Just over two years ago our government "saved" the banks by throwing tax payers money into a black hole and hoping it was enough - at that point in time they had the money and should have had the power.

The sad joke is they appointed public interest directors with no accountability to the public and left many of the same lunatics in charge (even allowing one or two of them to be promoted).

We, through our government who used our money, should now be 100% in control of the banks - their CEO salaries, their lending policies, their forbearance rules, interest rates, etc., but it looks as if they completely either (a) dropped the ball and gave the bankers access to our money with no caveats or (b) chose not to exert any understandable influence - either way they left a golden opportunity slip through OUR hands....makes you wonder.
 

Dan_Murphy

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That line is all over the internet, loads of different wordings. I think it is a fiction. I've never seen any reference to where he said it, or who he was supposed to have said it to. It doesn't make alot of sense either, if bankers didn't care who makes the laws why do they spend untold millions every year 'lobbying' politicians?
Because millions is a trivial sum compared to what it buys you in lobbying?
 

R3volution_R3ady

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2,370
Short answer.

Because banks and Government are one and the Same.

who allows Government to spend, spend, spend? Both of them need each other. The relationship would be null If we used gold.
 

SPN

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if bankers didn't care who makes the laws why do they spend untold millions every year 'lobbying' politicians?

They don't care WHO makes the decisions, as long as they make the RIGHT decisions.

Make the wrong decision and you'll have a colour revolution on your hands - or an outright invasion if needs be.
 

goosebump

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May 23, 2008
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We, through our government who used our money, should now be 100% in control of the banks - their CEO salaries, their lending policies, their forbearance rules, interest rates, etc., but it looks as if they completely either (a) dropped the ball and gave the bankers access to our money with no caveats or (b) chose not to exert any understandable influence - either way they left a golden opportunity slip through OUR hands....makes you wonder.
The fact that you think the State should control interest rates says all anyone needs to know about the value of this thread.
 

Mossy Heneberry

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Why? Because if the banks go our budget deficit would have to go as well.

Considering that nearly 50% of Irish people receive some sort of handout from the government, any political party that allowed the banks to fail and bring public spending under control would spend along time in the wilderness.
 

farnaby

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May 15, 2006
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Another aspect is the intelligence gap between banks and government. When it comes to dealing in international finance, top banks are always a few steps ahead of the government because they hire the most intelligent people, stick some ethical and ideological blinkers on them and have them able to manage deals worth billions before they're 30.

Politicians on the other hand like to be seen to know stuff so they get advice from the "cleverest people in the room" and regurgitate it to the masses. They fail to notice those ethical and ideological blinkers I mentioned, by which I primarily mean the doublethink of "free market capitalism" and "too big to fail". They get to sound "well-briefed" and in conformance with the thinking of every other western government, as comfortable a place as it is possible to be for a politician - talk the talk, collect the salary, swan off with a great pension no matter how it all works out.
 
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