Athens ablaze tonight

[sten_super]

mulitlateral shirley?

Yes, you are right. Apologies for the brain freeze

not sure if its the same thing, but there was an analysis a few months back that if banks could write off the debts to other banks that hold their debt, the economic fear would pretty much evaporate, the net borrowing between the big banks being pretty small. of course, this wouldnt help the sovereigns much in itself, they just have debt and nothing to offer but payments, but it would mean the balance sheets of the banks could then support these sovereign bailout. one of the technically interesting points from all this is that countries are still legislating to enforce holding sovereign debts, whilst changing other legislation to tell the banks they must hold less assests/more cash/safer bonds.

There is a fundamental disconnect between how much the banking and financial sector 'earns' (which I'd measure as their value added, although you could use one of a few different measures) and the scale of transactions that they handle. What you talk about is an extension of this - effectively a lot of the money owed is recycled. If the banks decided to multilaterally pay down all assets owed between one another then IMHO a lot of the risk could be taken out of the system.

 

[pseudonym]

A couple of weeks ago I was listening to an interview with an economic historian who was proposing a unilateral global debt write off. At the time I thought he was barking, now I don't. I certainly think that the only way that this crisis will be decisively ended is if those in charge agree to a substantial change in the status quo and the current way of doing things.

Was this the fellow?


BBC News - Hardtalk - Keen: Government should print money to pay off our debts

 

[Tux the albion Penguin]

what you need to understand is this:

a bailout is money for the banks so they can loan AT INTEREST to the people.....(to pay it back).

BUT, the people pay for it twice as they pay for it again in austerity measures to get the bailout in the first place. its a mafia elite scam, and most are too asleep to realise.

Nope or do I care to be honest. Politics Is a nasty business.

 

[sten_super]

Was this the fellow?


BBC News - Hardtalk - Keen: Government should print money to pay off our debts

I don't think so (I can't find the reference now), but it was broadly in line with what Keen says.

 

[beorhthelm]

Was this the fellow?


BBC News - Hardtalk - Keen: Government should print money to pay off our debts

from the synopsis "He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt..." you dont need to be a economist to recognise thats fuckwhitery, the governments are the debtors, so how are they supposed to pay themeselves

 

[sten_super]

from the synopsis "He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt..." you dont need to be a economist to recognise thats fuckwhitery, the governments are the debtors, so how are they supposed to pay themeselves

There would be two potential methods under the current currency system;
- the country that owes money prints their own currency, and then converts it on the markets (presumably at a lower rate than previously) to the currency in which the debt is denominated (if not the domestic currency)
- the country that is owed the money prints currency and transfers it to the debtor country

Of course you'd need some fundamental changes first, not the least of which is bringing the central banks back under government control in countries where this is not the case (e.g. the UK).

 

[drew]

Out of interest, how much of tax payable in Greece is actually collected. When I was there two years ago restaurants would only accept cash where as years ago they would happily accept credit cards and the like. Seems to me that whilst they have been let down by their government, they have also contributed to their own predicament.

 

[Uncle C]

Out of interest, how much of tax payable in Greece is actually collected. When I was there two years ago restaurants would only accept cash where as years ago they would happily accept credit cards and the like. Seems to me that whilst they have been let down by their government, they have also contributed to their own predicament.

Tax avoidance is rife.

Here is a good example:

As the nation of Greece teeters on the edge of bankruptcy, its tax authorities are taking aim at Greece's notorious tax-evading rich elite. Using satellite photos, the tax authority examined the claim of the residents of Athens's wealthy suburbs and discovered that, rather than the 324 swimming pools claimed by the locals, there were 16,974 of them.

http://boingboing.net/2010/05/04/satellite-photos-cat.html

 

[Chicken Runner61]

mulitlateral shirley? not sure if its the same thing, but there was an analysis a few months back that if banks could write off the debts to other banks that hold their debt, the economic fear would pretty much evaporate, the net borrowing between the big banks being pretty small. of course, this wouldnt help the sovereigns much in itself, they just have debt and nothing to offer but payments, but it would mean the balance sheets of the banks could then support these sovereign bailout. one of the technically interesting points from all this is that countries are still legislating to enforce holding sovereign debts, whilst changing other legislation to tell the banks they must hold less assests/more cash/safer bonds.

Its not the TOTAL debt between the banks thats the problem its the haircuts on the debt lent to countries going to default that will take out each bank one by one. If say French banks go bust when Greece's banks go pop any other foreign bank that lent the French Banks money short or long will take a hit. No one wants to lose out so they are holding cash from other banks to protect themselves if a country goes. The initial fund has been leveraged by each bank as they lent it. European banks have been soaking up dollars given out by the ECB that were swapped/borrowed for Euros from the Fed so it doesn't show up as QE. Same reason they were selling gold so they could give out money to try and prevent a crash.

Thats why they want the banks to hold cash while the country holds Sov debt.

 

[Chicken Runner61]

from the synopsis "He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt..." you dont need to be a economist to recognise thats fuckwhitery, the governments are the debtors, so how are they supposed to pay themeselves

Its nothing new the yanks have done it already and there is talk of mortgages being written off to restart the system - Can't see it happening here too many people who will be moaning if a few thousand middle earners get their wages paid off.

 

[Chicken Runner61]

from the synopsis "He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt..." you dont need to be a economist to recognise thats fuckwhitery, the governments are the debtors, so how are they supposed to pay themeselves

He is talking about giving money directly to the General Public to pay down their debt rather than giving money to banks to loan out - as I said its been done before elsewhere and been muted here but the bankers didn't want it (wonder why?)

 

[looney]

Printing excess money just leads to extra inflation which erodes savings and earnings. Seinorage or Inflation tax by name. One way or another you pay unless you make the banks bite the bullit and make a lot of rich people poor, this would also include pension funds of the many.

 

[Chicken Runner61]

Printing excess money just leads to extra inflation which erodes savings and earnings. Seinorage or Inflation tax by name. One way or another you pay unless you make the banks bite the bullit and make a lot of rich people poor, this would also include pension funds of the many.

Well get ready then because last week they started up the presses here and they are already talking of printing a whole load more

 

[brunswick]

Nope or do I care to be honest. Politics Is a nasty business.

apathy is a disease, i hope your cured soon.

 

[looney]

Well get ready then because last week they started up the presses here and they are already talking of printing a whole load more

Its already happening, thats why inflation is higher than it should be and pay rises are close to zero. Its another way the Government rips people off.

 

[BigGully]

Tax avoidance is rife.

Here is a good example:

As the nation of Greece teeters on the edge of bankruptcy, its tax authorities are taking aim at Greece's notorious tax-evading rich elite. Using satellite photos, the tax authority examined the claim of the residents of Athens's wealthy suburbs and discovered that, rather than the 324 swimming pools claimed by the locals, there were 16,974 of them.

http://boingboing.net/2010/05/04/satellite-photos-cat.html

So why invite them into this political game in the first place, every politician knew this and chose to ignore it, I would suspect the other Southern European nations have similar financial disciplines or lack of.

It is not the reason why it is failing, it is the very reason why it should never of happened in the first place.

 

[beorhthelm]

Its nothing new the yanks have done it already and there is talk of mortgages being written off to restart the system

i think thats only those in default already, or a mechanism to allow mortgage holders to walk away without any negative equity to pay off. i think the point about the debtors was missed, if the government is the debtor, they cant pay their own debt off. they can print, not quite the same thing. on reflection its probably less the chaps economic plan and more the BBCs oversimplified comment, i should watch the program.

He is talking about giving money directly to the General Public to pay down their debt rather than giving money to banks to loan out - as I said its been done before elsewhere and been muted here but the bankers didn't want it (wonder why?)

as i understand it there are good technical reasons against this. firstly, you would literally have to print money, rather than this QE which isnt quite the same. thats administrativly difficult, doesnt necessarily address the problem (people might save or go on holiday, hardly helping) and inflationary. QE is not necessarily inflationary, as they dont put the money into inflationary parts of the economy, it buys back specific debt which, in theory, frees up cash on the balance sheets of those that can then lend again. it seems this doesnt really address the problem either, as the bond holders just buy up gilts again, at lower %, rather than lend to another bank, but then that helps the govenment and our deficit reduction. hey ho.

 

[Chicken Runner61]

i think thats only those in default already, or a mechanism to allow mortgage holders to walk away without any negative equity to pay off. i think the point about the debtors was missed, if the government is the debtor, they cant pay their own debt off. they can print, not quite the same thing. on reflection its probably less the chaps economic plan and more the BBCs oversimplified comment, i should watch the program.



as i understand it there are good technical reasons against this. firstly, you would literally have to print money, rather than this QE which isnt quite the same. thats administrativly difficult, doesnt necessarily address the problem (people might save or go on holiday, hardly helping) and inflationary. QE is not necessarily inflationary, as they dont put the money into inflationary parts of the economy, it buys back specific debt which, in theory, frees up cash on the balance sheets of those that can then lend again. it seems this doesnt really address the problem either, as the bond holders just buy up gilts again, at lower %, rather than lend to another bank, but then that helps the govenment and our deficit reduction. hey ho.

He was definitely saying print money and give in to the General Public - they would have to pay off debt with it not just spend it. I suppose it would reduce debt across the nation and get the money to the banks who would then be able to relend it. Its not without its problems but it does stop banks holding on to it as their debtor book would need refilling!

We need to do something about individual debt if you take it in to account with national debt the UK is in terrible trouble.

On the Greek problem I read today that in 1953 we allowed the Germans to write off 50% of their external debts with very few conditions attached, and now Greece is struggling to get that same amount with absolutely impossible conditions attached.

Read more: Die Wahrheit Macht Frei | Finance

 

[Triggaaar]

i dont think people grasp the mechanics of how the state runs and is funded.

Indeed. They think this is all about banks etc, when it's about Greeks not working enough and voting for governments that kept hiding the problems. Who did they think was paying this whole time?

 

[dingodan]

There would be two potential methods under the current currency system;
- the country that owes money prints their own currency, and then converts it on the markets (presumably at a lower rate than previously) to the currency in which the debt is denominated (if not the domestic currency)
- the country that is owed the money prints currency and transfers it to the debtor country

In the spirit of Ponzi & Madoff.

If you just print money to pay off these debts you will cause massive inflation. This destroys a currency, and in doing so transfers wealth from the poor and the middle class to the wealthy.