A big step forward

[Tjerk12]

A big step forward.

Last night all European big bosses were gathered to create solutions for the financial crisis. This morning I heard on the radio that the banks are required to have at least 9% cash of all outstanding loans. A big step forward said our PM Mark Rutte.

I disagree with him. I am afraid that he and all his companions have few knowledge of our history. Banks have emerged from goldsmiths. They created the first safe places for money. They also discovered that you can make profit by loaning the money (of other people) to others. Experience learned them that they should at least keep 10% cash money in their “safes”. So they could avoid financial breakdowns.

Nowadays a lot of banks have only 4% or 5% cash. This is one of the reasons for the crisis we have.

So, Mark and friends, you made a gigantic step BACKWARDS!

I am convinced that you did the right thing. But you just should know wiseacres!

 

[gb2000ie]

9% is MORE than 4 or 5%, so how exactly is this a step BACKWARDS?

It's one thing to say it's a step in the right direction but we need to do more (which I agree with), but it's frankly wrong to say this is a step back!

B.

 

[Tjerk12]

9% is MORE than 4 or 5%, so how exactly is this a step BACKWARDS?

It's one thing to say it's a step in the right direction but we need to do more (which I agree with), but it's frankly wrong to say this is a step back!

B.

It is a step back in time. Far more than a century ago it was standard to keep at least 10% cash, because they knew that it was the only safe manner.
The politicians invented the wheel again and act as if it is their invention.

 

[gb2000ie]

It is a step back in time. Far more than a century ago it was standard to keep at least 10% cash, because they knew that it was the only safe manner.
The politicians invented the wheel again and act as if it is their invention.

You can't judge politicians over centuries! That's utterly unfair and unreasonable! Yesterday 4% was OK and legal, today, 9% is the bar to be reached by all European banks - how on earth is that not great progress? DOUBLING the reserves in a one stroke - that's impressive.

I highly doubt it went down from 10 to 4 in one go, so it's actually really impressive that we got five sixths of the way back in one leap!

B.

 

[Tjerk12]

You can't judge politicians over centuries! That's utterly unfair and unreasonable! Yesterday 4% was OK and legal, today, 9% is the bar to be reached by all European banks - how on earth is that not great progress? DOUBLING the reserves in a one stroke - that's impressive.

I highly doubt it went down from 10 to 4 in one go, so it's actually really impressive that we got five sixths of the way back in one leap!

B.

Thanks for your words. I like these kind of discussions.
My reply:

A constructer makes things. In an effort to improve a machine he can try to make changes. If after a while the changes show to be a deterioration he will say: I tried everything, but it seems to be the best way to go back to the old system. In facto: we will make a step backwards.

Politicians behave like merchandisers. Nothing against merchandisers, but it would not be wise to let tinker your car by an average car salesman. Merchandisers use another language. They will explain going back to the old system as a step forward. The complaints are solved, isn’t it?

I don’t think that the banking crisis is a private responsibility of the politicians. We all shared that madness. Because I am a constructer I think we all have to make a step backwards. That is the only way to make a step forward.

 

[gb2000ie]

Thanks for your words. I like these kind of discussions.
My reply:

A constructer makes things. In an effort to improve a machine he can try to make changes. If after a while the changes show to be a deterioration he will say: I tried everything, but it seems to be the best way to go back to the old system. In facto: we will make a step backwards.

Politicians behave like merchandisers. Nothing against merchandisers, but it would not be wise to let tinker your car by an average car salesman. Merchandisers use another language. They will explain going back to the old system as a step forward. The complaints are solved, isn’t it?

I don’t think that the banking crisis is a private responsibility of the politicians. We all shared that madness. Because I am a constructer I think we all have to make a step backwards. That is the only way to make a step forward.

I'm not sure I get what you're driving at?

Banking isn't a car, it's a complex ever-evolving institution, and the problem is that regulations often lag behind that evolution, leaving nasty loop holes through which the greedy wreak havoc with the world. The best we can hope for is that politicians close the gap as quickly as they can. We've failed at that for the last decade, but this new plan does some significant closing!

B.