Seperating retail banking from investment banking.

[Zod]

Separating the investment and retail banking arms of large banks would require the arms to be separately capitalised. Capital is expensive, so the cost of retail banking would increase and the profitability of investment banking arms would be reduced.

Lehman Brothers was a pure investment bank and went bust. RBS, Lloyds, HBOS, B&B and Northern Rock were all retail banks (RBS's investment banking arm did not contribute to its problems).

Barclays has a strong investment banking arm and did not need a government rescue. The majority of its profits come from investment banking, so ringfencing would make Barclays retail operation more expensive for its customers.

HSBC is a global universal bank. It too would find retial banking in the UK less profitable if forced to ringfence and it is the most likely candidate to move out of the UK.

[AJS-]

Fittster said:

If it's backed by the government it's not going to go bust.

Are you sure about that? Since our government is practically bust already, I don't share your faith.

[Zod]

AJS- said:

Are you sure about that? Since our government is practically bust already, I don't share your faith.

Out government, despite the best efforts of Brown is further from bust than most others, as is evidenced by the rates of interest we have to pay on our debt.

[AJS-]

tonym911 said:

It's a maths challenge. No need to set complex objectives, just one very simple one: balance the global books. Feed in all the economic and social data for every country, see what we've got, or not got, and take it from there. Then bring in one global currency. I appreciate this is a simplistic view but sometimes the simple answers are the best ones.

What would your idea of a complicated computer program be then Tony?

[Timmy35]

Zod said:

Separating the investment and retail banking arms of large banks would require the arms to be separately capitalised. Capital is expensive, so the cost of retail banking would increase and the profitability of investment banking arms would be reduced.

Lehman Brothers was a pure investment bank and went bust. RBS, Lloyds, HBOS, B&B and Northern Rock were all retail banks (RBS's investment banking arm did not contribute to its problems).

Barclays has a strong investment banking arm and did not need a government rescue. The majority of its profits come from investment banking, so ringfencing would make Barclays retail operation more expensive for its customers.

HSBC is a global universal bank. It too would find retial banking in the UK less profitable if forced to ringfence and it is the most likely candidate to move out of the UK.

All factually correct, sadly neither newspapers nor policians win circulation or elections by sticking to the facts.

[tonym911]

otolith said:

What level will the world taxation be set at? Will it be flat, progressive, income or spending based? What standard of public services will be provided? Will it be big government or small government? Will you attempt to redistribute wealth - that will level us all down to about the living standard of Lithuania or Brazil, are you happy with that?

The fact that you already seem to have a good idea of the level at which the world's wealth will level out gives me cause to believe that my proposal isn't so hard as is being made out. You may be surprised to find that the level is not so low as you think. Nobody really knows for sure, of course.

Similarly, I'm not sure why the complexity of the program need be an issue either. If we first accept that this is a problem that lends itself to a solution by computer, the only question then, surely, is how long would it take to develop and implement. Big steps required, certainly, and a massive leap of faith, but if it leads to a solution then I would argue it's worth considering.

[otolith]

I took the per capita gross world product (i.e. the sum of the national GDPs divided by the world population) and looked up which countries have a GDP per capita in that region. Personally, I would not willingly drop my standard of living to that level and would be happy for the country to go to war to avoid that.

[tonym911]

otolith said:

I took the per capita gross world product (i.e. the sum of the national GDPs divided by the world population) and looked up which countries have a GDP per capita in that region. Personally, I would not willingly drop my standard of living to that level and would be happy for the country to go to war to avoid that.

I suspect wars would largely disappear if everyone felt they had a fair shake.

[Spiritual_Beggar]

tonym911 said:

I suspect wars would largely disappear if everyone felt they had a fair shake.

I don't think so.

You're forgetting that 'Religion' is the main cause for most wars in the world. Always has...always will be.

[tonym911]

Spiritual_Beggar said:

tonym911 said:

I suspect wars would largely disappear if everyone felt they had a fair shake.

I don't think so.

You're forgetting that 'Religion' is the main cause for most wars in the world. Always has...always will be.

More than happy to include banning all religion as a sub-routine of the main program.

[Globs]

tonym911 said:

of course a single world taxation system would go with a single world currency. Hope that helps.

It doesn't help no, because the question is not 'we need to tax more to pay back the interest', it's 'the money doesn't exist'.
Your example has been effectively tested in the US, with the creation of the FED and subsequent Federal Income Tax - and look - they appear to be in the biggest debt hole ever created..

[Globs]

Spiritual_Beggar said:

tonym911 said:

I suspect wars would largely disappear if everyone felt they had a fair shake.

I don't think so.

You're forgetting that 'Religion' is the main cause for most wars in the world. Always has...always will be.

Actually the case for all wars being down to money and private central banking control is just as strong as that case. Especially when you consider WW1 and WWII were not religious wars.

[otolith]

tonym911 said:

otolith said:

I took the per capita gross world product (i.e. the sum of the national GDPs divided by the world population) and looked up which countries have a GDP per capita in that region. Personally, I would not willingly drop my standard of living to that level and would be happy for the country to go to war to avoid that.

I suspect wars would largely disappear if everyone felt they had a fair shake.

The problem you face is that currently wealth is not evenly distributed, and those who currently hold it (i.e. us) will fight tooth and nail to keep it. You think the people of the UK would just roll over and accept losing two thirds of their wealth?

[ninja-lewis]

tonym911 said:

I suspect wars would largely disappear if everyone felt they had a fair shake.

The trouble is no matter how fair everything is in reality, there will always be someone who perceives it to be otherwise.

Just as if one morning you gave everyone the same amount of resources - by the end of the day there would be winners and loser once more.

[Timmy35]

ninja-lewis said:

tonym911 said:

I suspect wars would largely disappear if everyone felt they had a fair shake.

The trouble is no matter how fair everything is in reality, there will always be someone who perceives it to be otherwise.

Just as if one morning you gave everyone the same amount of resources - by the end of the day there would be winners and loser once more.

Indeed, that's the problem, equality of opportunity doesn't equal equality of outcome. And those who perceive they have less than others have a tendancy to deny to themselves that they were to blame at all for there lack of success.

[tonym911]

otolith said:

tonym911 said:

otolith said:

I took the per capita gross world product (i.e. the sum of the national GDPs divided by the world population) and looked up which countries have a GDP per capita in that region. Personally, I would not willingly drop my standard of living to that level and would be happy for the country to go to war to avoid that.

I suspect wars would largely disappear if everyone felt they had a fair shake.

The problem you face is that currently wealth is not evenly distributed, and those who currently hold it (i.e. us) will fight tooth and nail to keep it. You think the people of the UK would just roll over and accept losing two thirds of their wealth?

if everyone in the world is operating on the same level in terms of currency, taxation, wages and goods prices, then why not? I would if the system was properly implemented and properly presented. I know talk of world harmony makes a lot of people snigger and make hippy references but if you boil it right down to basics we're supposed to be here to enjoy life, not to get one over on our neighbours. I certainly find it easier to see value in this proposal than I do in the existing system.

[Timmy35]

tonym911 said:

we're supposed to be here to enjoy life, not to get one over on our neighbours.

Actually there are several well know case studies proving the opposite. The most famous one is a survey in which American Business students were asked which outcome they would prefer, one in which all graduates received a high equal wage, or one in which the other graduates received far lower wages, but they received a highr wage that was still less than under the equal wage system.......to the researchers suprise most opted for the latter.

People actually want inequality, and to stuff their neighbours.

[tonym911]

Timmy35 said:

tonym911 said:

we're supposed to be here to enjoy life, not to get one over on our neighbours.

Actually there are several well know case studies proving the opposite. The most famous one is a survey in which American Business students were asked which outcome they would prefer, one in which all graduates received a high equal wage, or one in which the other graduates received far lower wages, but they received a highr wage that was still less than under the equal wage system.......to the researchers suprise most opted for the latter.

People actually want inequality, and to stuff their neighbours.

Surely that's because the flawed society we live in dictates that response. What if we take away the need to beat people down to be 'happy' (ie physically rich), by making 'richness' unnecessary?

[munky]

Zod said:

AJS- said:

Are you sure about that? Since our government is practically bust already, I don't share your faith.

Out government, despite the best efforts of Brown is further from bust than most others, as is evidenced by the rates of interest we have to pay on our debt.

We pay less than Spain, even though our government has more debt than the Spanish government (as % of GDP) so it depends on what you mean by further from bust. Also, the UK's budget deficit is worse, at -4.4% vs Spain's -0.9% (2011 forecast primary budget deficit). By those measures we're nearer to bust than Spain even though we're paying less interest.

On the other hand though Spain's average debt maturity is 6 years vs our 13.5 or so, and we have (just barely) GDP growth whereas Spanish GDP is contracting. And we have a more credible plan to cut our budget deficit than Spain. And possibly trumping all of the above is our ability to devalue or print money to repay debt if it really came to it, whereas Spain cannot. Oddly if a country has its own, floating, currency and most of its debt is in that currency, it can be very close to "bust" and still have low yields.
Look at Japan - more (govt) debt than anyone at 128% (although possibly now exceeded by Greece), a primary budget deficit, shrinking GDP, deflation, and a rapidly ageing population yet almost zero yields.

[Digga]

tonym911 said:

Surely that's because the flawed society we live in dictates that response. What if we take away the need to beat people down to be 'happy' (ie physically rich), by making 'richness' unnecessary?

With respect, I think you have perhaps spent too much of your life in Wiltshire.

There are places in the country where people are never likely to be happy.