How will banks survive deep NIRP?

[Martinghoul]

not bankrupt legally. in cyprus,they seized the assets withe connivance of the gov't.

Huh? Bank of Cyprus was restructured and Laiki Bank was closed, since both were insolvent. Indeed, this was the decision of the government, but, last I checked, Cyprus was a democracy. In a democracy, the elected government decides what's legal and what isn't. Therefore, by construction, the banks were legally bankrupt.

Well, banks themselves complain of NIRP already: http://www.ft.com/intl/cms/s/0/2ed4d1ae-cf48-11e5-831d-09f7778e7377.html

Of course banks complain... What else is new?

Anyways, like I said, I am not really sure what the point of this discussion is, since you clearly know all the answers.

 

[babyjake1961]

If banks saw no peril in NIRP for themselves, why would they complain in public so bitterly? To stir up even more panic and sustain even more damage?

Also, I don't buy it that bank shares worldwide would plunge so dramatically (Deutsche had nearly half of their capitalization wiped out) in mere weeks for no good reason.

 

[Martinghoul]

If banks saw no peril in NIRP for themselves, why would they complain in public so bitterly? To stir up even more panic and sustain even more damage?

Also, I don't buy it that bank shares worldwide would plunge so dramatically (Deutsche had nearly half of their capitalization wiped out) in mere weeks for no good reason.

Firstly, whether or not banks see or don't see peril in something doesn't necessarily imply that such peril exists or doesn't. To hijack your very own example, banks didn't see peril in subprime MBS and CDOs. More broadly, but very current, the finance industry sees peril from the adoption of the wide fiduciary standard. Believe it or not, these clever finance types get it wrong sometimes. Banks and other financial institutions always bitterly complain about things that might threaten their bottom lines. That doesn't mean that, when these scary things actually happen, the bottom line suffers. Didn't happen with NIRP in Switzerland, didn't happen with NIRP in Denmark, didn't happen with NIRP in Sweden (in fact, the opposite did).

Secondly, so what if banks complain? When did the taxpayer guarantee bank shareholders a certain level of return? When the banks whine about their profits being impacted, well, I'm sorry, but I, for one, am not too moved by their plight. If you sympathize with those poor banksters so much, pls feel free to donate personally. I know I won't.

Thirdly, I have spoken about Deutsche, which is a bit of a special case, in another thread. Obviously, it is entirely up to you how you choose to explain the selloff.

 

[Pricechange]

Huh? When did I ever say anything regarding the normality of NIRP? You're confused, mate...

What is my reason for being here on ET? Simple, it's mostly entertainment. Reading comments like yours relieves occasional boredom. As to media damage control, yes, you're not the first to accuse me of being a media representative of the Fed. You are, however, the first one to suggest that I am speaking on behalf of the banks. That's new and weird and promises to be even more fun.

Finally, you fade my investing notions and comments? Really? I was under the impression that I hardly ever say anything that is specific enough to fade. If you have examples, I would love to hear them. Also, I guess this means that there's another good reason why I am on ET: to provide you with ideas to fade.

yea, your posts sound like the Cyprus minister of finance in the weeks leading to the bail-ins..."nothing to see here fellows, there will be no problems of any sort. Just trust the ministry, we will protect your savings"

two weeks later most everyone lost 50% of their savings

Martin I am just guessing here but maybe you don't really give a fuck what happens here at ET...maybe you are here just for a place to pass time while tucking into a half dozen pints. But your posts are that of a sell side talking head trying to pretend everything is pretty just before the savers take another Northern Rock.

Again I usually fade your take on things so I will take this as a far negative for the banks and financials and start to arrange some shorts accordingly

By the way I guess you feel that DB stock behavior is perfectly normal and thats just a result of investors over-reacting.....cheers mate, baaawaaaa folking tosser

 

[Pricechange]

If banks saw no peril in NIRP for themselves, why would they complain in public so bitterly? To stir up even more panic and sustain even more damage?

Also, I don't buy it that bank shares worldwide would plunge so dramatically (Deutsche had nearly half of their capitalization wiped out) in mere weeks for no good reason.

babyjake fully agree....
Notice how Goldman's stock price never came back up along with the general averages after the talk of NIRP...and this after it fell from $200 and still at $150...thats a sickly chart.

seems like martingoul is just a troll wasting your time

 

[Martinghoul]

yea, your posts sound like the Cyprus minister of finance in the weeks leading to the bail-ins..."nothing to see here fellows, there will be no problems of any sort. Just trust the ministry, we will protect your savings"

two weeks later most everyone lost 50% of their savings

Martin I am just guessing here but maybe you don't really give a fuck what happens here at ET...maybe you are here just for a place to pass time while tucking into a half dozen pints. But your posts are that of a sell side talking head trying to pretend everything is pretty just before the savers take another Northern Rock.

Again I usually fade your take on things so I will take this as a far negative for the banks and financials and start to arrange some shorts accordingly

By the way I guess you feel that DB stock behavior is perfectly normal and thats just a result of investors over-reacting.....cheers mate, baaawaaaa folking tosser

Whatever, man... There is no point talking to you if insults are the best thing you can come up with.

I am outta here.

 

[Sig]

no kidding. under frank-dodd there is a bail-in provision a la cypriot banks. banks will take big risks because depositor's money will be confiscated in case of bank insolvency, in order to recapitalize them. hard to believe, it will be done at the depositor's expense and not at the taxpayer's expense.

Can you point to the specific section of the bill that allows this?

 

[babyjake1961]

Can you point to the specific section of the bill that allows this?

Google is power: http://www.examiner.com/article/does-dodd-frank-set-up-bail-for-u-s-banks-to-follow-cyprus

 

[piezoe]

The central bankers don't realize that both regular people and commercial banks do realize this way to restart the economy won't work.

The quote above is what makes me chuckle. The ECB does have a much more difficult problem on their hands than the U.S. Fed, I'll give you that, because they don't have a well integrated monetary system, e.g., they lack a Eurobond, and for other reasons. Yes, Banks do make mistakes from time to time, but as far as central banks go, it isn't as though the folks running them are a bunch of Wall Street Internet Gurus running around with their zippers open.

There may be a reason Central Banks elsewhere are following in the footsteps of the U.S. Fed, and I doubt it is because they are intentionally trying to crash land their respective economies. Let's hear the specifics on your ideas. Might you prefer a deep, world-wide depression just to clear out the system and get everyone back to zero for a fresh start?

The U.S. is not Cyprus. Dodd-Frank protects ordinary depositors and sets up stock holders and creditors to take the hit if there is trouble. The money you give the bank for safe keeping is safe. If you want to invest in banks with the hope of getting a positive return you will have to shoulder some risk. Do you have a problem with that?

This is probably what got you all excited: "Dodd-Frank authorizes the Federal Deposit Insurance Corp. to recapitalize failed financial institutions by confiscating customers' deposits."

But of course, confiscating customer deposits is what the FDIC does when they move on a failed bank. That does not mean that depositors lose their money.

 

[babyjake1961]

When your computer's operating system is too badly messed up, the only way out is to format the hard drive and install a new one. It's pretty much the same thing here.

Crashes and depressions are the only viable way to rid the world of the long unsustainable debt which prevents economic growth.

Problem is with the information age we're living in. While our grandparents during the Great Depression might have felt largely confused and looking for a salvation by the authorities, the modern-day rulers have compromised themselves beyond belief. So when the SHTF, quite a few of them might quickly end up hanging down from the nearest trees while angry crowds will go on with their armed rampage.