How Safe Are The Banks?

[churchill]

this is Irish Nationwide http://www.irish-nationwide.com/

Which as far as I can see has no connection to http://www.nationwideinternational.com/

[churchill]

Financial crisis: Government to take majority stake in RBS

Banking shares across the G7 nations could be suspended tomorrow as Government prepares to take a £35bn equity stake in four of the UK’s high street banks.

http://www.telegraph.co.uk/finance/finance...ake-in-RBS.html

Edited October 12, 2008 by churchill

[lannarebirth]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

[LaoPo]

this is Irish Nationwide http://www.irish-nationwide.com/

Which as far as I can see has no connection to http://www.nationwideinternational.com/

You're probably correct; I find it VERY confusing though, also because both have subsidiaries on the Island of Man carrying almost the same MOTHER names (Irish Nationwide Building Society & Nationwide Building Society) AND similar websites.

LaoPo

[whatsoever]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

[lannarebirth]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

Yes, I understand that. What I don't understand is why they are willing to pay depoitors a higher rate to use their money when they can procure the same funds from the Central Bank at a lower rate.

[whatsoever]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

Yes, I understand that. What I don't understand is why they are willing to pay depoitors a higher rate to use their money when they can procure the same funds from the Central Bank at a lower rate.

You obviously dont understand. However, your in the vast majority! If eg. Joe Blogs deposits $1000 in the bank of Siam, then the bank may pay him interest at lets say 5%. However, the bank through the fractional reserve rules can make loans from money it doesnt actualy have of 9 x $1000 - at lets say only 4%.

The loans are only made digitaly usualy no cash changes hands. I know it takes a bit of getting ones head around this fact but thats how thye can pay a depositor more than a lender.

[lannarebirth]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

Yes, I understand that. What I don't understand is why they are willing to pay depoitors a higher rate to use their money when they can procure the same funds from the Central Bank at a lower rate.

You obviously dont understand. However, your in the vast majority! If eg. Joe Blogs deposits $1000 in the bank of Siam, then the bank may pay him interest at lets say 5%. However, the bank through the fractional reserve rules can make loans from money it doesnt actualy have of 9 x $1000 - at lets say only 4%.

The loans are only made digitaly usualy no cash changes hands. I know it takes a bit of getting ones head around this fact but thats how thye can pay a depositor more than a lender. Anyway, mine was a rhetorical question, as I already know the answer. Would be depositors seem not to know.

I understand it. My question is, why would they? Even if I can lend money out at 50% returns, I'm still going to borrow it from the guy who will give to me for 3% and not the guy who will give it to me for 6%.

Edited October 12, 2008 by lannarebirth

[whatsoever]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

Yes, I understand that. What I don't understand is why they are willing to pay depoitors a higher rate to use their money when they can procure the same funds from the Central Bank at a lower rate.

You obviously dont understand. However, your in the vast majority! If eg. Joe Blogs deposits $1000 in the bank of Siam, then the bank may pay him interest at lets say 5%. However, the bank through the fractional reserve rules can make loans from money it doesnt actualy have of 9 x $1000 - at lets say only 4%.

The loans are only made digitaly usualy no cash changes hands. I know it takes a bit of getting ones head around this fact but thats how thye can pay a depositor more than a lender. Anyway, mine was a rhetorical question, as I already know the answer. Would be depositors seem not to know.

I understand it. My question is, why would they? Even if I can lend money out at 50% returns, I'm still going to borrow it from the guy who will give to me for 3% and not the guy who will give it to me for 6%.

No you dont get it. The banks are - again - only allowed to lend 9 x what they have taken as deposits from investors. They dont borrow from the central bank. The central bank just allows them to loan - digitaly eg. 9 x what they have on deposit. In exhange the cenral bank gaurantees the loans - because technicaly, if required it can print the money.

Last try: The cental bank will only allow banks to lend out 9 x what they have taken as deposits - not 9 x what they would loan from the central bank. That is an impossible situation

[lannarebirth]

I do get it. What I'm asking is why are they paying more than other banks?

Inspired by Alex Lah, I'll give you the reason. It may also be covered in the 7th Principle?, but this will do nicely:

http://en.wikipedia.org/wiki/Conservation_of_mass

For those who need the Cliff Notes version. The currency is about to get eviscerated. I might be wrong.

[whatsoever]

I do get it. What I'm asking is why are they paying more than other banks?

Inspired by Alex Lah, I'll give you the reason. It may also be covered in the 7th Principle?, but this will do nicely:

http://en.wikipedia.org/wiki/Conservation_of_mass

For those who need the Cliff Notes version. The currency is about to get eviscerated. I might be wrong.

So now you understand you change your question! Obviously to attract more depositers

[lannarebirth]

I do get it. What I'm asking is why are they paying more than other banks?

Inspired by Alex Lah, I'll give you the reason. It may also be covered in the 7th Principle?, but this will do nicely:

http://en.wikipedia.org/wiki/Conservation_of_mass

For those who need the Cliff Notes version. The currency is about to get eviscerated. I might be wrong.

So now you understand you change your question! Obviously to attract more depositers

Mr whatsoever, this is my original post, in it's entirety:

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

I have posed a rhetorical question to get would be depositors to question rates that on their surface appear "to good to be true". Why might that be? You've offered one explanation, but it's not the one that springs to my mind, as in these matters I like to think as a criminal would. Although I admit, the distinction between bankers and criminals is a fine one.

To me it reeks much more of baiting a trap. To each their own and I offer my most genuine good luck wishes.

[whatsoever]

I do get it. What I'm asking is why are they paying more than other banks?

Inspired by Alex Lah, I'll give you the reason. It may also be covered in the 7th Principle?, but this will do nicely:

http://en.wikipedia.org/wiki/Conservation_of_mass

For those who need the Cliff Notes version. The currency is about to get eviscerated. I might be wrong.

So now you understand you change your question! Obviously to attract more depositers

Mr whatsoever, this is my original post, in it's entirety:

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

I have posed a rhetorical question to get would be depositors to question rates that on their surface appear "to good to be true". Why might that be? You've offered one explanation, but it's not the one that springs to my mind, as in these matters I like to think as a criminal would. Although I admit, the distinction between bankers and criminals is a fine one.

To me it reeks much more of baiting a trap. To each their own and I offer my most genuine good luck wishes.

Well I do agree that banksters shouldnt be taken at face value. However, as we all know they are greedy parasites and will pay as little as they can when it suits - but I think in this case they are simply just competing for depositors cash. But that is purely my own speculative opinion and I have been wrong before. (Only once though )

[LaoPo]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

I have followed the discussion between you and Lannarebirth but I haven't seen any answers to my previous posts, here and on the so called ICESAVE thread.

1. do you have a link where it says that banks can loan 9 x the deposits they receive ?

2. OK, let's assume ICESAVE received € 5 Billion from some 425,000 investors from the UK and Holland (€ 1.7 Billion was from 120-125.000 depositors from Holland and Saturday Oct. 11th, an agreement has been reached between Holland and Iceland to pay those investors back).; so I'm not far off with my estimate of € 5 Billion; and that's just in ICESAVE's case.

Mind you: this € 5 Billion is CASH as this money leaves a certain country and is thus deducted from the local reserves and ends up in Iceland.

That would, in your opinion (9 x 5), mean that a total of € 45 BILLION is loaned out again by ICESAVE; is that correct ?

3. At what percentages*** (keeping in mind that they paid percentages of 6-6.25% and higher !)? to whom did they loan out and what kind of products ?

I could continue, but I'm curious to learn these items first.

I fully agree with Lannarebirth when he wrote: "Although I admit, the distinction between bankers and criminals is a fine one." because I wrote over and over again here on TV:

Banks are legalized Mafia. They are.

*** Certain banks on the Island of Man paid even more: up to 7.20%

LaoPo

[whatsoever]

Wether they are able to loan the full amount - up to 9 x the deposit depends on their marketing skills through various vehicles (i.e credi cards, etc etc). Maybe this fractonal reserve equasion helps to explain why Banks are so desperate to market and push loans CCs etc.

Problem is - as people are begining to realise - that when these loans are given to bums and stiffs (sub-prime), under the fractional reserve they havent just loaned out your deposit but also up to 9 x more in laibilites which they never ever had. This is why for eg. the US government has to borrow from the Fed so they can bail out the banks which have loned money which they never actualy had.

However, this is where it gets a little unbelievable (but fact). They US government actualy borrows the money from the Fed - who simply print it - to pay back the Fed with interest. This is done by the US treasury printing Bonds, lets say to the value of $70 billion, and exhanging them for $70 billion in notes. Well, infact not notes just digits on a computer.

I have tried to keep it simple as i do understand that 99.95% of people have no idea how banking functions.

PS a $1000 deposit into a bank can eventulay becom loans of upto $90,000 yes $90,000 not just $9000 but i think thats for another day.

I simple link doesnt explain as this information is purposely esoteric - just do your research!

[rott]

Here's the part I don't get. these banks can get funds from the central bank for a couple of points less than they're paying out in terest to depositors. Why on earth would they offer these rates? Well, I'd say everyone here has been well and truly warned. Chok Dee.

Quite simple realy! For - lets say - every $1000 deposited in a bank, the bank through the fractional reserve system, can lend $9000 or for simplicity 9 x $1000 loans. Thus receivng interest on 9 x $1000 loans and only having to pay interest on 1 x $1000 loan

I have followed the discussion between you and Lannarebirth but I haven't seen any answers to my previous posts, here and on the so called ICESAVE thread.

1. do you have a link where it says that banks can loan 9 x the deposits they receive ?

2. OK, let's assume ICESAVE received € 5 Billion from some 425,000 investors from the UK and Holland (€ 1.7 Billion was from 120-125.000 depositors from Holland and Saturday Oct. 11th, an agreement has been reached between Holland and Iceland to pay those investors back).; so I'm not far off with my estimate of € 5 Billion; and that's just in ICESAVE's case.

Mind you: this € 5 Billion is CASH as this money leaves a certain country and is thus deducted from the local reserves and ends up in Iceland.

That would, in your opinion (9 x 5), mean that a total of € 45 BILLION is loaned out again by ICESAVE; is that correct ?

3. At what percentages*** (keeping in mind that they paid percentages of 6-6.25% and higher !)? to whom did they loan out and what kind of products ?

I could continue, but I'm curious to learn these items first.

I fully agree with Lannarebirth when he wrote: "Although I admit, the distinction between bankers and criminals is a fine one." because I wrote over and over again here on TV:

Banks are legalized Mafia. They are.

*** Certain banks on the Island of Man paid even more: up to 7.20%

LaoPo

LaoPo the overwhelming majority of your posts are, for me, informative and educational.

I am relieved that you eventually grasped that The Irish Nationwide and The Nationwide are totally different entities, but will you please stop referring to "The Island of Man", it's THE ISLE OF MAN.

Please continue with your (mainly) excellent posts.

Thank you.

[Naam]

will you please stop referring to "The Island of Man", it's THE ISLE OF MAN

i too resent LaoPo's continous faux pas and insist that "The Iceland of Mann" is henceforth called only the correct way "Île-de-l'homme" which is klingon-français

[LaoPo]

LaoPo the overwhelming majority of your posts are, for me, informative and educational.

I am relieved that you eventually grasped that The Irish Nationwide and The Nationwide are totally different entities, but will you please stop referring to "The Island of Man", it's THE ISLE OF MAN.

Please continue with your (mainly) excellent posts.

Thank you.

I am SO sorry ! Mea Maxima Culpa.

I've always been under the impression that The Isle of Man was an island, somewhere hidden between England and (Northern) Ireland.............or is it Eire ?

Note: for an outsider, not familiar with the various Nationwide entities it was indeed a bit confusing. I am very happy I learned something, again.

LaoPo

[SirPaul]

FOUND OUT: If you have money in a Thai Bank that goes under, you get 80% of your money back. Same for Thai or non Thai people.

Can anyone varify this?