Once again he says this but

The reality is that there are savings in every community. And as I have long argued, many savings are literally wasted. Banks do not need deposits to lend.

Then how can a bank go bust when people withdraw their deposits in a bank run?

Think it through. Those Granite bonds at Northern Rock are still paying off, there’s been no great big loss on the loan book. Yet NR did most assuredly go bust. How, if banks don’t need deposits?

13 thoughts on “Once again he says this but”

  1. He’s on a tear at the moment! What a succession of drivelling posts! So much rudeness directed at his intellectual superiors. So much self-satisfied stupidity on display

  2. Quite, Tim. (before going off topic and back to Cataluña).

    One of the biggest and most solvent banks in Spain, the Sabadell, based in Cataluña but with most business country-wide, took the decisión to shift their HQ out of Cataluña yesterday (something the ‘independentistas’ said wouldn’t happen) because there was the start of a run. I was debating whether to shift some of my vast riches out of the Sabadell.

    The minister for the Catalan economy apparently sh*t a brick and begged them not to (thinking tax base maybe) but got short shrift from the Chairman who like a good chairman has the interest of shareholders and customers as his objective.

    Cue Caixabank (the leading domestic bank operator) due to take the decision today, and a whole load of others from other sectors to move. All it takes is a 10 minute board meeting 🙂

    Some have already gone and their shares jumped (Sabadell’s too).

    Looks like the tanks aren’t even going to have to start their engines!

    Incidentally, out the 890 ‘injured’ I think only 4 or 5 (but not sure) are in hospital, one from a heart attack and the lady who claimed she had had her fingers broken one-by-one has admitted the lie.

    The ‘brutality’ was not what it was pointed out to be. It was the Catalan Govt. out flanking the central govt on social media.

    I suggest reading this:

  3. Ah, but if Northern Rock hadn’t had depositors, it wouldn’t have had a run, so wouldn’t have gone bust!

    I suppose theoretically one could have a bank that was funded entirely by issuing fixed-term bonds and then lent for equal or shorter periods. But would it actually be able to raise enough capital at the right price for it to be a worthwhile exercise?

    Plus of course you wouldn’t get that conversion of short deposits into long-term loans that banks actually do, and which is rather useful.

  4. What’s even more glorious is that that’s roughly what the NR model was. Issue mortgages, package into bonds, sell bonds of same maturity as mortgages (ie, taking account of early pay off etc). Worked just great too, that side of the business is still paying out. Their problem was with getting the deposits to fund mortgages they’d already issued but before they had a pile big enough to sell as bonds…..

  5. Yes, it’s a bit tricky to issue long-term bonds, at a sensible price, before you’ve got any assets to back them.

    But of course to Murphy intangible assets don’t have any real value (neo-liberals only assign value to them for tax avoidance), so that wouldn’t matter.

    It’s a pity the co-op bank has gone bust; I would love to have seen Murphy made a director of it and put his ideas into practice. We could have all become members to vote for him.

  6. Bilbaoboy

    Whether or not Catalan independenc is a good idea, the facts are that putting a cross on a ballot paper has been declared illegal without the approval of the state. That wouldn’t happen here. The UK is a bloody wonderful country, all the more wonderful for voting Leave.

  7. The reality is that there are savings in every community. And as I have long argued, many savings are literally wasted. Banks do not need deposits to lend.

    The third sentence has been discussed, the first is banal, but what the fuck does the second mean?

  8. Cataluña

    Leaving aside history, the fact that years back, the independence people were just the historic radical left, that since 1978 nationalists have controlled education and the media…. (long march etc), that the conservative nationalists (are not really in favour of independence ‘cos the money) have been the most systematically corrupt regional government in Spain (vying with the socialists in Andalucia), have lied consistently to create the victim narrative: See the highlights of the debate between Josep Borrell a catalan socialist in the PSOE government years back and Oriol Junqueras the most undocumented and ignorant Minister for the Economy Cataluña have ever had.. https://www.youtube.com/watch?v=VHYsrhT2ggQ In Catalán with Spanish subtitles, have lied regarding the effects of independence (we will still be in the EU, no banks will leave, ha, ha, we will love the Spanish and they will love us, -just watch the boycotts…)

    The current government was elected in a general regional election with 48% of a 75% turnout (52% voted non-nationalist options, not non-independence as it was not a one-issue election, ) and created a majority government in seats (as is their right) with an impossible amalgam of political views some of which didn’t really want to go for independence so the radical anti-capitalists who are a small proportion but key forced their programme and got shot of the President Mas (who yesterday admitted that Cataluña isn’t ready for independence) installed a more radical guy, who has now lost control of the situation…

    This government has, under the Constitution, a limited (but very wide-ranging) series of competences with regard to Cataluña and enjoys this because all of Spain (including Cataluña) had decided that in 1978.

    However with this government with 36% of the population (not voting for independence but for nationalist parties) announce they have a mandate for independence and then consistently break all the laws regarding public finances, parliamentary rules etc. They pass a law (without due process even in their parliament) outside their jurisdiction to hold a referendum for independence. The law is declared rightly inconstitutional by the Constitutional Tribunal.

    All this, while the rest of Spain is pouring money into Cataluña much of which is also spent illegally on matters outside their competence and due to their need to create a crisis.

    The bullying, pressure and fear is rampant. Millions of Catalans in Cataluña are seriously afraid to speak out. Their busineesses are boycotted, they are shunned in their towns, their kids are signalled out.. Perhaps worse than here when ETA were still operative.

    Really it just goes on and on…

    It was a an totally illegal revolutionary coup d’êtat, a coup d’êtat, based on a minority of the population who have whipped up a frenzy based on lies and manipulation over the last 30 years and accelerated recently.

    What should the State do? Ignore consistent prevarication, illegal acts and minority imposition?

    It was a delierate provocation (the objective was to promote violence so that more would become independence-minded and achieve a majority in favour (something they have always been missing).

    Incidentally, demanding independence is not the same as Brexit (merely leaving a shi**y club) and even with 50% of the population on your side all you can achieve is what has been achieved: a fractured society sliding into civil strife.

    Of the ‘900’ injured, 4 are in hospital (one with a heart attack). Not even Franco’s police could achieve that sort of mayhem without opening fire and yes I have been beaten in demos back then and arrested and followed by the secret police. The Spanish police and Civil Guard were under extremely heavy provocation and behaved much better than could have been expected (and then I expected). All the images have been manipulated, politicians have lied (and are being found out he, he!). I am so surprised that all Europe has bought the extreme violence narrative so easily. Amazing. I am also shocked that some in Europe seem to believe that we still have a black heart, that the inquisition rules and… Lordy …

    Rajoy’s government has been pussillanimous. The Article 155 of the Constitution allows for the suspension of a regional goverment if it breaks its mandate. Many socialists (enemies of the government) and the Cuidadanos party and many in the PP were demanding its application. If there is a unilateral declaration of Independence it will I am sure be applied and general elections will be called where those interested can turn it into a debate and vote on independence.

    The Catalan’s have voted dozen’s of times in elections, they even had a DISGUISED REFERENDUM three year’s back when 37% of voters voted (90% in favour of independence).

    The solution in the end is that the economy is leaving. 2 of the 5 biggest Spanish banks are Catalan-based. Yesterday, both had moved their corporate HQ out of Cataluña. Other companies have done so and many more will do so if there is a UDI.

    So we will have no independence, a temporarily ruined Cataluña and a fractured society where a majority do not want independence. This is why violence (the other day, at the anti-independence rally tomorrow and on Tuesday if the UDI happens) is so important. With no violence the UDI is impossible.

    Idiots like Verhofstadt know nothing. A federal Spain would only make independence easier for the radical left by setting up a pre-independent state with all its institutions and is not the answer. If, I dunno, maybe 65 or 70% were independence-minded I might agree and take that route and if it leads to independence so be it, but the independentistas have NEVER had a majority following. So NO.

  9. “What should the State do?”

    Parallels with Scotland?

    Offer a formal referendum? Give it a 3 month period, to allow common sense to influence stuff. Madrid not to lie (ie don’t copy the Remainers). If what you say is true, the vote will be against and the independence wallahs will have nothing (for now), like the SNP?

    It seems to me that Rajoy has simply played very badly into their hands?

  10. “Many savings are literally wasted”
    Well, anyone whobuys an index-linked gilt with a negative real return is literally wasting their savings.
    Oh, wait – that is what Murphy wants us to do.
    Since real interest rates went negative a decade ago, my wife has very sensibly been saying “let’s use our spare cash to enjoy decent holidays before it becomes worthless” and sometimes I’ve given in.

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