Bankuak eta beraien nazionalizazioaz

E-posten trukaketa:

Hi Warren.

Here a doubt I have been dealing with for some time: Banks and their nazionalization

Bill Mitchell is in favor of nationalization:

Nationalising the banks | Bill Mitchell

The case for re-nationalisation – Part 2

Banking

Re-nationalising the banking system would eliminate the largely unresolvable tension that exists in the current system where banks occupy a special protected place and are not really allowed to fail by dint of government support (implicit or otherwise) yet at the same time behave just like risk-taking entrepreneurial firms, paying exorbitant executive salaries and skewing their operations to the interests of their shareholders.

The tension between the public nature of banking and the intrinsic social role they play and the greedy pursuit of private profit – or the privatisation of profit and the socialisation of loss – is palpable and unsustainable.

Socialisation the profits and loss and steering the activities of banks 100 per cent towards the advancement of public purpose would go a long way towards eliminating the worst features of the banking system which culminated in the global financial crisis.

The nationalisation of banks would mean that a key social institution is serving only one master – the public rather than compromising its public charter to line the coffers of their private owners.

When we consider the essential progressive reforms to the financial system in a later blog, a starting point will be to return banks to being banks rather than gambling casinos.

Part of that process, should be the re-nationalisation of the banking sector

Also in his new book, Reclaiming the State, pp. 257 ff.

It seems to me that you are not in favor of that measure…

https://www.youtube.com/watch?v=hcx-gFh1Alk&feature=youtu.be

Warren Mosler, on with Steve Grumbine at Real Progressives, discussing reforms of banking. In order to reform banks, we have to first decide what banks are for and what they should and shouldn’t do. The first purpose of banking is to have a stable payment system. This is infrastructure that undergirds the economy, so that individuals or corporations can make payments. Decades and centuries of experience show that banks on their own cannot create a stable payment system, and instead have a tendency towards bank runs, panics, and financial crises. This is the argument for deposit insurance. With deposit insurance, the government protects bank customers from their bank. It ensures that even in the event of bank failure, customers can still withdraw or transfer their accounts, stabilizing the payment system. Furthermore, centralized payment clearing at a central bank (where the central bank (like the Fed) makes payments between banks) is necessary to ensure that $1 in every bank will actually be equal to $1. Once there is deposit insurance and central banking, the banking system becomes dangerous. This is because they have government guarantees behind their actions, so they cannot fail. It’s like letting a gambler loose in a casino, then saying “you get to keep all of your winnings and the government will pay for all of your losses.” It encourages extreme risk-taking. This therefore demands full banking regulation, to ensure that banks aren’t taking advantage of government protection. The next task of banking is lending. There are many purposes to lending, with probably the most important being the capital development of the economy. So, entrepreneurs and businesses can take out loans in order to finance investment in new technology, jobs, factories, etc. This kind of financing activity is a major contributor to the improvement of quality of life. One question here is, should banks do this? The private sector is capable of lending even without banks doing it. This is what the bond market does, and what private companies can do to finance their customers’ purchases (think auto loans from a car company). However, there are 3 key differences between bank lending and other private sector lending. First, because banks are lending their own IOUs rather than lending from a pre-existing pile of cash, this means that lending for the capital development of the economy is not limited by any quantity of saving. Second, because banks are backed up by government guarantees, they don’t have to lend based on the value of the assets, but can lend based on the ability of the borrower to pay. And third, because banking is heavily regulated by government, it is an opportunity for public policy to shape the development of the economy, by encouraging banks to lend for things that serve public purpose, and discouraging (or banning) lending for things that don’t. Since banks are already functionally public-private-partnerships, should we just nationalize banks and make them all into public institutions? Mosler argues that we should not. The reason is because public banks are subject to political pressures and can make huge losses, therefore public banks are highly susceptible to corruption. With the public-private model, Mosler asserts, the banks have incentive to lend based on risk, not based on political favors.

I have read some texts of yours where you have the same position (of course!!) about nationalizing the banks, i.e., Not to nationalize them.

Is this OK?

Any more arguments?

Thanks a lot.

Best.

joseba

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Nork: Warren Mosler <>
Bidaltze-data: asteazkena, 2017(e)ko azaroaren 15a 01:01
Nori: .
Gaia: Re: Doubt

On Mon, Nov 13, 2017 at 9:07 PM, . <josebafelix@outlook.es> wrote:

except they do fail as defined  by the owners losing all their equity. 

That’s where regulation and  supervision comes in,  as per my proposals. 

Socialization of loss only after shareholders have lost  everything.

Nor are govt. net losses all that large, best I can recall.  In  fact, 

many of the ‘bailouts’ resulted in profits for the govt. after 2008  

And introduce its own set of problems- politicization  of lending, as most europeans are painfully aware of after decades of large state owned banks. 

More specifically,  they tend to be biased towards serving those with political power. 

True, again, it’s about regulation and supervision. 

Both public and private banks  are very dangerous animals… 

as above.

The legislature can advance funds as desired, public banks or no  public  banks.

That is, the tool for the desired outcomes is already in place.

Those were not my actual words.  I don’t argue specifically against public banks, but I do  point out the  shortcomings

which never seem to be part of the analysis of those who advocate for them.

As above, thanks!

Best!

Warren 

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Warren Mosler

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Because we fear becoming the next Greece, we continue to turn ourselves into the next Japan

‘The 7 Deadly Innocent Frauds’ 

http://www.moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/

“The Conservative belief that there is some law of nature which prevents men from being employed, that it is ‘rash’ to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years. The objections which are raised are mostly not the objections of experience or of practical men. They are based on highly abstract theories – venerable, academic inventions, half misunderstood by those who are applying them today, and based on assumptions which are contrary to the facts… Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense.” – J.M. Keynes in a pamphlet to support Lloyd George in the 1929 election.

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Gehigarria

Against Free Banking: The Liability Side Isn’t The Place For Market Discipline

Bideoa: https://www.youtube.com/watch?v=PyYYrIcgYJ4

Warren Mosler, former banker and investor, discussing bank regulation, and specifically the institutional structure called “free banking.” In free banking, the government would not backstop the banks at all, and instead private citizens would have to choose which bank was safest when deciding where to keep their money. If the bank fails, then the depositors lose their money. Contrast this with the situation we have today, where the federal government backstops the banks. It does so in two ways: first, the Federal Reserve will lend to any bank that is illiquid (meaning that the bank is still solvent, but that it’s incoming cash flow isn’t enough to meet its cash outflows). And second, the government provides deposit insurance to protect bank customers. In the event that a bank is insolvent (meaning that its assets are greater than its liabilities (or, in simple terms, it owes more than it owns)), the Federal Deposit Insurance Corporation will ensure that bank customers get their money back. Many free-market types (particularly Libertarians) point out the problem with this situation: with the bank’s customers’ welfare guaranteed by the government, the bank is effectively playing with “house money,” and has incentive to do irresponsible things with it. It’s sort of like saying “if your bet goes well, you get to keep the profits. If it goes poorly, the government will bear the costs.” Big incentive problem. One possible response to this would be to have free banking, where there is no government backstop. However, this makes the system excessively prone to bank runs, to private citizens losing their savings for no real reason, and to general financial panics. It also means that there won’t be “par clearing,” so that $1 in your bank account might not actually be worth $1. We used to have this in the United States, and each bank printed its own banknotes, so that there were hundreds of different currencies circulating at once. Merchants had to keep books telling them at what rate each banknote was being accepted for (perhaps CitiBank’s $1 notes would be accepted for $0.98, while Bank of America’s might only be accepted for $.70.). The system proved quite unpopular, and so the government took steps to stabilize the system. The alternative approach is to acknowledge that the government backstop creates perverse incentives for banks, and also that it effectively turns them into public/private partnerships. As such, the government should treat them as vehicles for enacting the public purpose, by regulating what they can and can’t do, to make sure the banks’ actions are consistent with the goal of the development of the economy.