I hate banks

[WesLangdon]

You don't get something for nothing in this world.

So you create falsely high returns for one part of the system at the expense of increased risk in another - or vice versa.

Rock and hard place.

Part of the problem that caused the current woes was that banks were dependent on asset prices (eg. equities, property) both for apparent reserves and security so when things went bad the asset prices slipped and things got worse as risk exposure then increased and asset valuations slipped and risk exposure went up and asset valuations slipped. A lovely slippery spiraling slope downwards.

the reverse multiplier effect or the inverse algorithm that they used to invent CDO's

Collateralized debt obligation - Wikipedia, the free encyclopedia

 

[Dieselman]

because they can loan out your money in your account by a ratio of 9:1
when the good times roll they can "earn" over 9x the derisory amount of interest they pay you. For every £1000 you save they can lend out £9k and will charge a higher interest on each £1k they loan than they pay you. This gives them the ability to allow you free personal banking as if by magic.

...

 

[markjay]

Keep in mind that cash held in chequeing or current account does not really help the bank with its loan planning because it can be withdrawn at any time.

Off course they will use some statistic formula to loan money on the back of cash held in such accounts, but what they really need is cash 'closed' for a set period of time - e.g. saving plan or bond etc with early withdrawal penalty - this allows them to give out a higher proportion of loans.

At the end of the day the banks earn their money mainly from interests on loan, so the cash held in bank accounts is important for them and the more predictable it is, the better.

 

[markjay]

Money disappeared slowly in two stages.

The first was when governments issues notes and coins that had no real value other then through mutual acceptance and trust.

The second was when the coins and notes were largely replaced with binary digits on a computer.

Money does not have physical existence anymore, it is a virtual concept very remote from the (partial) securities held by governments against it - unless of course you use gold or silver coins.

 

[markjay]

I received a letter yesterday from HSBC regarding a disused Saving Accounts I have with them.

The letter stated that a Saving Account should be used for savings, and as I do not make regular deposits into the account they will convert it into a Current Account.

Which is fair enough, and at any rate I have no real use for this account which I opened nearly twenty years ago at an HSBC branch near where I used to work at the time.

However... the letter also stated that if I wanted to keep the account as a Saving Account, I would have to make regular deposits of at least £500 each month going forward.

I do find this figure somewhat steep - how many people can in the current economic climate set aside £500 as savings each month? Certainly not anyone earning anything near the UK average salary which I believe is around £26k pa gross.

So it would seem that HSBC think that people on low an average income should not have Saving Accounts - not with HSBC anyway?

 

[st13phil]

I used to bank with HSBC until they decided to reduce the interest rate on a savings account I had with them without telling me. As a result of that action I moved my banking elsewhere, but kept four accounts open with HSBC, with 1p in three of them, and 38p in the fourth. That way they have to provide me annual statements on each of the accounts - which I find strangely gratifying. They did write to me last year saying that if I didn't make any transactions on the accounts for ten years (it's been eight years since I last used them) then they would become dormant accounts. I have a note on my Outlook Calendar for month 12 of the ninth year to move a few pennies in to each of the accounts to keep them active

 

[markjay]

Better still, I suppose you could just move the pennies around between the existing accounts...

 

[st13phil]

I did think of that, but I can't remember my account login details, so I'd have to contact them find it out. But I do know the account numbers, so it's easier to make a small deposit to each of the accounts