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RBA chief exposes big bank bastardry
This article first appeared on Webdiarist Alan Thornhill’s Private Briefing website. Thank you, Alan, for permission to republish on Webdiary.
RBA chief exposes big bank bastardry
by Alan Thornhill
Some of the now confessed bastardry of Australian banks has now been exposed, at the highest possible level.
The Reserve Bank Governor, Glenn Stevens, chose his words carefully – and spoke politely – when he did that late yesterday.
But those who heard him had no doubts about what he was really saying.
He was laying into
The Governor’s speech, clearly, followed years of frustration, dealing with the deep conservatism and self-serving policies, of
True, they haven’t acted as badly as their reckless counterparts in the
But Mr Stevens’ catalogue of what they have done – and failed to do – makes serious reading, anyway.
The governor says, for example, that the big four banks have effectively lumbered Australian shoppers and businesses with a cumbersome payment system, whose design is at least thirty years out of date.
He said other countries, including
Bad as that, undoubtedly is, Mr Stevens’ criticism of the big banks, which he regulates, didn’t stop there.
He noted too, that if the big four banks ever saw a chance to freeze small rivals out of the system, they would take it, regardless of the damage it did to competition in
But Mr Stevens made it clear, too, that he also had his reservations about the smaller players, in
“For example, small institutions would only consider a system that allowed to form fee-free networks among themselves, otherwise they would be at a competitive disadvantage to the big banks, with their large ATM networks,” Mr Stevens said.
He effectively confirmed, too, that the Reserve Bank had been forced to drag the big four, kicking and screaming, into the recent reform of
The new head of the National Australia Bank, Cameron Clyne, boasted yesterday, that as boy who grew up in
And he added: “There are issues where many people think the banks can be bastards”.
Mr Clyne might well have hesitated, before saying that, though, if he had realised that Mr Stevens would soon, effectively, join those critics.
That happened just a few hours after Mr Clyne spoke.
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Communication
Justin Obodie, actually, what you write of has merit. I just don't think it'll happen. Personally, I'm certain - that doesn't mean I'm right.
My opinion is my opinion - even if it's wrong.
I write this because I've re-read what I've written in this thread. I do come across as a "little" brusk. That there is no doubt.
I thank both you and Jay for your responses. All comments made toward me, "really", did make me think.
It's a pain but it's here to stay
Justin Obodie, there will never be a one world currency in our lifetime. It's simply impossible.
The level of monetary co-ordination needed means it is, and will be, untenable. Even if it were to be tried, some political opportunist (probably lots of them) would soon see it off (probably with the use of conspiracy theories).
The problem with democracy is that it gives everybody a vote. I make no bones about the fact that I'd be hard pressed allowing 50% of the population to feed my pets. I certainly understand they're not going to come up with the right financial decision.
Wealthy people wanting to control the world? There's a level of wealth one reaches where having more takes a lesser seat to losing what one already has. The American system works because it guarantees one keeps what one has. Of late, one even gets back (thank you Mr taxpayer), that which one has lost. Add to that an unbeatable chain of nuclear weapons and such (there aint going to be invasion), and one already has a world currency.
It's known as the US Dollar.
I repeat: The only possible other currency is gold (or the like commodity). There isn't any other choice - and there won't be in our lifetime.
The NWO - a global currency
The Financial New World Order: Towards a Global Currency and World Government.
Paul, read it and weep.
The Dollar and that's it
Jay Somasundaram: "I suspect that China was not suggesting its own currency as a world standard, but rather one issued by an international body such as the IMF or world bank. I'd think most countries would support such a move, unless they received a quid pro quo from the US to vote against it."
Who really knows what China is suggesting. The fact is they are totally reliant on the American producer, and consumer - something that isn't just about to change.
A world currency wouldn't work. It's ridiculous even thinking one. Look at how truly awful and full of imbeciles the world organizations are already! They're jokes and that's the nicest thing I can think of.
There's a misguided belief that wealth is democratic. It isn't. There's a misguided belief, that wealth can be fair. It can't. That's not the way it works, and it'll never work that way.
If you want an independent guide, you're best off pushing for gold. That many still want fiat, world or otherwise, is because they can't wean themselves away from the power it brings. The power to inflate as a wealth creation tool.
So we're all stuck with the US Dollar or the highway. That's the simple reality.
The market decides the price of oil. The USA Government has nothing to do with it. Arabs have no alternative but to sell oil (they don't have anything else). They don't have a choice to hold back. Simple economics dictates that. Anyway OPEC decides on production, and it often decides things very different to what the US Government would prefer.
Controlling oil markets wouldn't be the reason for an Iraq invasion, and if, and that's a huge if, so it's one of the most economically stupid moves I've ever heard of being made. It doesn't make any sense. It didn't then, and it doesn't now.
George's ridiculous thinking
An interview with George Soros published today:
The Dollar or the Golden Eagle?
Jay Somasundaram "The US, of course, is going to resist losing its dominance. Some conspiracy theorists even say that it is willing to use subterfuge and force, that the invasion of Iraq and the threats against Iranwere partly driven by their attempts to move away from the USD. The G20 talks are going to be quite interesting. The king is weak, and the hyenas are circling."
The King may well be weaker, yet, the Court Jesters are positively flattened.
The problem with conspiracy theorists with finance: their ranks are 99.9% made up of complete and utter economic illiterates.
America will have the dominate currency throughout our lifetime. That is accepting that a currency is dominate. I actually don't fully accept this will automatically remain the case.
China for example doesn't even have a floating currency. It pegs its Yuan to the US Dollar. Hence, the reason for large US trade surpluses, though that's another topic. Along with China's less than open financial transparency it ain't even in the running for "dominate currency" for more then a good few years. And nothing else comes even halfway close to being able to assume the role. So any dreams of the US Dollar demise remain just that - only further away.
The only possible scenario of change is a return to the pre-WWI gold standard. The one that worked so well until nations (England mainly) decided to crank up the presses for war funding. Give a politician a chance for easy money and they never go back. Hence, they didn't.
BTW all American bonds are paid in US Dollars. The bonds can never be de-faulted on. The reason: the Fed simply needs to crank up the press.....etc..etc..etc. The bonds of course can lose value and attractiveness; however, that's also another topic.
The joy of Reds under the Bed
I enjoy reading conspiracy theories, Paul. It's fun to evaluate them. The best ones are written by subject matter experts, knoweldgable enough to subtly blend fact and fiction. Economic factors do play an important part in most decisions to wage war.
I suspect that the facts in the article on Iran and Iraq's actions vis a vis the US dollar are accurate; how relatively important they were to the US in the overall scheme of things is the "conspiracy theory" part. My guess would be that the US's main interest was to maintain a strong influence over the middle east to ensure cheap oil. In general, Iran and Iraq threatened that influence. The dollar issue was an added thorn.
I suspect that China was not suggesting its own currency as a world standard, but rather one issued by an international body such as the IMF or World Bank. I'd think most countries would support such a move, unless they received a quid pro quo from the US to vote against it.
Banking
Obviously, we need strong banks, but the RBA is saying that we also need to cut fees while the economy is declining.
I think he will be polite, but a licence is granted by the state and can always be recalled.
The BIGGEST bastards
Watch Bill Moyers discuss (with William Black) the criminal activities of the bastards who created this financial fuck up. Obama, as most of us probably realise by now, is doing it all wrong.
Speaking of bastardry
Speaking of bastardry, we have the noises emanating from Treasury boss Ken (not Don!) Henry about a new purge on disability pensioners, the talk of an attempt to put people warehoused on Disability pensions back on the dole, just of unemployment is rising.
This from the cretins in part responsible for the likes of Sol Trujillo walking away with tens if not hundreds of millions of dollars, for dreaming up ways to sack people.
Still, I suppose they must skin the money for the all these CEO's and their equity, legal and bean counter "developer" mates off somebody’s hide, I suppose.
Reading the Governor's mind
What would be really interesting is a speech by Governor Stevens on the US dollar as a world standard. The USD is a de-facto world currency. Most international contracts are specified in USD (which gives US firms a not insignificant advantage), and reserve banks mainly hold USD in their foreign currency reserves. The financial crisis was only partly about the US housing. It was also partly because the US dollar was less reliable. With increasing deficits, the US was maintaining its budget by selling treasury bonds to India and China.
It started coming to a head with the US announcing it was going to buy back a trillion dollars of bonds and other debt. To do this it has to either to increase taxes or print money (and guess what it’ll likely do). When the UK prints more money, the pound drops in value. Those holding pounds suffer – mainly the British. With the USD, more of the dollar is held outside the US than inside. So, the rest of the world is going to pay half the cost – what a sweet deal. China acted quickly, calling for an international currency. Australia is well placed to take a lead. Kevin Rudd has a lot of credibility, and our banks are well recognized. It would guarantee us a nice slice of cake (chocolate, please, with icing and cream).
The US, of course, is going to resist losing its dominance. Some conspiracy theorists even say that it is willing to use subterfuge and force, that the invasion of Iraq and the threats against Iran were partly driven by their attempts to move away from the USD. The G20 talks are going to be quite interesting. The king is weak, and the hyenas are circling.
Scapegoat?
The Speech comes across to me primarily as an apologia, trying to explain why, even though it was their job, the RBA hasn’t achieved the efficiencies in the networks he would have liked it to. I suspect that for years the RBA believed wholeheartedly in markets, and expected markets to behave efficiently. The RBA has belatedly started to act, and is now searching the literature for a good design.
Health, on the other hand, has thrown a lot of money at their network. They’ve possibly achieved less, at higher public cost. The Ministry is now very quite on what was once touted as ‘twenty-first century medicine, here we come’.
Yes, my paying $2/$3 for using a rival ATM is rather steep. And it was naughty of banks to obfuscate the fee. But at the end of the day, it is for the customer to decide whether they want to pay for the convenience or hunt for a free ATM.
I haven’t looked at the figures, but a possibly much larger source of profit for banks is credit card debt. To blame banks because people actually use high-interest credit cards as a loan facility is absurd.
We live in a world in which it pays for the consumer to be smart. The government, with its complex tax and income support laws, has just as many tricks as the private sector.
Commercial banks are there to make profits for their shareholders. If the RBA wants them to do something different, it is the job of the RBA to make laws that force them to act differently.
Payments system
John, a payments system is a system for making payments for transactions - it has very little to do with paying your mortgage. Visa, Mastercard, Amex, EFTPOS, and BPay are payments systems.
When the RBA talks about inefficient payments systems, they are usually talking about credit cards. The banks have systematically promoted credit cards in a way that hides the true cost of using them in increased costs for goods. The RBA has been using its regulatory powers to try to change this for years, with little success so far.
At least Australian banks are still solvent
Alan, what is meant by a cumbersome payment system? A mortgage payment being deducted from one's account seems pretty simple to me.
We shouldn't complain too much if big banks want to freeze small rivals out of the system. Isn't just what capitalism is all about?
It seems Glen Stephens said a lot about nothing. In fact our banks have come out of the current global crisis as shinning stars. We can thank Keating and Hawk bank regulation for that.
I think Australia banks have done us proud compared to the likes of HSBC or Citibank. At least they are still solvent.