Study finds bankers are a net economic drain, while hospital cleaners add positive value.

[Alby_da_Wolf]

Kasz216 said:

Alby_da_Wolf said:

Kasz216 said:

[...]

Banks only lose out when countries fail though.

I mean, where have banks made money with Greece and Italys failure.  Stock Prices everywhere are down, the banks that own their bonds have to take massive cuts and lose money on the bonds..... if bank failures happen, most banks everywhere will lose some money...

This is true, but even more reason for American banks to avoid attacking America too hard and for American rating agencies to avoid helping, willing or inadvertently, hedge investors in such attacks. Also, some big banks and funds actually attack whole states and their bonds, I guess they prepare in advance their portfolios to maximize profits and minimize losses from the operations, because they wouldn't shoot themselves in the foot, and they obviously don't care if others lose from them.

BTW I found the origin of the latest criticism against the ECB: it's going to help banks with a giant loan of more than 480 billion Euros at a ridiculous 1% interest rate, that's considered poking fun at averyone else, from states to private citizens, that are strangled by interests far higher when they borrow money, particularly from the banks. Almost everybody is sure that banks will keep on charging very high interests on loans, blaming the stuation, despite this big loan they received, that at such a low interest rate is almost a gift, no, actually IT IS a gift, because the profits they'll make lending that money is far higher than if they had to collect it elsewhere, while ECB will lose from the loan, as the interest rate is lower than inflation rate. Rescuing the banks was maybe necessary, but charging an interest equal to inflation rate, not lower, would have already been a help big enough, and already more than what anybody else, including states in trouble, could hope for.

http://www.globaltvbc.com/money/ecb+lends+europes+banks+a+massive+%E2%82%AC489+billion+over+unprecedented+3-year+period/6442546373/story.html

http://www.thehawkeye.com/story/BC-EU--Europe-Financial-Crisis-7th-Ld-Writethru

In one or both articles, there's also the origin of my first misunderstanding: some economists suggest ECB become the lender of last resort to European governments, while the ECB president opposes the idea.

Instead, a EU separate 700 billion Euros fund, the ESM, will be raised as lender of last resort, and Italy must contribute with more than 120 billions. But many are deeply worried by some excessive powers this fund will have: http://en.wikipedia.org/wiki/European_Stability_Mechanism#Critics

Banks do not attack countries at all.  Not sure where your getting that from.

This is a global economy we're talking about here.

As for the ECB not wanting to be a lender of last resort to Europeon governmets.  It's not that Draghi doesn't want to be that.  It's that they CAN'T be that as that is not within the the ECB's charter.  They don't have the authority to do so. 

Mainly because Germany didn't want the ECB to become a credit account that irresponsible countries could run up without having to get money through political decisions.

As for the 1% rate being too low... I'm not reading anyone upset with that interest rate, and if you read your source you'll note the rate before that was 1.5%.

 

The money is being loaned to banks, because banks don't want to loan money to each other because of eurodebt contagin.  That money is then lent to other people.   Charging a higher interst rate would mean the banks would have to charge you a higher interest rate.

The money is being lent specifically so it can be lent out to others at a higher rate so the credit market doesn't freeze up.

About the impression of banks attacking states: massive short selling of bonds when the emitter states are weaker; and in at least one case, the vicious circle of loans at growing interests to pay previous interests that sunk Argentina, if they didn't want to sink it, they should have given it some relief stopping that vicious circle, obviously asking in return some urgent measures to stabilize the balance.

About the rest, you know the matter and I guess you're right, but if even some economists react that way, common people will prefer to follow them, because they are just as angry towards banks as they are towards governments. Anyway, if thanks to that loan banks will concede more favourable loans to their clients, then we'll be able to say it worked, and let's hope so, but we still have to see.