Pay up, Iceland!

[klr]

... until you spend it on something. There is no moral or legal obligation to invest your money, you're perfectly entitled to sit on it until you need it.

In which case it confers another type of benefit, instead of my making it available for lending out to others while being able to access it when I like.

I've been sitting on an ever-growing pile of cash for years, mainly because my outlays have nowhere near matched my income.

It is in the interests of the government to encourage - via legislation, policy and other means - an environment where citizens feel confident that personal savings are safe in the banking system.

Only within limits. At some point the government has to allow failing banks to fail so that they can be replaced by banks that operate better. Moreover, it is in the interests of fiscal sanity for individuals and businesses to live within their means and invest wisely, and accept the consequences of investment risk without expecting the taxpayers to bail them out of their bad judgment.

In theory, that's all well and good. But individuals are by and large not in a position to make an authoritative judgement on whether an institution is well or badly run, what it's level of exposure to risk on the world markets is, and so on. Even highly-paid financial consultancy firms have made a right royal hash of assessing such things, as we in Ireland are only all too aware. So the financial sector should be more tightly and effectively regulated in the first place (IMHO), to reduce the chances of financial meltdown.

[Coito ergo sum]

Only within limits. At some point the government has to allow failing banks to fail so that they can be replaced by banks that operate better. Moreover, it is in the interests of fiscal sanity for individuals and businesses to live within their means and invest wisely, and accept the consequences of investment risk without expecting the taxpayers to bail them out of their bad judgment.

The insurance doesn't have to go away when the bank fails. The insurer can pay the investors (account holders) and the bank can fuck the hell off. That's what should have happened. Let the bank declare bankruptcy, and have the Trustee audit the books. Any irregularities can be reported to the authorities, and the fuckwad criminal bankers can get prosecuted. Instead, big dogs at the major financial institutions saw the shit hitting the fan and tricked the Congressional cowards into believing the sky was falling, and so we wrote a blank check to the criminal fuckwad financiers who were basking extorting the government. Instead of investigating and prosecuting the criminals, we bailed them out.

I agree in principle, but where do you draw the line? Who is defined as an "innocent investor," and using what criteria? I think that the free market and civil courts are adequate to the task of keeping rapacious bankers in line. Allow cheated investors to leave the bankers with nothing but their underwear.

In a rational way. Personal savings accounts up to a maximum amount. The policy is paid for by the banks, who are investing the money anyway. So, they pay out low interest rates at 1 or 2 percent tops, if that nowadays, and they lend the money out at anywhere from 5 to 25% or even higher in some cases, and then out of the spread they pay the premiums. They get the benefit of huge sums of money to use that would otherwise be in mattresses, and the account holders get the benefit of knowing they get a modest return on their savings without risking losing it all because some douchebag at the bank rips them off.

There is no practical way for people who put money into bank accounts to audit the solvency of a bank, or to anticipate the criminal behavior of bank management. A person putting money in a bank account can't be anything other than an innocent investor.

It's certainly a fair opinion to hold that you think the civil courts are adequate to the task of keeping rapacious bankers in line. I disagree, though. I disagree because people with small amounts in a bank account will not have the resources to sure a bank. Moreover, if the bank fails the bank fails, and there is no money to pay the account holders, so any judgment obtained would be empty - you can't sue the individual banker acting his capacity as an employee of the bank. There is corporate limited liability. And, to pierce the corporate veil is very difficult, legally speaking.

And, who would an individual account holder sue? the CEO of the bank? The individual account manager? How would one prove exactly why the bank went belly up?

[klr]

...
There is no practical way for people who put money into bank accounts to audit the solvency of a bank, or to anticipate the criminal behavior of bank management. A person putting money in a bank account can't be anything other than an innocent investor.
...

Exactly my point. As in many other things, the man or woman in the street simply doesn't have the expertise or the information.

[Azathoth]

Only within limits. At some point the government has to allow failing banks to fail so that they can be replaced by banks that operate better. Moreover, it is in the interests of fiscal sanity for individuals and businesses to live within their means and invest wisely, and accept the consequences of investment risk without expecting the taxpayers to bail them out of their bad judgment.

The insurance doesn't have to go away when the bank fails. The insurer can pay the investors (account holders) and the bank can fuck the hell off. That's what should have happened. Let the bank declare bankruptcy, and have the Trustee audit the books. Any irregularities can be reported to the authorities, and the fuckwad criminal bankers can get prosecuted. Instead, big dogs at the major financial institutions saw the shit hitting the fan and tricked the Congressional cowards into believing the sky was falling, and so we wrote a blank check to the criminal fuckwad financiers who were basking extorting the government. Instead of investigating and prosecuting the criminals, we bailed them out.

I agree in principle, but where do you draw the line? Who is defined as an "innocent investor," and using what criteria? I think that the free market and civil courts are adequate to the task of keeping rapacious bankers in line. Allow cheated investors to leave the bankers with nothing but their underwear.

Unfortunately the bastards are wise to that and only have a tiny fraction of their huge wealth in their own name. It is a time honoured tactic to avoid taxes and any fallout should everything go to shit

[Coito ergo sum]

...
There is no practical way for people who put money into bank accounts to audit the solvency of a bank, or to anticipate the criminal behavior of bank management. A person putting money in a bank account can't be anything other than an innocent investor.
...

Exactly my point. As in many other things, the man or woman in the street simply doesn't have the expertise or the information.

...or access to the information.

[MrJonno]

Are American banks still private comapnies?, UK ones are now mainly owned by the government/tax payer in part or totally. Eventually we hope to sell them for a profit to the tax payer

[devogue]

All of the banks should have been left to fail.

Down through the years we've all been well aware of the following caveat:

Please remember the value of your investment can go down as well as up and you may get back less than you invested.

But when the chips were really down it turned out to be meaningless.

We all knew that money left on deposit in a bank was invested by the bank to get a return (if anyone didn't know then ignorance can't be used as an excuse - the onus was on them to find out). They pay out a small amount of taxed interest (say 3%) after making investment and loan interest gains of anything up to 10% and beyond.

If I had £50,000 resting in a bank account and making interest, I have bought in to the banking system and put my money under their control. If the bank fucks up and goes under well I should just accept that my money is gone. Bad luck. It's outrageous that the public, my fellow citizens, many of whom may have no money on deposit, are forced to bail me out and cover my £50,000 private asset.

[egbert]

This should perk up Iceland's economy:

Iceland's Penis Museum Gets Old Man's Pickled Peen

The Icelandic Phallological Museum is getting its first real human penis soon, after the death of 95-year-old Pall Arason, a friend of the museum's curator who agreed to donate his well-traveled dick some years ago. From the AP:

Sigurdur Hjartarson, who runs the Phallological Museum in the tiny Icelandic fishing town of Husavik, says Arason's organ will help complete his extensive collection of whale, seal, bear, and other mammalian members.

A 95-year-old penis. Yuck. Arason's penis is set to become the museum's main attraction.

http://ca.gawker.com/5791166/icelands-p ... ckled-peen

[klr]

All of the banks should have been left to fail.

Down through the years we've all been well aware of the following caveat:

Please remember the value of your investment can go down as well as up and you may get back less than you invested.

But when the chips were really down it turned out to be meaningless.

We all knew that money left on deposit in a bank was invested by the bank to get a return (if anyone didn't know then ignorance can't be used as an excuse - the onus was on them to find out). They pay out a small amount of taxed interest (say 3%) after making investment and loan interest gains of anything up to 10% and beyond.

If I had £50,000 resting in a bank account and making interest, I have bought in to the banking system and put my money under their control. If the bank fucks up and goes under well I should just accept that my money is gone. Bad luck. It's outrageous that the public, my fellow citizens, many of whom may have no money on deposit, are forced to bail me out and cover my £50,000 private asset.

What's outrageous is that we in Ireland are being forced to pay out for the sins of real investors, who went completely nuts in the property market. Now that was risky investment. Like every other PAYE worker, I'm already paying through the nose for this, even though I had no part in it. As I've already pointed out, this madness was based on cheap external credit, not on the savings of Irish individuals.

Remember the three key variables in investment: Risk, return and liquidity. If I'm getting next to no return for whatever I have on deposit, then it is understood that this is very secure and/or I can withdraw it at any time.

If everyone took such an unforgiving view of the banking system as you do, then I doubt you'd have been able to get the money to fund your business in the first place.

[AshtonBlack]

What was the argument against having 2 tier banking? How difficult would that be?

[Seth]

...
There is no practical way for people who put money into bank accounts to audit the solvency of a bank, or to anticipate the criminal behavior of bank management. A person putting money in a bank account can't be anything other than an innocent investor.
...

Exactly my point. As in many other things, the man or woman in the street simply doesn't have the expertise or the information.

...or access to the information.

Then don't invest in what you do not understand...or at least don't bitch if you lose your investment...and FFS don't expect everyone else to bail you out of your ignorance.

[Azathoth]

A voting slip from this weekend's referendum as to if we should pay the Icesave debt

[devogue]

If everyone took such an unforgiving view of the banking system as you do, then I doubt you'd have been able to get the money to fund your business in the first place.

What happened in 2008 was extraordinary, unprecedented.

But look at it this way - people invested money with Bernie Madoff and were utterly screwed illegaly. Madoff went to jail and his vivtims were left high and dry.

People invested money with Fred Goodwin (via RBS) and were utterly screwed legally. Goodwin received a handsome pay off and pension and his bank was underwritten by the UK government.

[Santa_Claus]

IMO this would have been the correct approach for all Icelandic Bank depositors:-

The Guernsey arm of an Icelandic bank placed into administration in 2008 due to the collapse of its parent company has gone into liquidation.

Guernsey's Royal Court agreed the former administrators be appointed as liquidators on Tuesday.

More than 1,600 people had money deposited in Landsbanki Guernsey when it collapsed, around a third of whom were living in the Channel Islands.

Savers have so far received up to 67.5p in the pound back from their deposits.

The liquidators, Richard Garrard and Lee Manning, said after a further payment of up to 7.5p in the pound early in 2011 there would be one further payment.

Depositors have campaigned for the States of Guernsey to make up any shortfall and also referred their dispute to the Icelandic courts (and have been told to fuck off )

http://www.bbc.co.uk/news/world-europe- ... y-11948063

75% back (and maybe a few more %) over a 3 year period - seems perfectly fair to me. and for a totally failed investment quite good. I see no reason for anyone else (UK or Icelandic Tax payer) to put hand in pocket to either replace these losses, or to speed up repayment.

I have heard varying esitimates on the money that will be generated once the Banks are fully liquidated and assets all sold off (and therefore how much Iceland would be paying) - truth is that no one really knows at the moment. I think quite reasonable for Iceland to assign any interest it has in the assets of these Banks to the UK and Dutch Governments now. and for the these 2 Govts to become the primary creditors - that can be done with a pen, even if it requires some law changes.

And if the assets realised over the next 10 years turns up short - the Icelanders will talk at that time. They can even put that in writing But no reason for Iceland to begin paying interest now on a EUR4 Billion debt that may not even exist

Methinks the English and Dutch thought they were dealing with soft people. My guess is that if needed the Icelanders would live on a diet of raw fish and no Cafe Lattes for a generation - rather than mortgage their children's futures.

[Coito ergo sum]

All of the banks should have been left to fail.

Down through the years we've all been well aware of the following caveat:

Please remember the value of your investment can go down as well as up and you may get back less than you invested.

But when the chips were really down it turned out to be meaningless.

We all knew that money left on deposit in a bank was invested by the bank to get a return (if anyone didn't know then ignorance can't be used as an excuse - the onus was on them to find out). They pay out a small amount of taxed interest (say 3%) after making investment and loan interest gains of anything up to 10% and beyond.

If I had £50,000 resting in a bank account and making interest, I have bought in to the banking system and put my money under their control. If the bank fucks up and goes under well I should just accept that my money is gone. Bad luck. It's outrageous that the public, my fellow citizens, many of whom may have no money on deposit, are forced to bail me out and cover my £50,000 private asset.

The one difference with respect to bank accounts is that they are insured, so you're money is protected if the bank goes belly up.

The insurance makes sense. You're not putting your money "at risk" in a bank account the same way as, say, a stock investment account, right? I mean - if you put $1,000 into an online TDAmeritrade account, if it goes up 100% you double your money. With a bank account, you only get the interest they agree to pay you. If they take your money and double it, they keep the spread. You don't get any of the windfall gain, so it makes sense that you also shouldn't be at risk to lose all your money.