Reply to: The new mantra for a cleaner City: regulation, regulation, regulation

[Diver]

you can read?

soory Diver

You would be surprised at some of my reading material, If I can find something boring enough, it saves me taking pills to sleep

[BrilloPad]

Er! Didn't I recently read this in Lombard Street?

you can read?

soory Diver

[Diver]

Didn't you know that "Threaded" is an anagram of "Plagiaristic Bulltulipting Bastard"?

Probably...

Thaas Naasty!

[Churchill]

Er! Didn't I recently read this in Lombard Street?

Didn't you know that "Threaded" is an anagram of "Plagiaristic Bulltulipting Bastard"?

Probably...

[Diver]

That the amount of the liabilities of a bank is a principal element in determining the proper amount of its reserve is plainly true; but that it is the only element by which that amount is determined is plainly false. The intrinsic nature of these liabilities must be considered, as well as their numerical quantity. For example, no one would say that the same amount of reserve ought to be kept against acceptances which cannot be paid except at a certain day, and against deposits at call, which may be demanded at any moment. If a bank groups these liabilities together in the balance-sheet, you cannot tell the amount of reserve it ought to keep. The necessary information is not given you.

Nor can you certainly determine the amount of reserve necessary to be kept against deposits unless you know something as to the nature of these deposits. If out of 3,000,000 L. of money, one depositor has 1,000,000 L. to his credit, and may draw it out when he pleases, a much larger reserve will be necessary against that liability of 1,000,000 L. than against the remaining 2,000,000 L. The intensity of the liability, so to say, is much greater; and therefore the provision in store must be much greater also. On the other hand, supposing that this single depositor is one of calculable habitssuppose that it is a public body, the time of whose demands is known, and the time of whose receipts is known alsothis single liability requires a less reserve than that of an equal amount of ordinary liabilities. The danger that it win be called for is much less; and therefore the security taken against it may be much less too. Unless the quality of the liabilities is considered as well as their quantity, the due provision for their payment cannot be determined.

Er! Didn't I recently read this in Lombard Street?

[threaded]

Not even a banker is going to read to the end of that! Just stick it in a CDO in panama - that will fix everything...

It does indeed fix many things.

[BrilloPad]

That the amount of the liabilities of a bank is a principal element in determining the proper amount of its reserve is plainly true; but that it is the only element by which that amount is determined is plainly false. The intrinsic nature of these liabilities must be considered, as well as their numerical quantity. For example, no one would say that the same amount of reserve ought to be kept against acceptances which cannot be paid except at a certain day, and against deposits at call, which may be demanded at any moment. If a bank groups these liabilities together in the balance-sheet, you cannot tell the amount of reserve it ought to keep. The necessary information is not given you.

Nor can you certainly determine the amount of reserve necessary to be kept against deposits unless you know something as to the nature of these deposits. If out of 3,000,000 L. of money, one depositor has 1,000,000 L. to his credit, and may draw it out when he pleases, a much larger reserve will be necessary against that liability of 1,000,000 L. than against the remaining 2,000,000 L. The intensity of the liability, so to say, is much greater; and therefore the provision in store must be much greater also. On the other hand, supposing that this single depositor is one of calculable habitssuppose that it is a public body, the time of whose demands is known, and the time of whose receipts is known alsothis single liability requires a less reserve than that of an equal amount of ordinary liabilities. The danger that it win be called for is much less; and therefore the security taken against it may be much less too. Unless the quality of the liabilities is considered as well as their quantity, the due provision for their payment cannot be determined.

Not even a banker is going to read to the end of that! Just stick it in a CDO in panama - that will fix everything...

[threaded]

That the amount of the liabilities of a bank is a principal element in determining the proper amount of its reserve is plainly true; but that it is the only element by which that amount is determined is plainly false. The intrinsic nature of these liabilities must be considered, as well as their numerical quantity. For example, no one would say that the same amount of reserve ought to be kept against acceptances which cannot be paid except at a certain day, and against deposits at call, which may be demanded at any moment. If a bank groups these liabilities together in the balance-sheet, you cannot tell the amount of reserve it ought to keep. The necessary information is not given you.

Nor can you certainly determine the amount of reserve necessary to be kept against deposits unless you know something as to the nature of these deposits. If out of 3,000,000 L. of money, one depositor has 1,000,000 L. to his credit, and may draw it out when he pleases, a much larger reserve will be necessary against that liability of 1,000,000 L. than against the remaining 2,000,000 L. The intensity of the liability, so to say, is much greater; and therefore the provision in store must be much greater also. On the other hand, supposing that this single depositor is one of calculable habitssuppose that it is a public body, the time of whose demands is known, and the time of whose receipts is known alsothis single liability requires a less reserve than that of an equal amount of ordinary liabilities. The danger that it win be called for is much less; and therefore the security taken against it may be much less too. Unless the quality of the liabilities is considered as well as their quantity, the due provision for their payment cannot be determined.

[BrilloPad]

of course, it is excessive regulation this got us into this mess in the first place. trying to avoid regulation created more exotic products.

now TPTB will try to get us out of this hole by digging it deeper...

[BrilloPad]

I've got an even better idea. Why don't you check in at your local surgery, see a GP, and get a referral to the nearest psychiatric care unit?

Waiting lists are long though, so you'll have plenty of time to spout carp on this board.

No wonder the waiting lists are long - mostly full of people from this board...

[BrilloPad]

What a pathetic corklord you are.

BM - mind if I quote you so atw gets to read this?

[bogeyman]

I have got a better idea - every top exec of any bank operating in the UK should spent at least a week every year in Belmarsh...

I've got an even better idea. Why don't you check in at your local surgery, see a GP, and get a referral to the nearest psychiatric care unit?

Waiting lists are long though, so you'll have plenty of time to spout carp on this board.

[Diver]

That's enough of your cheek - sperm of Evan Davies!

Goodnight Bogey

[Diver]

I have got a better idea - every top exec of any bank operating in the UK should spent at least a week every year in Belmarsh: this would give them first hand experience of many years that they will get should anything go wrong in their bank that would materially affect markets.

High pay should come with high responsibility.

Good Idea

I'm off to bed now, goodnight all

[bogeyman]

You two should get married, you'd make a lovely couple

That's enough of your cheek - sperm of Evan Davies!