More Than Half of the World's Banks Are Already in a Weak Position Before Any Downturn That May Be Coming (bloomberg.com) 100
A majority of banks globally may not be economically viable because their returns on equity aren't keeping pace with costs, McKinsey said in its annual review of the industry released Monday. From a report: It urged firms to take steps such as developing technology, farming out operations and bulking up through mergers ahead of a potential economic slowdown. "We believe we're in the late economic cycle and banks need to make bold moves now because they are not in great shape," Kausik Rajgopal, a senior partner at McKinsey, said in an interview. "In the late cycle, nobody can afford to rest on their laurels." The decade since the global financial crisis has seen a wave of innovation in financial services, bringing new competitors from fintech startups to giants like Apple and Alphabet's Google. Banks have pondered whether to compete with, partner with or acquire some of these newcomers. Some established firms have sought to rebrand as technology companies, in part to attract hard-to-get talent.
McKinsey, whose clients are some of the biggest corporations in the world, consults on topics ranging from strategy and technology to mergers and acquisitions, outsourcing and stock offerings. In its report, the firm said banks risk "becoming footnotes to history" as new entrants change consumer behavior. Most recent attempts by banks to boost efficiency have been "business-as-usual," it said. Banks allocate just 35% of their information-technology budgets to innovation, while fintechs spend more than 70%, McKinsey said. Combined with regulatory factors lowering the barrier to entry -- like open banking and looser requirements for startups -- the environment is increasingly conducive for newer firms to take share from banks.
McKinsey, whose clients are some of the biggest corporations in the world, consults on topics ranging from strategy and technology to mergers and acquisitions, outsourcing and stock offerings. In its report, the firm said banks risk "becoming footnotes to history" as new entrants change consumer behavior. Most recent attempts by banks to boost efficiency have been "business-as-usual," it said. Banks allocate just 35% of their information-technology budgets to innovation, while fintechs spend more than 70%, McKinsey said. Combined with regulatory factors lowering the barrier to entry -- like open banking and looser requirements for startups -- the environment is increasingly conducive for newer firms to take share from banks.
Not important except to investors (Score:5, Insightful)
Who cares besides investors what the bank's return on equity is?
What matters to most people is the bank's cash deposit ratio.
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I think what matters to most people is that they have a safe place to store their cash for easy access with no fees, a way to earn interest, and all of that to come with the bank's ability to remain financially stable while paying their own bills.
Whether or not a bank turns a profit is meaningless to the average person. Just like our electric company. We just want them to be financially stable to keep providing us the service we desire at the price we can accept.
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Kind of late to do that, they are already in the hole and dragging us down with them, in the insane greed driven stupidity. Now actual actions have to take place to give the global economy a kick start. About the only thing left is creating more trading blocs like the EU, with internally stabilised trade and the confidence it will build in those economies and new trade bloc opportunities are explored and invested in.
So Russia and China, with some bordering countries, this to drive economic interest and dev
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Ack....this prescription runs counter to the alleged Administration's preference for picking off countries one by one with individual trade deals. It lets the Ego-in-Chief wank on about how he achieved some grand deal regardless of the details. So far all he's achieved is shooting his feet off....but the NRA is proud of him for this achievement.
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+1
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Of course there's a reason fractional reserve is the undisputed boss. Full reserve would have to charge significantly higher fees to make up for the lack of revenue their fractional reserve cousins get by loaning the fraction. If full reserve became the law of the land you'd see financial intermediation in general move away from banks toward other financi
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In the UK banks have to be part of a scheme that compensates depositors if they run out of cash. Basically you get your money back, unless the whole banking sector collapses and the fund isn't big enough to cover it all in which case you probably have bigger problems anyway.
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Re:Not important except to investors (Score:5, Informative)
The FDIC only has $107.4 billion in funds.
That's only about $300 per person in the US.
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Re:Not important except to investors (Score:4, Informative)
Whenever someone makes a remarkable claim and cites GlobalResearch, they are almost certainly wrong. GlobalResearch is such a bad reference that it is on the anti-spam blacklist for English Wikipedia. [rationalwiki.org]
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Not sure why you'd think using rational wiki for anything is a better source. The article itself that flatulus linked is sound, the warnings are echoed on sites from investopedia to papers written by various presidents of central and federal banks. It's also covered on sites like forex or xe which are for currency trading. The only way to avoid the pitfall of fractional banking is by only holding "valuable" items. Whether it be wine, art, classic cars, stamps, collector-currency or metals. And hoping tha
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FDIC is in practice reinsured by the Federal Reserve. The Federal Reserve cannot run out of money, by definition.
Backed by the "good faith and credit" (Score:2)
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They haven't passed a budget *on time* in years. They do pass the every year.
And falling back on the gold standard would work were this 1900. But it isn't, now it is just a stupid idea that would seize up commerce in every nation except those still on the barter system.
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Yes. In other words, the article is about whether these banks are good businesses. It makes no comment on whether customer deposits are safe.
Not important to ANYONE in the West (Score:2)
Who cares besides investors what the bank's return on equity is?
What matters to most people is the bank's cash deposit ratio.
What matters is the belief in the US and Europe that even if another crash comes, governments will probably just bail those banks out. Again. Just like 2008. And that belief is probably correct.
The cry from the Left was "We need to break up the big banks". But that will accomplish nothing of value. What we need to do next time is let them fail. Until we do, they're just going to keep doing stupid things knowing Uncle Sugar and his buddies will ride to the rescue.
Translations (Score:5, Insightful)
i.e. Magic beans
i.e. Join the gig economy, and let the contractors eat shit when things go badly.
i.e. Become "too big to fail" (tm)
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Let's translate those strategies.
i.e. Magic beans
i.e. Join the gig economy, and let the contractors eat shit when things go badly.
i.e. Become "too big to fail" (tm)
Yep. In a nutshell. We're all gonna be on the hook to bail out the banks & be in even more debt with more austerity yet again. Accountability of banks hasn't changed since 2007.
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Why would they, they've been bailed out twice already, as long as government keeps picking up the pieces they'll continue doing what works for them. Bush-Obama backed over a trillion dollars in debt directly and many more indirectly through austerity measures which resulted in an anemic economic recovery.
I'm not sure what Trump will do if push comes to shove, I think banks are worried about it because of Trump being a wildcard; his economic advisors, the House and Senate on both parties are all supporters o
Re:Translations (Score:5, Insightful)
It makes no difference at all, however, what platform he was elected on, because as he himself said, he could shoot someone of fifth avenue and not lose votes.
You have made the mistake of being confused about who runs your country (and much of the world's economy). It is not a Democrat v Republican divide. The ruling class will get what they want regardless who is in the White House.
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The key is that the economic downturn only happens if a Democrat gets in next year.
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Trump could shoot HIMSELF on 5th Avenue and not lose votes.
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Trump's economic advisors? Errm....you mean that talking head Kudlow who has no degree in economics and basically no claim to fame other than hobnobbing with like minded dolts? Or the ones that encouraged a trade war with China sapping international commerce and has us looking at the next recession? I urge you to choose your words more wisely.
And even were that dolt to have "advisors", what does the term "advisor" even mean when he cannot keep an idea in his head for longer than 5 seconds and believes with
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Take the long view. This is pretty much the situation that led up to the Great Depression, bank-wise. So accountability of banks hasn't changed since 1929 or so....
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After the Great Depression many regulations were brought in. Starting with Clinton, and maybe even back to Reagan, those regulations were eased, most probably because people were beginning to forget how bad things were. GW Bush continued the deregulation which set up the conditions for the bank failures in 2007/2008. At that time new regulations were quickly put in place but it wasn't long before they were coming back down again. It didn't even take a generation before the banks were back in a position to c
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Hypocrisy Is the Greatest Luxury (1992) (Score:2)
Bail out the banks, loan art to the churches
Satanic Reverses
Bail-out the banks, loan art to the churches
Satanic Reverses
In 1992 the European economic community will reform
In 1997 the city of Hong Kong will become
A part of the People's Republic of China
In 1999, and this is no coincidence
The nation of Panama will control it's own canal
While in the United States
Civil rights have collapsed at the hands of Fundamentalists
And national insecurity's at an all time high
It's been 27 years and society is still up to the same old shit.
TL;DR: (Score:2)
Buy our (McKinsey & Co's) services, or you're (cue Invader Zim voice) doomed! Doomed! Doom...!
No, seriously, there will always be a number of banks in such a position, taking greater risk in return for a shot at greater growth. The doom prophesy is cute, though. But then,. it's always easy to predict an eventual drop when you're on an upswing, no?
I just hope the next time something like 2007-2008 happens, they actually let the bastiches fail. FDIC can cover for the non-wealthy among us, and everyone els
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When in history has the rich and powerful ever been held accountable?
France, May 5, 1789 to Nov 9, 1799.
France 89 (Score:1)
Re:France 89 (Score:5, Interesting)
The argument here is not that the French revolution is the best answer to our problems. Rather, it is the example we need to present to the wealthy elites, over and over again so they never fucking forget. The question for them is, do you hate regulations and accountability more than you like keeping your head attached to your neck?
If the rich like maintaining a close relationship between neck and head, they need to stop fighting against being held accountable. Allowing themselves to be held accountable is the safety valve that keeps the angry mob appeased, and the pitchforks, guillotines, and torches safely stowed away.
I'm sure some of the wealthy and their defenders will take this as a threat. It is not. It is merely an observation of historical trends: the masses will only allow the elites to go so far in oppressing them before they resort to violence.
The wealthy elites got the message (Score:3)
They've taken control of the media (look up "Manufactured Consent"). They no longer flaunt their wealth. They learned to use wedge issues (Abortion, Gun Control, Social Issues, etc, etc) to divide us into easily manageable castes. They spend billions on political campaigns. They try to buy all politicians [youtube.com] and when that doesn't work they relentlessly smear them [youtube.com]
Meanwhile I see guys like the "Amazing Atheist" with millions of followers telling them all not to vote because w
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As a long time fan of Noam Chomsky, I've already read Manufacturing Consent. My wife and I are huge Bernie supporters, we donate and she does calls. We watched most of the rally you mention. Though Jimmy Dore isn't my favorite, we watch Young Turks all the time. Also highly recommend Krystal Ball on The Hill.
Elitism and wealth inequality seem to come in cycles in this country. The elites get cocky, the rest of us forget why we had to slap them down last time, they do it again, we get pissed, we decide to sl
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It was no counter-example, it was a straight example. And a good one. A good one for demonstrating just how bad ruthless the accounting can be.
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Exactly. I never said it was a good example, but just an example. I do believe that it is an example the rich and powerful should be reminded of. They are only rich and powerful as long as the peasants allow them. All the power and money in the world won't help if the mob comes with the pitchforks and torches.
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All the power and money in the world won't help if the mob comes with the pitchforks and torches.
Unless they have a 737 and just simply fly to some other country that's more welcoming or hell for some of these types their own private island. We don't live in a world anymore where they have to physically be present in the building to still run everything. Unless we start inventing some transatlantic pitchforks, the peasants have nothing. I mean seriously as everywhere social media is today, you think some sizable mob is just going to sneak up on some rich person's armored $100 million villa?
It gets o
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That would depend on if they have some one to fly their 737's for them, or to guard them. One of the things that lead to the downfall of the aristocracy during the French revolution is the people that where to server and protect them where apart of the mob.
Which goes back to may statement they are only rich and powerful as long as we let them. Many a leader has been brought down because those tasked with protecting just handed him over to the mob. Or just did the job themselves.
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Oh 7 three 7. Nevermind.
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Then we can prosecute and imprison the C-level and the boards of directors for fiscal irresponsibility.
Ha ha! Oh yes, good one!
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FDIC covers at least up to $250,000 per depositor, per category, per bank. Not $100,000.
FDIC can cover more, either at their discretion or if the bank pays for better insurance terms. (I don't know of any bank that does, however, so in practice it's always $250,000.)
Sure, because banks suck at being banks (Score:5, Interesting)
Think about what the "problem" is: Banks aren't able to leverage the equity they have to make profits that are growing faster than expenses.
Translation: They suck at investing / managing what they have.
I disagree that the "solution" is to give them even more money and thus more of the same that got us to this point.
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This is what happens when you let banks become "financial institutions" that tinker in investments and insurance rather than remaining just "banks".
No, because banks that can do these other things can be 100% covered for deposits. Being "just banks" means they have to have to hope only a certain percentage of deposits will be demanded while the rest is loaned out long term.
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This is what happens when you let banks become "financial institutions" that tinker in investments and insurance rather than remaining just "banks".
No, because banks that can do these other things can be 100% covered for deposits. Being "just banks" means they have to have to hope only a certain percentage of deposits will be demanded while the rest is loaned out long term.
Right, "can be". 2008 - 2009 demonstrated that ain't what is. And if you have some proof that they didn't go right back to their usual behaviors, I'd truly love to see it.
The New Deal isn't the answer (Score:4, Interesting)
This is what happens when you let banks become "financial institutions" that tinker in investments and insurance rather than remaining just "banks". Our great-grandparents knew it, that's why they put regulations in place forbidding this kind of gaming with depositor funds. .
There's absolutely nothing wrong with banks doing other financial business, including investments and insurance. Glass Steagall was a mistake that held back economic growth for decades.
The problem... in the 1930's, in 2008... was that we didn't let the banks and their investors lose their shirts because of their mistakes. You want finance to act responsibly? Then let them face the consequences of bad decisions. People will start turning to credit unions and responsible banks if they don't.
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The banks didn't like the fact that 1) They couldn't use all that sweet sexy money on the stock craps table, and 2) They couldn't rape their depository customers with their bullshit "financial products" and "insurance vehicles".
If the banks are using their profits or funds from those who agreed to be part of the ride, have at it. If I've got an investment account and
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If you are really trying to get top end talent... (Score:5, Interesting)
Drop the traditional education/certification requirements and concepts where education or equivalent experience for mid level jobs doesn't consider experience time served to qualify, then target age 35-50. Hire for tangent past roles instead of head on. Ideally with 3 or more positions and under 10yrs in any given position. There is a massive pool of talent out there in this segment who is great with technology and poor with rebranding, failed to shift to management and avoid ageism, or entered the industry at a time when talent was all that mattered before all the education requirements shifted out from under them in order to justify student visas for H1B imports.
Banks and Finance basically missed the mark on this kind of talent. That is understandable because honestly... soft metrics like how someone is dressed, the ability to stick to it through school, go to the right school, extremely long time in position to show loyalty etc are all you have to differentiate most of your financial/business/management types at hiring. Technology is a high skill based market so you can safely toss all that nonsense out the window entirely. Oh, and for entry level, actually be willing to be a first employer and can people without justifiable cause who don't make the grade at the 6mo mark. Also, for tech, ignore diversity metrics altogether and correct those non-functional statistical criteria in other areas.
Banks aren't about top talent (Score:4, Interesting)
Sad thing is it worked.
Sure ... when asked if they may want money ... (Score:2)
... they said "Just a few trillions.".
Now ask me if I'm in a ... weak ... position ... *rolls in dollar bills* *holds out hands like a poor poor little 1900s street child with soot in his face*
So what? (Score:5, Insightful)
We'll bail them out again anyway, and they know it. Why should they worry?
Quite frankly. If you basically tell me you'll bankroll my gambling habit, why would I go to rehab?
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We'll bail them out again anyway, and they know it. Why should they worry?
The Hamptons is not a defensible position. [youtube.com]
Hmm. How much do you want to bet (Score:2)
No, they're in a very strong position (Score:4, Insightful)
Small government is a myth. If you try to have one you just leave a power vacuum, and the corporations hoover up all the power.
The solution is universal, mandatory voting, ranked choice voting and other pro-Democracy tools to balance the need for a strong central government to balance the incredible power that comes from being a large corporation.
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Small government is a myth. If you try to have one you just leave a power vacuum, and the corporations hoover up all the power.
So your solution is to consolidate it all in the government's hands under the belief that somehow it will be responsible with it and that the same horrible people that misbehave with corporate power won't seek out or gain control of the government. Just like a market economy succeeds because there is competition between entities, the same holds true at
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>There are always things a country can do that are better, but there's no silver bullet.
Sure there is, make the corporation criminally liable as in if it breaks the law it serves time with the same restrictions a person has.
Murder someone.. life in prison. Bribery and all the other day to day crimes that are line items in a corporation could easily be prosecuted.
Problem being our leadership is corrupt and bribery is the equivalent of free speech.
And term limits for every office
You're missing the point (Score:3)
You're options are as follows:
1. Bail out the mega corps every time they drive the economy over a cliff.
2. Build a strong central government that prevents the mega corps from driving the country over a cliff.
You notice how I didn't list "Have a weak or no central government and skip the bail out"? There's two reasons:
1. The damage would be incalculable. Human civilization would grind to a halt.
2. You won't be _allowed_ to. By relying on a weak central government
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This time Capitalism will work! (Score:1)
FYFY.
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Do you really hate Credit Unions that much? Sure they're socialist and I guess you might compare them to a small commune if you want to claim they're communist, yet to me they seem to work better then the capitalist banks.
BTW, in case you haven't noticed, your representative republic has people voting for tax cuts and increasing debt to prop up the economy. How long can that go on?
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It's possible to have decentralized socialism with competition. Just have a bunch of different governments for people to choose from. We could have that system, but apparently everything is interstate commerce.
It shouldn't be surprising that centralization of power, whether in the hands of massive corporations (aka. a few powerful people), or in the hands of the political elite (aka. a few powerful people), gives you the same result.
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How does mandatory voting solve anything? Making someone who currently can't be bothered to vote go and cast a vote isn't going to motivate them to educate themselves about the issues before voting. It's possible that they are just going to select a random candidate or spoil the ballot. I hope that the names on the ballot are randomized between ballots in case mandatory voters just select the top candidate out of convenience.
Voter Suppression (Score:3)
Making voting mandatory eliminates voter suppression. You can't suppress something that's mandatory.
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Making voting mandatory eliminates voter suppression. You can't suppress something that's mandatory.
Wanna bet? Hey, as a bonus, you can get a whole new type of criminal to keep those for profit prisons profitable and afterwards declare them felons to take away more rights and keep them in their place.
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Mandatory voting doesn't solve those issues. It just hurts the lives of the disenfranchised even worse when they can't vote because the polling station is too far away or they have to work instead of voting and they weren't allowed paid time off to vote. It also doesn't solve the gerrymandering that goes on of the boundaries that allows one party to elect more representatives than the other despite getting fewer votes overall.
If you had an independent election organization that set the boundaries according
Obama already had a chance and did nothing (Score:5, Insightful)
Yep, we screwed the pooch on Obama (Score:2)
Um... you do know that massive legislation (Score:2)
If you want change vote Bernie, AOC and the Justice Democrats, and for the love of God show up to your primary. Demand politicians that refuse corporate PAC money. It really is that easy.
Banks Are Already in a Weak Position... (Score:3)
More Than Half of the World's Banks Are Already in a Weak Position Before Any Downturn That May Be Coming
That's what happens when you have a 2007 subprime mortgage crisis, almost crash the global economy, none of the banksters get punished for it and a bunch of corrupt politicians then set forth to repeal what little regulation was passed after the 2007 FUBAR in a very half hearted fig-leaf attempt to keep it from happening again. A more interesting question is whether anybody present is actually dumb enough to be surprised at these news.
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More Than Half of the World's Banks Are Already in a Weak Position Before Any Downturn That May Be Coming
That's what happens when you have a 2007 subprime mortgage crisis, almost crash the global economy, none of the banksters get punished for it and a bunch of corrupt politicians then set forth to repeal what little regulation was passed after the 2007 FUBAR in a very half hearted fig-leaf attempt to keep it from happening again. A more interesting question is whether anybody present is actually dumb enough to be surprised at these news.
That's what happens when you have perpetual low interest rates and low inflation, so the banks leverage up to make money and the plebs don't get their mortgage debt cancelled by inflation.
Comment removed (Score:4, Interesting)
Re:End the federal reserve (Score:4, Informative)
I've just read Mark Blyth's (an economics professor) book on austerity and why it's been a disastrous economic policy. I highly recommend it for a deep dive into the mechanisms and policies contributing to societal inequity, the rise of extremist governments on both the right and left and the mess caused by the Euro.
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I've just read Mark Blyth's (an economics professor) book on austerity and why it's been a disastrous economic policy. I highly recommend it for a deep dive into the mechanisms and policies contributing to societal inequity, the rise of extremist governments on both the right and left and the mess caused by the Euro.
I've been watching his YouTube videos. He has some very interesting things to say about the Washington Elite among others and the irony of the fact that millions of Trumnpkins have been trained to worship one of them and accept as gospel the supposed benefits (for them) of Elite's societal inequity friendly economic policy because every thing Trump has done so far in terms of doing away with financial market regulatoins is taking us back to the pre 2007 era.
What's left? (Score:4, Insightful)
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interest rates for savings accounts is a huge slap in the face.
Ally, Synchrony, Betterment, and the list goes on. All provide FDIC insured savings accounts with interest rates that are on the order of hundreds of times higher than you’d get at most big banks.
Translation (Score:4, Insightful)
If the host (productive sectors of the economy) weakens, it's bad news for the parasites (financial sector).
They have to point it out because most banks think they have money because they're entitled to it, and don't remember where it actually comes from.
Statistics (Score:2)
Remember, there are three kind of lies, with statistics being the worst one.
Let's look at these banks:
- Are they more than half of the total bank population? (It seems to. However then they are most likely the long tail of small banks)
- Do they serve more than half of the investors (probably not, it was not mentioned in the article)
- Do they serve more than half of the creditors / depositors (again probably not)
- Do they hold more than half of the total monies (almost definitely not)
It is like saying more t
Generational Theft (Score:3)
What's really going on is generational theft. The clamour for every country to lower interest rates and increase debt is all about stealing from future generations. Across the globe countries are falling into huge amounts of debt and it's all about taking today and not leaving anything for tomorrow. Every extra dollar borrowed today is a dollar that won't be available for future generations. When this music stops and this giant ponzi scheme we're calling a financial system collapses, hardly any of this money will ever be repaid. What all this "increased liquidity" and generation of money really represents is the plundering of the planet's resources at the expense of the future.
Is it really? (Score:2)
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No... incorrect. Through the process of debt creation, banks are in actual fact creating new money. When you look at the globe all countries have debt, even China has created a huge amount of debt...
https://www.scmp.com/economy/c... [scmp.com] ...with $40 trillion dollars of debt (5 times the amount of debt that triggered the GFC). There is a virtual race to see who can create the most debt, it's quite literally a money grab.... grab it whilst you can. And who are they all grabbing it from? The answer is future g
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When you realise what money actually is, it is a representation to your right to have, occupy and use resources on this planet. As such this race to accumulate debt, is really a race to drain the planet of its resources before they run out.
Money losing its worth isn't a bad sign ... (Score:2)
... on its own. It's the natural effect of capitalism running its course.
I'm just hoping that we make an easy and neat transition into post-scractity economy and that society doesn't collapse.
I don't think it will. It will be some strange cyberpunk thing. We're in the middle of it already, I just hope it doesn't turn out as bleak as Bladerunner 2049.
"What we have brought on ourselves" (Score:2)
Central bankers have lowered interest rates to boost the value of assets the banks own (e.g., mortgages) so that they can pretend to be solvent. That's caused a massive removal of capital from the equity markets where growth hasn't been artificially boosted. Now the asset bubble is levelling out, the banks have nowhere to go because the equity markets have been fucked over by the non-solution of near-or-under-zero interest rates that have been in place for almost a decade.
The who system has been screwed up
Consultancy Firm: Give Us Money (Score:1)
Consultancy Firm (one of the big leeches at that) makes claim, says solution is to do things that it offers costly services to those same businesses to do.