Cyprus-Forum.com

[miltiades]

It's common sense mate.No banks, no money, no money no business. You explain how on earth any nation can do without banks. Mate, you are obsessed with the banking system, do try and collect your ....pension from a bakery or a butcher shop !!!! Banks are a nations ONLY indispensable industry.

[Pyrpolizer]

Pyrpolizer:

There are too many things that contribute nothing to real economy Robin.
Whores, kasinos, just to name 2.The list is endless.
If we ban everything we would end up to communism or dictatorship.

You surprise me! I think that is a very narrow view.

These people have a system that is completely divorced from the REAL economy but they can have catastrophic effects on it. Most of those that appear not to contribute actually do as they inevitably provide a service that other people are willing to pay for. Income tax does not contribute to the economy as it is taken out before it enters into it. So the idea for instance, that banks/bankers contribute by paying large amounts of income tax ..... is not a contribution to the REAL economy. Seems a daft idea ..... but think about it! The economy is based primarily on people spending. If everyone just saved say 25% of their income, the economy would collapse.

What the banks produce remains within the financial economy, and that directs its products to the financial markets. This expands assets such as housing, stock and bond markets, which is effectively taking money out of circulation. Only a very small fraction of the money the banks create goes into lending to wealth producing industries and the creation of jobs.

2015 (I think) the UK Government got the BoE to create a Quantitative Easing binge of some £375BN (?) virtually ALL of it went to the banks and ended up boosting asset prices. Very little ended up where it should have done ..... in the real economy.

You can’t ban banking completely as you need commercial banks (High Street Banks) to function as intermediaries, they should be a service to industry. The problem is the investment banks and the fact they are linked to the commercial banks. Commercial banks are, or should be, an essential part of the wealth creating process but they have been abused as the bankers have found they can make money out of money ....... and money is no good if you don’t spend it.

The OP is about the value of Sterling. This is manipulated by speculators to line their own pockets (watch the video -50 mins..) and it is only what they spend on Champaign and expensive cars, expensive clothes and other cash expenditure, that it adds to the economy. Most of their ‘contribution’ is in the taxes they pay ..... but that does not enhance the real economy. Also, a very large part of their money is paid in tax havens and that is lost to the economy. (I know that because we had one of them in the family and the video described him to a tee!)

IMO: The investment banks and The Markets, are as much use to the economy as an ashtray on a Harley Davidson! The money all us pensioners living in Cyprus have lost from our incomes has gone to the banks (currency markets) as profit. But of course it is much easier to blame Brexit than to work out what is really happening!

I am also surprised for 2 things
a) because I didn't say that in contrast to currency speculation . I think your long post to explain that currency speculation delivers nothing to the real economy was because of this misunderstanding.
b) Because it's a fact that there are many things in real life that deliver nothing to the real economy including a countless number of services.
It doesn't matter if someone is willing to pay for those services. They still deliver nothing to the real economy. For a good or service to deliver something to the economy it must yield an added value. Added value means that if we could measure the economy at a given moment, that very good or service should have added some value to it.

Let's take this example:
Suppose we have 5 Casinos all strictly made for use by the locals. Would increasing their number to 10 add anything to the economy? Would closing them down deduct anything from the economy?
What Casinos and other services do has nothing to do with the economy. They just increase the re circulation and redistribution of money that increase the GDP but the GDP alone is not the measuring stick of the economy. Similarly with betting shops.
What these "no value added" services do is just improve the quality of life. So admittedly whores do improve the quality of life, but the economy will not change one iota if their number increases from 100 to 1000 , or decreases from 100 to zero.

Quality of life and economy don't relate much. Even Milti thinks the quality of life here in Cyprus is better that in the UK, yet our economy is so much weaker.

Another example is the selling of drugs. Sure there are many people who would pay to buy some marijuana, does that mean there's any benefit to the economy? If yes let''s make it legal to boost the economy

[Pyrpolizer]

You can’t ban banking completely as you need commercial banks (High Street Banks) to function as intermediaries, they should be a service to industry. The problem is the investment banks and the fact they are linked to the commercial banks. Commercial banks are, or should be, an essential part of the wealth creating process but they have been abused as the bankers have found they can make money out of money ....... and money is no good if you don’t spend it.

While I generally agree I think the last statement is wrong. Someone will spend it eventually, nobody takes money with him down the grave.
The problem as I see it, is stealing of money from someone else's pocket, as you explained in your last paragraph, someone stealing money from the pension you get from the UK.

I was today listening to comments from listeners on the radio regarding the financial statuses of the President his Ministers political leaders et al that were announced yesterday
Most of them declared huge amounts of debt and about average assets and earnings. Ridiculous! Nobody believed what they declared.It's bvious the system just help the rich, while stealing as much as it can from the poor.

[B25]

Averof - 7m in assets, 854 euros in the bank> if you believe that you'll believe anything. Hell he cannot even pay his IPT.

[Robin Hood]

Milti:

It's common sense mate. No banks, no money, no money no business. You explain how on earth any nation can do without banks. Mate, you are obsessed with the banking system, do try and collect your ....pension from a bakery or a butcher shop !!!! Banks are a nations ONLY indispensable industry.

..... and what did I say:

“You can’t ban banking completely as you need commercial banks (High Street Banks) to function as intermediaries, they should be a service to industry. The problem is the investment banks and the fact they are linked to the commercial banks. Commercial banks are, or should be, an essential part of the wealth creating process but they have been abused as the bankers have found they can make money out of money ....... and money is no good if you don’t spend it.”

So I am agreeing with you ...... but you are not just talking about high street (commercial) banks, you are including investment banks and they do not meet the description of a bank at all and that is where your argument collapses. The high street banks, as most people understand them, collect your deposits, keep them safe for you but then lend some of it to borrowers, although what they lend is just a fraction of the deposits they hold. That widely held concept is complete bullsh*t ! (That is an irrefutable fact!)

I won’t bother to explain how they work, I have said it all before.

Investment banks create nothing that contributes to the real economy, it services the financial economy and that is not the same thing at all. The problems come when you allow investment banks to incorporate the high street banks because the liabilities, when things go wrong, fall back on the high street banks ....... that is you and the money the bank has borrowed from you, your deposits, your pension. So, the banks are a classic demonstration of socialism ..... they get into trouble and they expect the State (Tax Payers) bail them out and customers foot the bill when they get bailed-in! As we saw in Cyprus ..... when the SHTF the banks then defaulted on their liability to their customers and they lost their deposits.

(Look up Glass Steagall Act 1933 and its repeal by Clinton in 1999, which in turn was the most significant factor in the 2007-2008 banking collapse.)

If you were just referring to high street banks, then speculation with currency would not happen and the value of your pension would decline gradually over time due to economic considerations such as inflation. They money you have lost since the referendum to date is mainly down to speculators and these guys/gals work for investment banks. You can’t blame the high street banks as they don’t speculate they are a service industry and, as we both recognise, are an essential service to society. We need them ....... but we do not need the investment banks as they are a liability on the real economy, not an asset.

Yes I am obsessed with the banking system, I see it for what it is; I know how it works; I can see the dangers and it concerns me just how little people know about it and have no idea how dangerous they are to our society.

Maybe not within our lifetime, but within a decade or at most two, this system will change. Try looking up Universal Basic Income and the implications ! When introduced It will go one of two ways! We will either have a society where the Government is The Bank or, Government will bring the banks down to earth and become themselves the sole source of money creation. Then high street banks will operate more or less as people think they do now ...... but of course by then there will be no such thing as money!

[Robin Hood]

Pyrpolizer:

a) because I didn't say that in contrast to currency speculation . I think your long post to explain that currency speculation delivers nothing to the real economy was because of this misunderstanding.

My comments were not just directed at currency speculation but investment banking in general. It is a closed system! What it produces remains generally within the banking/financial system. It is not spent into the real economy.

b) Because it's a fact that there are many things in real life that deliver nothing to the real economy including a countless number of services

I disagree! There are very FEW things that do not contribute to the economy. Even the investment banks contribute something as they pay salaries and require services but their worth is a miniscule portion of the money they create for themselves.

Every transaction in the real economy is a link in a chain that keeps money flowing from one transaction to another. At each stage there is added value .... it pays a salary, it creates a profit, it supports other providers in the economy, it pays taxes. The financial sector used to be part of this chain but has now mainly broken from that sequence and now in the main operates outside the normal economic flow of wealth. It is a parallel economy that can effect the real economy but contributes little to it. If we relied just on banking ......... we would soon die out as a species, but the bankers would die incredibly rich on paper. But if the investment banks suddenly vanished, the mass of the population would not even notice they had gone.

Let's take this example:

Suppose we have 5 Casinos all strictly made for use by the locals. Would increasing their number to 10 add anything to the economy? Would closing them down deduct anything from the economy?

But your 5 casinos create jobs, they require goods and services from suppliers, they pay taxes ..... so they contribute. If the market could support 10 casinos, then you could double the contribution to the economy. If you closed them all down, a lot of people would lose their jobs, local suppliers would lose their customers and the State would lose the tax revenue.

So I don’t think your example is a good comparison.

What Casinos and other services do has nothing to do with the economy.

IMO: Wrong! They ARE the economy, just as much as a factory producing goods for sale.

They just increase the re circulation and redistribution of money that increase the GDP but the GDP alone is not the measuring stick of the economy. Similarly with betting shops.

What these "no value added" services do is just improve the quality of life. So admittedly whores do improve the quality of life, but the economy will not change one iota if their number increases from 100 to 1000 , or decreases from 100 to zero

Circulation of money IS the economy, where ever it comes from. That is why investment banking is different. Their products circulate within a closed-loop, they do not flow through the real economy so they cannot be considered as part of it nor as a contributor!

Quality of life and economy don't relate much. Even Milti thinks the quality of life here in Cyprus is better that in the UK, yet our economy is so much weaker.

Living in a mud hut on a tropical island, with a supply of fresh water, earth to grow a few vegetables and a sea full of fish ..... could be paradise for just Milti. But if I were to land on his island, we would then have an economy! He can catch fish, maybe I can grow vegetables ..... I swap him a few vegetables for some fish. That’s an economy.

Another example is the selling of drugs. Sure there are many people who would pay to buy some marijuana, does that mean there's any benefit to the economy? If yes let’s make it legal to boost the economy

Again, not a good analogy ..... as growing/selling drugs is illegal. But it is still a part of the economy as there is a transaction and a trade takes place. It is a link in the economic chain. However, if you decided to grow marijuana and only smoke it within the family, then that does not contribute to any economy other than your own.

[Pyrpolizer]

Ok we have a disagreement on that.
While keeping the disagreement you seem to think that every re circulation of money contributes positively to the economy.
Imo it's not just that, if for example we take the case of Casinos and their creating of jobs etc as a +, you should also think of the minuses, been: lost manhours, increase of crime rate, destroyed families, "fish" getting out of it within weeks totally broke

A Good Way to Wreck a Local Economy: Build Casinos
https://www.theatlantic.com/business/ar ... os/375691/

[Robin Hood]

Ok we have a disagreement on that.
While keeping the disagreement you seem to think that every re circulation of money contributes positively to the economy.
Imo it's not just that, if for example we take the case of Casinos and their creating of jobs etc as a +, you should also think of the minuses, been: lost manhours, increase of crime rate, destroyed families, "fish" getting out of it within weeks totally broke

A Good Way to Wreck a Local Economy: Build Casinos
https://www.theatlantic.com/business/ar ... os/375691/

I agree with you but you are now mixing economics with what is a moral/criminal aspect.

Even illegal activities keep the money flowing, whether we agree with those activities or not is our personal choice. I mean ..... I disagree with the UK spending these vast amounts of money on aircraft carriers and their supporting fleet, let alone the cost of the aircraft we need to buy from the US. But it creates jobs and may revive a once proud shipbuilding industry. I see a far greater benefit from the money going into say the Health Service and capital projects ..... which will create a longer lasting benefit for the people ..... after all, when you think about it ....who the hell is the UK 'defending' itself from?

The thing with the financial economy is that it benefits a very, very, very few people! They have become a means for the transfer of wealth from poor to rich which is also why there is an ever widening gap between the rich and the poor.

IMO: The whole system needs revising to benefit the people rather than the few!

[Robin Hood]

The pound was up to 1:11 against the Euro today ......... must be due to Brexit becoming clearer! Looks like there is life in the GBP yet.

BTW: Did I really read today that the UK is the No.2 power on the planet, after the USA. I wonder if that's down to Brexit too or just wishful thinking ? (I did read it in the DM)

[miltiades]

R of H, Ray of Hope ,
Nothing pleases more than to see Stg rising,
Let's hope that I and others with similarly expressed views on Stg are wrong. As we very well know traders can drive any currency up or down, I would be well pleased to see Stg rise to at least 1.15 to the E.
Will be interesting to see how this week goes.