"We want our banks to be profitable, of course, and every country wants a stable banking system."

Good article but no I do not want our banks to be profitable - certainly not the big 4 at $1000 for every man woman and child in the country. We want our banks to serve us - the Australian community - well. They do not and will not until we take them - or at least some of them - out of private ownership.

I also note that Joe Stiglitz has now joined James Galbraith in suggesting that the US banks be criminally prosecuted for their part in the GFC.

And while I am on about banks, why in a democratic country is today's most important macro economic instrument - setting rates - left to an undemocratic organisation?

Gavin Mooney

*In 2008, the proportion of pre-tax profits as a percentage of total assets was 1 per cent for Australia, 0.5 per cent for Canada, 0.4 for the United States and -0.1 for Britain.*

Whew, what a biased article. The above says it all really.
In the US, something like 100 banks have gone broke just recently,
in Britain a great many had to be taken over by the Govt.

I hardly think that 1% of assets is ripping off the customers.
The real problem lies in Australians seemingly unquenchable
thirst to borrow, our big 4 have something like 2.2 trillion $
on their books! When will Australians learn to spend less then
they earn?

Because our big 4 are healthy, was exactly the reason why consumers
fell over themselves during the GFC, in a flight to quality.
Who would put their money in a financially stricken bank?

So yes, our big 4 picked up market share, as overseas banks
and other money lenders fled the Australian scene.

Shareholders of the big 4 were hit with another 20 billion capital
raising in 2009. The author does not even mention this fact.

I suggest that the author studies the latest Westpac annual report.
Fact is retail banking profits have in fact dropped. Fact is
profits and dividends per share are no larger then they were
before the GFC. Fact is that much of the present figures are
due to less then expected write offs and an increase in profits
from institutional lending, not retail lending.

A professor should know all this, given that I as an amateur,
can figure it out.

So the government sets up a banking cartel, then surprise surprise they profit from a privileged position, and so then the idiots say the problem is not enough government regulation. They want to set up a system where the public pay *all* banks losses if they make hare-brained decisions, how stupid is that? Let's just get one thing straight shall we? The government at all relevant times exercised, through central banking, control over interest, which is the price of money, and the price mechanism is what balances out supply and demand. Then you've got a crisis, in other words, an imbalance of supply and demand, in what sector? The *financial* sector! Get it? Government controlled the price of money, and then there was a crisis in the money industries. And these complete idiots want to solve the problem by more government control of money and banking. It never occurs to them to stop their clueless ham-fisted meddling in people's private affairs on the basis of religious worship of government. Why should government decide to systematically favour one half of every transaction? How would they have the knowledge to know how this could ever be fair or practicable? While ever idiots like this get to vote its no wonder there's a GFC.

austr-alians...desire to run things on credit isnt a choice
its a nessesity...for many...bying into this consumerism

but lets run with reigning in these bankers
lets say..the wheat producers,..pooled their wheat
and formed a publicly proclaimed...board

like say the fed reserve board...made up of bankers
who determine..the cost of our ursury[intrest-rate]

surly this would be cartel behaviour
yet the banker do it...and govt cant see how to end it

there is the sad fact...many believe..the federal reserve..to be govt
but its far from govt...govt actually claims a hands-off unaccountability..for the rates of intrest...

let..alone cutting the exorbitant cost of credit-card ursury
[supposedly because a high default rate..[2 percent]

well here is the deal..govt takes back the full control of the fed
lends to bankers..who can lend only at a fair margin...also it pays intrest..to banks..and banks pay intrst to the savers[not just take it intrest free]

im sick of the abuses...govt saying it is state issue
and other destractions..spin to do nothing

i want intrst..on the savings
inflation chews away

ditto this yanki con...lol
the fed bying up govt bonds
with credit it gets from govt
at a 2 percent magin

then we get the joke of quantitive 'easing'
ie..they issue..[create]..more money...
devalueing yet further..us muggs who saved it..in todays values

but who get to spend it,..in tommorrows deflated worth
sure the lower value..will raise the stock market
but thats about all/

its still the same value...in our...non quantive eased funds

we get nailed..both ways
inflate/deflate..how do they excuse it mate

then steal our pension funds..[and in usa take away em-ploy-ers medical aid..[that was a work condition]..[ie value..they now dont get

ok they..excludes managment
they still get..all the lurks/perks

Milind Sathye

Sir,

Thanks for your description of the mechanics of banking.

On reflection though, all of those who cross the threshold of a bank door are bankers, be it positive or negative bankers.

Thus banking is a condition of all people in a developed country.

This novel view may help the ones who in future may approach the subject of banking

Milind Sathye

On accepting the undeniable condition that we are all bankers, one way or the other algebraically speaking, and knowing the other undeniable human condition, ‘greed’, with which you and I are tainted, it is clear that the solutions you offer in your article are exactly ‘no solution’.

However there is a solution, there must be a solution if we wish to see a saner world, but it is unmentionable and it certainly is not in universities which, like banks, are incorporated entities for the benefit of the few at the discomfort of the many.

It is exactly “the benefit of the few at the discomfort of the many” principle that must be dismantled in order to survive, not in this world but with this world