European Finance Ministers states Cyprius bailout now a template

CLAPTON

Graham_Devon wrote: »

If we are going to suggest that savers are investors, then true savers (you know, your nurse, plumber, bus driver, teacher etc) that has little interest in banking should have somewhere they can place their money with no risk attached.

Investors make a decision to invest and take on that risk.

Savers don't make that decision. You can argue that technically they do, but it's a boring argument. One that could go on and on with the technicalities of everything in life. In effect all a saver is doing is putting money into a pot. They don't expect that pot to be swiped, and to be honest I don't think it's fair to expect your joe bloggs saver to make the decisions an investor will actively make through their own choices.

So maybe whats now needed is a change. Maybe that change should be simple low return, no risk accounts where all the money on deposit can be paid back to the saver if required.

Savers would then have a choice...the no risk, low return, very simple savings account, or savings accounts with risks attached offered by high street banks. People then have a choice. But I feel we all need somewhere we can put our money that is safe.

they can save in national saving; not totally risk free as one never knows what a government will do but the best there is.

Graham_Devon

CLAPTON wrote: »

they can save in national saving; not totally risk free as one never knows what a government will do but the best there is.

That's the point, not risk free.

You'd turn around and say the same thing should the government "require" the money.

I mean something totally risk free, or should I say "untouchable". Something where a levy could never be imposed, and the total amount on deposit was backed up with the same amount available to pay out everything to everyone.

If we can't offer that, but can offer the multitude of unfathomable stuff banks have offered over the past decade then somethings wrong.

Before the crisis I thought Lloyds was quite a reputable bank. Why would I as a layman think differently? Hell, the banks don't even know the risks they have taken on, so how is your average joe in the street supposed to be able to make such risk decisions?

Savings accounts are the fundamental foundations to all finance packages. If those foundations are now smashed, the whole thing looks precarious....as we are finding now that normal people are trying to withdraw their cash.

Capitalism...or whatever we have now has totally turned things on their heads. Saving used to be respected, now its seen as somewhat parasitic behavior where said savers should be punished in favour of those with debt, either through funding schemes, money printing or now, pure theft to save the system.

Mallotum_X

Nothing in life is risk free. The savers chasing high levels of interest had a choice and the went after the higher returns on offer.

How could a totally risk free bank even exist, how would it cover its costs? Even a simple model for banking would have loans being made to generate an income for the bank (and the savers). If the loans turn bad the savers would lose out.

A 100% risk free savings account is simply impossible to even start to create. In general one would think the UK accounts are safer, but we have had our "haircut" here in a different way, though changes in exchange rates rather than in GBP.

Keeping large amounts of money in a single bank has always been a bit of a daft idea. This situation just helps to confirm that.

Ultimately once the dust settles on al lof this the focus will need to shift to banking reform, a safer environment could be created for savers but it wont ever (and shouldnt ever be) totally risk free.

CLAPTON

Graham_Devon wrote: »

That's the point, not risk free.

You'd turn around and say the same thing should the government "require" the money.

I mean something totally risk free, or should I say "untouchable". Something where a levy could never be imposed, and the total amount on deposit was backed up with the same amount available to pay out everything to everyone.

If we can't offer that, but can offer the multitude of unfathomable stuff banks have offered over the past decade then somethings wrong.

Before the crisis I thought Lloyds was quite a reputable bank. Why would I as a layman think differently? Hell, the banks don't even know the risks they have taken on, so how is your average joe in the street supposed to be able to make such risk decisions?

Savings accounts are the fundamental foundations to all finance packages. If those foundations are now smashed, the whole thing looks precarious....as we are finding now that normal people are trying to withdraw their cash.

Capitalism...or whatever we have now has totally turned things on their heads. Saving used to be respected, now its seen as somewhat parasitic behavior where said savers should be punished in favour of those with debt, either through funding schemes, money printing or now, pure theft to save the system.

total rubbish

banks have failed numerous times

governments have debased the currency numerous times

governments have defaulted numerous time

fortunately in the UK we normally only suffer small incremental erosion of value rather than outright confiscation.

grizzly1911

Graham_Devon wrote: »

If we are going to suggest that savers are investors, then true savers (you know, your nurse, plumber, bus driver, teacher etc) that has little interest in banking should have somewhere they can place their money with no risk attached.

Investors make a decision to invest and take on that risk.

Savers don't make that decision. You can argue that technically they do, but it's a boring argument. One that could go on and on with the technicalities of everything in life. In effect all a saver is doing is putting money into a pot. They don't expect that pot to be swiped, and to be honest I don't think it's fair to expect your joe bloggs saver to make the decisions an investor will actively make through their own choices.

So maybe whats now needed is a change. Maybe that change should be simple low return, no risk accounts where all the money on deposit can be paid back to the saver if required.

Savers would then have a choice...the no risk, low return, very simple savings account, or savings accounts with risks attached offered by high street banks. People then have a choice. But I feel we all need somewhere we can put our money that is safe.

Mallotum_X wrote: »

So come on Grizzly, who should pay to save the Savers?

If it is a regulated establishment the regulator. The regulator has benefited from the upsides in the good times.
Back tomorrow 3G awful.

wotsthat

Graham_Devon wrote: »

So maybe whats now needed is a change. Maybe that change should be simple low return, no risk accounts where all the money on deposit can be paid back to the saver if required.

Zero risk and a return too? There's a Nobel prize in economics for the person that works out how this can be achieved.

There's no such thing as a return without a risk. If someone is making a return without risk it's because someone else is taking the risk on their behalf.

Graham_Devon

Mallotum_X wrote: »

How could a totally risk free bank even exist,

This wasn't what I said. I said risk free accounts.

So those accounts would be risk free, but at low returns (or even no return if needbe). People would then have a choice. They don't become "investors" without their knowledge.

Were even going down the road of suggesting savers were lending money to the banks. How many savers realistically see the products this way?

The split banking idea could do something like this. Other business's run loss leaders to provide spring boards to selling other products. Banks do it with current accounts, so theres no reason such a product couldn't exist.

In effect all I'm suggesting is that the money put into those accounts is completely ring fenced. Therefore, all money can be returned even if all depositors pull it out the same day.

If people want more, they can have more with a level of risk. They can have higher paying accounts (or fixed term accounts), move onto other investments and such like.

I just find it wrong on quite a few levels that those just wanting to put some money away for the future, those who we should be patting on the back are suddenly seen as the enemy, ready to be tapped into to protect those who knowingly took risks.

If this conversation involved the government just deciding they now had a right to 20% of peoples housing equity, the conversation would be very much different. The principle is very much the same however.

Graham_Devon

wotsthat wrote: »

Zero risk and a return too? There's a Nobel prize in economics for the person that works out how this can be achieved.

Lots of nobel prizes need to be handed out then.

I spend on my credit card, I pay it off within 60 days. I get a return (points / cashback) with no risk.

Of course, it's paid for by others (retailiers and others paying interest). But theres nothing to suggest that can't be done with savings accounts. Nothing at all. It's just something differing to what we currently have.

It's not like I have have asked for whole institutions to be risk free. I've just suggested an account should be risk free, and then other higher paying savings accounts have the risk attached. Maybe you could do away with all guarantee's on all other savings accounts.

BobQ

While I think its possible to argue that the €100K protection limit in any depositor protection scheme is arbitrary and could be reduced, I think its only fair that they protect lower value depositors at some limit or other.

Savers need to take some responsibility but for most they do not think they are investors bearing risk, particularly when they are told the savings are protected. The fact they were paying higher rates than other areas of the Eurozone should have been an indication of higher risk as we had in 2010 with Icelandic banks.

But if any Government had reneged on the published protection limit who knows what would have happened across the Eurozone?

wotsthat

Graham_Devon wrote: »

Lots of nobel prizes need to be handed out then.

I spend on my credit card, I pay it off within 60 days. I get a return (points / cashback) with no risk.

Of course, it's paid for by others (retailiers and others paying interest). But theres nothing to suggest that can't be done with savings accounts. Nothing at all.

You've made a return; others have taken the risk. That's exactly what I said.

With savings accounts you could deposit money in the world's safest (as in well guarded) bank. To minimise risk they wouldn't lend it out so there would no return. You'd have to pay a fee for the security. Even then there's risk - the vault gets raided and the money stolen; inflation will erode value and there's still no escape from government taxes.

Not sure you understand risk at all. I reckon the 'normal' people (your nurses and plumbers etc) have a better understanding of risk than you give them credit for too.