The inevitable is happening again, and the losses are beginning to mount. These financial crises will only end when there is some accountability and an end to the idea that some are too big to fail.
Showing posts with label Banks. Show all posts
Showing posts with label Banks. Show all posts
June 06, 2024
March 14, 2023
Tucker Carlson: Big Government Will Always Save Wall Street
Tucker Carlson describes how easy money ends up being the opposite. The fall will be very hard.
August 26, 2020
ANZ Closes Bonus Bonds
It's the end of the venerable Bonus Bonds. Despite having many critics they've remained popular since their introduction in the early 1970's. And those critics were probably just disgruntled know-nothings or competitors anyway.
Bonus Bonds offered monthly prizes instead of interest. The main advantage of them was their completely tax free status. Founded by the NZ government and initially run by the NZ Post Office, they were intended as a way for the government to raise funds. When PostBank was sold in the early 90's, their buyer ANZ had to take over the scheme. Their tax free status remained.
Were they any good, these Bonus Bonds? They could be, depending on how much you had invested. Too much and earnings would be too low. Too little and you may wait years for a prize. But for just the right sum, they could earn regularly, and those earnings didn't impact your tax position. The money was on call and returns immediate, meaning a single prize early in the year could cover the whole expected annual return drip fed over time in any other investment vehicle.
Bonus Bonds closure is a sign that the COVID19 lockdowns have damaged the economy. Businesses are closing every day and now banks are stressed. This could get very ugly, and all because of a bug that's about as bad as the flu. Unbelievable.
Bonus Bonds offered monthly prizes instead of interest. The main advantage of them was their completely tax free status. Founded by the NZ government and initially run by the NZ Post Office, they were intended as a way for the government to raise funds. When PostBank was sold in the early 90's, their buyer ANZ had to take over the scheme. Their tax free status remained.
Were they any good, these Bonus Bonds? They could be, depending on how much you had invested. Too much and earnings would be too low. Too little and you may wait years for a prize. But for just the right sum, they could earn regularly, and those earnings didn't impact your tax position. The money was on call and returns immediate, meaning a single prize early in the year could cover the whole expected annual return drip fed over time in any other investment vehicle.
Bonus Bonds closure is a sign that the COVID19 lockdowns have damaged the economy. Businesses are closing every day and now banks are stressed. This could get very ugly, and all because of a bug that's about as bad as the flu. Unbelievable.
July 31, 2018
Banks These Days
Banks are being very short-sighted these days. Do they not understand banks role in society? Put simply, their role is to act as a conduit for doing business. Two pillars form the backbone of this role, and that is trust and relationships.
So what do banks do? They destroy trust and ignore relationships. What I'm talking about is the trend to move on-line, and to close branches. And branches that remain are becoming automated. What the bank execs are doing is making the mistake of positioning money as a generic product. If you've built relationships over someone's whole life, why would you then turn around and say to that person, in effect, go away and deal with a robot? It's barmy.
Any bank that takes the time to put the human touch back in, will be quids in I reckon (note the pun, hah).
So what do banks do? They destroy trust and ignore relationships. What I'm talking about is the trend to move on-line, and to close branches. And branches that remain are becoming automated. What the bank execs are doing is making the mistake of positioning money as a generic product. If you've built relationships over someone's whole life, why would you then turn around and say to that person, in effect, go away and deal with a robot? It's barmy.
Any bank that takes the time to put the human touch back in, will be quids in I reckon (note the pun, hah).
June 15, 2016
Bitcoin Building Society
This is my answer to the problem of bitcoins being highly volatile in terms of value. I still think my formula for linking a digital currency to the real world has legs, whether it is linked to precious metals, or a basket of goods and services or even Caterpillar tractor output.
However the solution below deals with things as they are now:-
1. A building society be formed that accepts bitcoin deposits along with other currencies both real and virtual.
2. The building society exists to lend to its members for the purpose of buying real property, but mostly real estate.
3. It is a building society with shareholders and members holding bitcoin balances. A member with a bitcoin balance need not be a shareholder, but all shareholders are members whether they hold a bitcoin balance or not.
4. When a member deposits bitcoins to the building society, an account fee is charged, one half of the fee to cover the cost of running the society and the other half to be invested in real property, precious metals, cash and cash equivalents for the benefit of members.
5. No fee for withdrawing funds.
6. The society will operate a platform whereby bitcoins are exchanged for cash. No fee for cashing in or switching currencies, apart from the quoted exchange rate.
7. Loans are made available to members, which may use bitcoins as security to cover part of the loan. If a mortgage is advanced, then the property would be secured as well as a bitcoin balance.
(eg) A loan applicant wants to borrow to buy a $1,000,000 house. 1,000 bitcoins are held in the applicants membership account. Assuming income is available to service the loan, the applicant qualifies for a $750,000 loan, and as $650,000 is held in bitcoins, $250,000 of that becomes the equity in the house, a proportion of the balance is then locked up to provide additional security for the loan (suggest half of the balance, or 308 bitcoins, which would be 'advanced against' and thus could not be withdrawn but would still carry limited voting rights - those 'advanced against' coins could not vote on any policy influencing lending).
8. Repayments may be made in any currency but must always equal the minimum loan repayment amount stated in the loan agreement.
9. If the building society winds up, or bitcoins become unfeasible, then the amount payable from the reserve to each member will be pro rata the balance of each members shares, bitcoin balance, plus any other balance from the members accounts.
10. Shareholders and members have a voting right related to their shares or membership account held in bitcoins. The bitcoin balance is always backed by the reserves set aside in 4 above. Shareholders and members may transfer or sell their shares or bitcoin balance to anyone. If not already a member then any new shareholder becomes a member automatically.
11. Voting rights for each member will be capped at 5% of the total bitcoin member pool (based on the idea that the building society starts with 20 equal members). There is no cap on how many bitcoins can be held and all bitcoins pro rata participate in any profit. However individual members can only vote up to a maximum of 5% of the total membership.
(eg) A member has been in the society for 13 months and qualifies to vote at the next AGM. The member has deposited a total of one million bitcoins, 500,000 upon joining, with the rest added over the following months. The AGM will have total member votes available of 20 million bitcoins. The member may vote all his initial stake of 500,000 bitcoins (2.5% of the total pool) but none of those units after as none of them have been in the system for over a year. If the pool is the same size the following year, and the member still has the same bitcoin balance, the member may vote all bitcoins possessed as they represent no more than 5% of the membership pool.
For the purposes of the example above, the 5% threshold applies to the aggregate of all accounts for that member, where the member has control of that account (being 50% or more control or power of attorney), and whether separate accounts exist (or not) for that member.
12. As the building society exists for legitimate reasons, and is principally there to provide member benefits, there would be no problem getting banking facilities. The bitcoins form the members but in every other respect the organisation is exactly the same as any building society.
An advantage of my approach - the problem of bitcoins being a poor store of value is addressed. Members with a significant balance of bitcoins in their membership account would have a reserve backing up their bitcoins. The coins held within the membership account would always be worth more than zero. Bitcoins outside of a system like this can indeed be worth nothing.
A possible flaw I can see already I've addressed in 11 above. Not all bitcoins in member accounts would be equal. Someone may have been a member for ten years, while another member only a year. Having said that however, their bitcoins rank equally for distribution of reserves or profit after the qualifying period.
The above problem is addressed in two ways, firstly a minimum membership term must be established to begin with, say, one year (see 7 above). Then secondly, beyond that each member receives a share of the profit, provided there is a profit to distribute from the society. Thus, a member for a long period of time should build up significant equity. If the society was wound up, new memberships would be closed off so new subscriptions could not flood in to pounce on those reserves.
If anyone is interested in this, by all means contact me to discuss. There is a contact form to the right under my photo.
However the solution below deals with things as they are now:-
1. A building society be formed that accepts bitcoin deposits along with other currencies both real and virtual.
2. The building society exists to lend to its members for the purpose of buying real property, but mostly real estate.
3. It is a building society with shareholders and members holding bitcoin balances. A member with a bitcoin balance need not be a shareholder, but all shareholders are members whether they hold a bitcoin balance or not.
4. When a member deposits bitcoins to the building society, an account fee is charged, one half of the fee to cover the cost of running the society and the other half to be invested in real property, precious metals, cash and cash equivalents for the benefit of members.
5. No fee for withdrawing funds.
6. The society will operate a platform whereby bitcoins are exchanged for cash. No fee for cashing in or switching currencies, apart from the quoted exchange rate.
7. Loans are made available to members, which may use bitcoins as security to cover part of the loan. If a mortgage is advanced, then the property would be secured as well as a bitcoin balance.
(eg) A loan applicant wants to borrow to buy a $1,000,000 house. 1,000 bitcoins are held in the applicants membership account. Assuming income is available to service the loan, the applicant qualifies for a $750,000 loan, and as $650,000 is held in bitcoins, $250,000 of that becomes the equity in the house, a proportion of the balance is then locked up to provide additional security for the loan (suggest half of the balance, or 308 bitcoins, which would be 'advanced against' and thus could not be withdrawn but would still carry limited voting rights - those 'advanced against' coins could not vote on any policy influencing lending).
8. Repayments may be made in any currency but must always equal the minimum loan repayment amount stated in the loan agreement.
9. If the building society winds up, or bitcoins become unfeasible, then the amount payable from the reserve to each member will be pro rata the balance of each members shares, bitcoin balance, plus any other balance from the members accounts.
10. Shareholders and members have a voting right related to their shares or membership account held in bitcoins. The bitcoin balance is always backed by the reserves set aside in 4 above. Shareholders and members may transfer or sell their shares or bitcoin balance to anyone. If not already a member then any new shareholder becomes a member automatically.
11. Voting rights for each member will be capped at 5% of the total bitcoin member pool (based on the idea that the building society starts with 20 equal members). There is no cap on how many bitcoins can be held and all bitcoins pro rata participate in any profit. However individual members can only vote up to a maximum of 5% of the total membership.
(eg) A member has been in the society for 13 months and qualifies to vote at the next AGM. The member has deposited a total of one million bitcoins, 500,000 upon joining, with the rest added over the following months. The AGM will have total member votes available of 20 million bitcoins. The member may vote all his initial stake of 500,000 bitcoins (2.5% of the total pool) but none of those units after as none of them have been in the system for over a year. If the pool is the same size the following year, and the member still has the same bitcoin balance, the member may vote all bitcoins possessed as they represent no more than 5% of the membership pool.
For the purposes of the example above, the 5% threshold applies to the aggregate of all accounts for that member, where the member has control of that account (being 50% or more control or power of attorney), and whether separate accounts exist (or not) for that member.
12. As the building society exists for legitimate reasons, and is principally there to provide member benefits, there would be no problem getting banking facilities. The bitcoins form the members but in every other respect the organisation is exactly the same as any building society.
**********
The are hurdles to cross in respect of gaining regulatory approval to accept deposits. These are not insurmountable.
Why not form a credit union? That would work too and I read about an attempt to do this in the USA. Credit unions are smaller and have a lower threshold, but by contrast a building society can offer bonus issues by ballot in New Zealand (a form of gambling).
Why not form a credit union? That would work too and I read about an attempt to do this in the USA. Credit unions are smaller and have a lower threshold, but by contrast a building society can offer bonus issues by ballot in New Zealand (a form of gambling).
An advantage of my approach - the problem of bitcoins being a poor store of value is addressed. Members with a significant balance of bitcoins in their membership account would have a reserve backing up their bitcoins. The coins held within the membership account would always be worth more than zero. Bitcoins outside of a system like this can indeed be worth nothing.
A possible flaw I can see already I've addressed in 11 above. Not all bitcoins in member accounts would be equal. Someone may have been a member for ten years, while another member only a year. Having said that however, their bitcoins rank equally for distribution of reserves or profit after the qualifying period.
The above problem is addressed in two ways, firstly a minimum membership term must be established to begin with, say, one year (see 7 above). Then secondly, beyond that each member receives a share of the profit, provided there is a profit to distribute from the society. Thus, a member for a long period of time should build up significant equity. If the society was wound up, new memberships would be closed off so new subscriptions could not flood in to pounce on those reserves.
If anyone is interested in this, by all means contact me to discuss. There is a contact form to the right under my photo.
August 15, 2015
More About What Is Going On
Standard & Poor's today announced the downgrading of the big four banks in NZ. Confirmation about what I said earlier then, the banks are becoming overheated...
>>LINK<<
>>LINK<<