Well you know that I always bow down to the God Nev- who can explain things in layman's terms.

Also I watched some very helpful youtube videos kind of the economic collapse for dummies that explained everything in nice graphics.

This thread has driven me to trying to speed read this:

http://cyber.law.harvard.edu/wealth_...orks/Main_Page



"This deeply researched book documents the fundamental changes in the ways in which we produce and share ideas, information, and entertainment. Then, drawing widely on the literatures of philosophy, economics, and political theory, it shows why these changes should be welcomed, not resisted. The trends examined, if allowed to continue, will radically alter our lives—and no other scholar describes them so clearly or champions them more effectively than Benkler."—William W. Fisher III, Hale and Dorr Professor of Intellectual Property Law, Harvard University, Director, Berkman Center for Internet and Society



So my brain is a bit fried, plus I have so many errands and have to shovel snow again to get out. It would be nice if I could have Nev read through this then explain the basics, as it seems to be a very interesting article

However...

but,

Who are the central banks?

The central banks are really under government control.( yes I know no-one likes to call it that!)

Still the system did not collapse, what I mean is that even when we had the Great Depression the economic system rebuilt. The system transforms, what drives it is still this fight between what we describe as Keynesian and Supply-side economics.

A load of investment banks have gone under, a load more banks will go under and we will still be here arguing economics theory and there will still be supply and demand, markets and governments, to manage them. The world doesn't stop turning, I haven't seen the four horsemen, The intelligent will survive, the unintelligent will flounder, those who have compassion will help the less fortunate and the greedy will help themselves.

Why be fear change- it's inevitable so embrace it and be ready to take advantage of it!

Banks will still refuse to become transparent and not increase liquidity the system is collapsing, or at least losing out to emergent economies. Spain will go under, the Euro will divide and Germany will save itself but I somehow think that Santander like Barclays in the UK will survive and still get their bonuses. What do you think?



Looking forward to your response and learning, but I'm off to plow/plough

To say that this is normal practice is a bit misleading. Well managed bank will do their best efforts to match long term liabilities with long term assets and short term liabilities with short term assets.

This was what every soundly managed bank should have done.

In other words, banks that didn't do this were stupid or more likely, just irresponsible.

Now they must do it according to Basel III.

Perhaps a better comparison would be the US Banking Crisis of 1907 when a liquidity freeze nearly brought the US banking system to it's knees. With central bank to intervene this would almost certainly have caused the US banking system to collapse were in not for the intervention of JP Morgan who stepped in as lender of last resort to shore up the banking system with his own money.
http://en.wikipedia.org/wiki/Panic_of_1907

I'm not arguing that things couldn't eventually rebuild after a banking collapse but bear in mind the c21st financial system is a lot different from the early quarter of the c20th. Apart from the sheer size of the financial sector these days, the extent of globalization means that the impact of a banking crisis in one country can't be contained to that country. Almost certainly the contagion will spread since the banks are all in hock to each other. When they stop lending to smaller banks who maybe kept their noses clean, those smaller banks get sucked into difficulties if they can't access liquidity.

As I said before, one or two investment banks going belly up won't bust the system but the financial crisis of 2008 wasn't caused by that - it was caused by a liquidity crisis which paralyzed whole global banking system. That's what brought down Lehman/Bear Sterns and arguably Merrill Lynch - not their trading losses, though they played their part. And but for the intervention of central banks, it's what would certainly have brought down many others around the globe like a deck of cards.

Edit:
I'm editing this just to make another point which is often overlooked in these discussions. Central bank intervention brought confidence back that the banking system wasn't about to collapse. That allowed banks with big holes left in their balance sheets from trading losses and illiquid assets - banks like Citi, Goldman and UBS - to recapitalize from fresh investment from private investors like private billionaires and middle eastern sovereign wealth funds. Without the public money going in first it's hard to see that the private money would have followed.

It is a generalization, but the fact that two years on the patient wouldn't be breathing without infusions of cheap short term money from central banks shows how much their life support depends on short term liquidity.

By the way, I'm not defending the banks. I think the way they were run and regulated was appalling. Though there have been some regulatory changes, I think the politicians should be tougher but to do that they would have to be more coordinated. Effectively the banks are arbitraging the politicians who are more focussed on their own national interests at this stage.

this is totally normal for business! i worked for many years for a partnership (and so the 'shareholders' and 'managers' are one and the same) sometimes part of working is also chilling out, entertaining staff and clients etc. etc.

This is the level to which the UK parliament is approaching. Barclay's CEO testifying before a parliamentary committee:

"Why is it easier for a camel to pass through the eye of a needle than a rich man to enter the kingdom of heaven?" Mr. Mann* asked at one point.

Mr. Diamond** simply smiled and didn't attempt to answer.

* British MP
**Barclay's CEO

---------------

This is just plain circus.

Banks have always had lavish entertainment budgets. Up to the end of the 1980s basically it was a case of anything goes but for a number of years now many banks have tightened up internal policies. Hiring out top restaurants, expensive yachts, champagne and oysters for VIP clients are all still on the menu but, though there's sure to be exceptions, anyone claiming expenses of lap dancer to sit on a client's lap or for "private services" at a "gentleman's club" are likely to end up getting themselves fired from many banks, especially US banks.

I have to just add a 'note' where my husband works now (US)gifts and entertainment are strictly limited, there is actually a dollar limit. It gets a bit tricky if you are just socializing, so I keep my mouth shout about what he is working on if we are just 'hanging out with old friends in other companies. He goes strictly by the rules as he is very faithful to the company he is with. BB2 is right I am green when it comes to the financial world- it seems that China are stepping in to help the Euro.

My bonus is fixed-nothing!

We can fix that for you. How about 10%, would that be fair?

I work for kisses- I haven't quite worked out the bonus or perks package yet

ummm....you mean 10% of nothing...that's pretty fair!

I think maybe 10% of a kiss would probably be a pinch on the bum or something similar...

Very interesting last night to watch the first 2011 edition of Question Time on the Beeb. The most scathing comments on the current bankers bonuses did not come from either Labour or Lib'dems, but from the Conservative Education Minister. If somebody with better IT skills than mine could get his comments here, which are available as video on the Question Time website - it would be great. Thanks.

If anyone would like to listen to what MP Gove said about the bonuses, look at the Question Time website.