21 thoughts on “Weekend reflections

  1. In response to the Professor’s post about how poor the social utility of bankers/financiers are, I have decided to post this:

    1. Bankers who boast about their remuneration or bonus probably didn’t get a bonus that year or it was very small
    2. Banks and individuals donate more money to charity than ever gets mentioned in the press
    3. “Social” banks sound like giving money out to those who are poor which is what we call the subprime mess. Wanting a social bank is signing the bankruptcy form… not very left wing
    4. There is no such thing as an unregulated banking system. Whoever says that obviously has never visited a Regulation & Compliance officer or visited any regulatory websites
    5. Bankers are not greedy, but there are many on the Left who are naïve
    6. People blame the banks for the mess but there was always someone who wanted money. How about personal responsibility?
    7. If you want to understand the broad causes, read Mohammed El-Erian’s book When Markets Collide. Objective, factual but not readable, it is much better than the twaddle usually produced by people with no knowledge of what they write about.

  2. @SeanG,

    No evidence is presented to support this assertion.
    See point 1, and irrelevant even if true.
    Twaddle. What do you think credit unions are?
    Bankers are greedy almost by definition – it’s axiomatic.
    The person or body with more information has, therefore, more responsibility when there is a market failure. Who was on the right side of the information imbalance – the banks (who knew the lenders would be unlikely to afford the repayments) or the lenders (who did not)?

    What else have you got?

  3. SeanG, are you sure you are not high for this is way off the mark ‘Wanting a social bank is signing the bankruptcy form’. Get real.

  4. Are we still experiencing an irrational exuberance by the market as we head to recovery.

    Alister – As you suggest many business people are not concerned with social benefits. They want a big cut from the money which passes through their organisation. What is more worrying is the lack of structure to prevent public guarantees translating to disproportionent amounts of money for the incumbent (or outgoing) CEOs and public officers. Regulations should prevent money going to those with the stickiest fingers.

    SeanG – I doubt that anyone would dispute that there is regulation in the banking industry – just that it is too often ineffective, cumbersome or counterproductive.

  5. @Michael of Summer Hill

    You are so right – we should levnd money to poor people who have absolutely no credit history or a very poor credit history. This is the social thing to do.

    Have you ever heard of the subprime mortgage market? It is about lending money to people who under normal circumstances would not get a loan. This has been a major cause for the mess and you want to lend more out?


    Even credit unions have lending policies. This means that they might turn you down! That is good practice, a social bank that lends money out without controls creates a subprime fiasco.

  6. Heads up: Notre Dame University is purging its heterodox economics department. At a time when doyens of economics like Prof. Krugman and little tin gods like Alan Greenspan are announcing that there is something fundamentally wrong with the way their profession thinks about economic issues, this beggars belief; one of the few North American institutions which promotes other ways of thinking about economics is getting rid of that very capacity.

    Below is a statement from one of the heterodox economics professors. Please consider signing the petition, especially if you have standing in the academic world.

    Message from Amitava Dutt:

    Our Dean has publicly announced the closing of the Department of Economics and Policy Studies. The Department of Economics and Econometrics, which calls itself a “neoclassical” department, will be the one which will then house both our economics undergraduate and graduate programs (the latter it has done for the last four years in any case). Our faculty will not lose their jobs because we have tenure in the College of Arts and Letters, but it seems that we will be dispersed in centers and institutes around the university. Some undergraduate students alums have started a petition expressing opposition to the move. In case you haven’t seen it, I am attaching the link.

    Save the Liberal Arts Economics Education at ND

  7. I have been reading John Curtin’s war speeches and I find it funny that he referred to the Japanese in one of them as “yellow aggressors”.

  8. According to their website, the Productivity Commission and Alan Fels’ draft report on Executive Remuneration should be released next week (end Sept.). Be interesting to see what is said.

  9. SeanG, according to your theory ‘social banking’ is a waste of time but the evidence suggest otherwise. Here are some of the awards received by the Grameen Bank for outstanding service:
    1 Awarded Aga Khan Award For Architecture, 1989 by Geneva based Aga Khan Foundation for designing and operating Grameen Bank Housing Programme for the poor, which helped poor members of Grameen Bank to construct 60,000 housing units by 1989, each costing on an average $ 300.
    2 Awarded “The King Baudouin International Development Prize 1992” for its recognition of the role of women in the process of development and the novelty of a financial credit system contributing to the improvement of the social and material condition of women and their families in rural areas.
    3 Awarded Independence Day Award for outstanding contribution to Rural Development.
    4 Awarded 1994 Tun Abdul Razak Award for the Bank’s unique programme to lend money to the poorest of the poor and thus transform the lives of thousands of impoverished people.
    5 Awarded “World Habitat Award : 1997” by Building and Social Housing Foundation.
    6 Awarded “Gandhi Peace Prize :2000” by Government of India.
    7 Awarded “Petersberg Prize 2004” by the Development Gateway Foundation, U.S.A. in 2004.
    8 Awarded “Nobel Peace Prize 2006” in October, 2006.

    Any more bulldust.

  10. SeanG

    Nice troll, but, now please indicate – what is the evidence for:

    1. Bankers who boast about their remuneration or bonus probably didn’t get a bonus that year or it was very small

    And for:

    2. Banks and individuals donate more money to charity than ever gets mentioned in the press

  11. SeanG, I know exactly what you have written and conceptually you are all over the place. What do you think ‘social banking’ is?

  12. Chris,

    F**k! It was meant to be tonge-in-cheek. Jesus. Are you all lacking any funny bone at all?

    Except that, yes bankers tend to overstate their bonus and more money is donated to charity than is reported. Do you have evidence to the contrary? I mean, honestly, you have so much experience of the banking industry! You must have intimate knowledge of the trading floor, of experts of M&A of private bankers to the rich and famous and to private equity chaps.

    Of course you don’t. That doesn’t stop you from posting here. Grow up.


    I interpreted social banking in terms of Fannie and Freddie, you interpret it as microcredit. Unless you are specific in your posts then we will always think of different organisations. What I said to Chris applies to you – grow up.

  13. @SeanG

    There are green aliens living on a planet orbiting Alpha Centauri.

    Do you have evidence to the contrary? Of course you don’t. That doesn’t stop you from posting here.

    That’s tongue-in-cheek.

  14. @SeanG
    Sean – I had a quick glance at the Huffington post article link you put in here…except when I read the line in the first para..”speak for yourself kemo sabe”…I couldnt go much further (gagged) – schoolyard taunt eh? A brief skim para two mentions the patriot act.

    Close and exit.

    It that was getting the claws out on Krugman – you will have to try much harder than that limp pallid uninteresting unclever article.

  15. Alice,

    You really should read the entire article. I admit that the taunt was, well, sad but the rest of the article is better. Krugman should do a rejoinder.

  16. @SeanG
    Sean – the taunt was also sadly placed (first para). I doubt there will be a rejoinder from Krugman…Ill struggle back to read the rest of it Sean.

  17. I have been away for a while structuring the description of the idea behind Rewards and zero interest loans to make it more understandable for readers who start with a mental model based on the current banking system and regulations. It also explains the underlying reason why social banking has been so successful when implemented well.

    Be interested in comments on the idea which boils down to funding current investments from future profits using loans rather than equity and repaying the loans from the future cash flow of the investments – which is what social banking is all about.


    Here is a response to the challenge from the US biotechnology industry on how to fund R&D in gene technology without patents. It uses the same idea as above.


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