https://www.theguardian.com/business/live/2023/aug/09/italy-...
"We've never had it so good" ...
Next up, the energy sector.
With that said, I'm no different and I wish the same happened in my country. I am however aware that my feelings are short-sighted.
However, we're aware of the long-term effects not taxing banks enough brings about, so trying something different seems like a good idea, even if we don't know all of the effects until later.
There have been significant windfall taxes before and (in my country (UK), at least) I can't recall any disastrous long term indirect effects.
I think this is a slightly reductionist view, but the effect is the same and unpacking it here won't change anything.
In the least snarky way possible, can anyone think of an example where capitalism promotes or encourages long-term thinking?
Everyone I know is going without due to rising costs in everything, but some how banks are making record profits.
Tax the life out of them.
Banks are technically private but won't be valued as much without government protection. So, to some extent, it's not wrong for the government to tax them more than other private companies.
However, a negative consequence of this tax it reduces the bank's incentive to lend money to small and risky companies/startups. This is equivalent to increasing capital gains to 40% - why invest in risky assets if I know I will ever only receive a small percentage of my profits (if any)?
What about contagion to other sectors Oil & Gas?
Retail players (P&G, Unilever, Nestle, Etc.)?
More discussion over here: https://news.ycombinator.com/item?id=37049786
However, there is also an argument that across the system, bank net interest margins were actually abnormally low for much of the period of zero/sub-zero interest rate policy. Essentially there are two reasons for this:
- There was a pretty effective zero (or close to zero) bound on the interest rates they could pay on deposits. Even before rates were negative this would have compressed net interest margins as banks typically paid below the policy rate on much of their deposit base historically.
- Large amounts of central bank liquidity added to the system (through all the various programmes - LTROs etc) allowed weaker banks to fund themselves more cheaply, leading in turn to lower interest rates charged on lending than a market without this additional liquidity would have led to
In a way, you can see this in the fact that the stock market consistently priced banks at a meaningful discount to book value for a long period of time.
The effects of this net interest margin compression were also not spread evenly across the sector. Weaker banks arguably suffered from these effects much less than stronger banks and perhaps even saw a net benefit.
This kind of return on ultra flexible accounts is basically unheard of in most of Europe in recent memory as far as I know (born & lived in Europe as recently as 2019). What you describe are called Certificate of Deposit (CDs) in the U.S. and you can get 5.50% for those in August 2023 [1].
The vast majority of deposits come from companies and ultra wealthy individuals. Your average human customer is a borrower.
You also have to remember the regime we were and are in: 2 years ago, banks borrowed or paid depositors .5% and charged borrowers 1%. A shitty .5% gross margin.
Now, if they borrow at 4% and charge 6% that's 4x the return (2% Vs .5%). But it's also (a) move average historically and (b) smaller as a spread.
Considering how much of an upfront investment (not just in pure cash, but also in agreements, infrastructure and operations) becoming anything more than a basic savings bank is, the risk is very great.
Likely existing players can go pretty far before before the risk/reward of creating a new bank checks out.
The real question is why those existing banks aren't trying to undercut each other. Maybe there's some pressure and risks that make them behave this way in the current economy, or maybe it's good old price fixing.
It's not really fair for the state to impose huge regulatory hurdles that make competition impossible and then for leftists to go 'hurr but what about the invisible hand meme now???', when that obviously relies on FREE MARKETS, which we increasingly do not have.
Or maybe another way to look at it this: the invisible hand of force is yet another invisible hand operating in the markets.
Nobody forces you to accept bad deals. By the way, do you have time to talk about this amazing money-doubling service I've created?
Lol, have you ever been to Italy...? Banks will not lend to you unless you're quite rich already. Catholicism says debit bad, and the country is pretty conservative as a whole.
Italian banks making money implies two things: them screwing consumers (famously called literally "available cattle", il parco buoi, in local finance circles) and rich people getting richer.
Catholicism isn't about "debit bad", it is about "interest bad" and this only applies to catholics owning banks. Historically this has left jews in Italy running banks and abusing its citizens (that cattle, or more accurately "goy" in native language of those bank owners) just fine since centuries.
Please remember that the Vatican created its own bank (financial group) to escape the jewish monopoly on banks. Within the catholic circles you'd hear them now promoting Santander as catholic-friendly option in Europe for normal citizens to escape that monopoly. Money lending isn't an issue within European catholic groups as long as it avoids going overboard with interests.
you just need to have roughly 30% of the house cost cash and a stable job that pays enough, but with a 1.3k net salary (median income) and 30k you can totally buy a 110k home
talking about the north, if you live in the south just move already xd
From Wikipedia: "The present era of banking can be traced to medieval and early Renaissance Italy, to the rich cities in the centre and north like Florence, Lucca, Siena, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing branches in many other parts of Europe."
. . .
"The word bank was taken into Middle English from Middle French banque, from Old Italian banco, meaning "table", from Old High German banc, bank "bench, counter". Benches were used as makeshift desks or exchange counters during the Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths."
> money to start businesses
What proportion of bank lending is that? Close to insignificant.. Pretty much all small businesses/low collateral loans are backed by governments which are already pure profit for the banks
Do the banks get a "windfall subsidy" when they have bad years?
"Congress approves $700 billion Wall Street bailout" - https://www.nytimes.com/2008/10/03/business/worldbusiness/03...
July 20, 2008 -> "...it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation..." - Henry Paulson
November 20, 2008 -> "...We are working through a severe financial crisis caused by many factors, including government inaction and mistaken actions, outdated U.S. and global financial regulatory systems, and by the excessive risk-taking of financial institutions..." - Henry Paulson
Should the Silicon Valley banks that have recently failed also pay a windfall tax? And if not, why tax success? Because it's clearly not a 'windfall' if it only goes to people that made good predictions and not ones that made bad predictions.
Is that sarcasm? Cause yeah, they generally do…
Is that like "windfall taxes" where the banks buy shares in the government and get repaid later?
If it helps society to be more productive in the long-term, yeah (in an indirect way)?
No, never happened as far as I can remember.
Where were you in September 2008?
