Go to Villagebet.com.au for free horse racing tips - Click here now
Forum Home Forum Home > All Sports - Public Forums > Joffs All Sports Bar
  New Posts New Posts RSS Feed - High rise living
  FAQ FAQ  Forum Search   Events   Register Register  Login Login


Thoroughbred Village Home Page. For village news, follow @TBVillage on Twitter. For horseracing tips, follow @Villagebet on Twitter. To contact the Mayor by email: Click Here.
Punters, click here for everything about betting: Villagebet - Community of punters.

High rise living

 Post Reply Post Reply Page  <1234 5>
Author
Message
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 2:36pm

This is nothing more than the ALP's print media doing a little bit of gratuitous "bank bashing".

I work for myself, always read contracts and ask questions, always paid my insurances, and I'm afraid I'm sick of hearing about these "victims".

... even Julie Klein would have known what she was required to do after her interest-only period expired, after all, she has been a bank customer for 40 years! ... I wonder why she didn't take up the insurance that the banks are always vilified for offering to clients, to cover them in case of sickness and incapacity?

Oh well, it looks like she might have to sell her unit in Kew and downsize to a unit in Frankston or Altona ... I just hope she isn't concerned about the threat of African Youth Gang Violence.
[/QUOTE]



You're missing the point of the article from yesterdays AFR . When these loans start to kick over and continue to do so, we will definitely see some fire sales in the property market . 

Also the banks aggressive lending policy was not sustainable or even good business for them as their risk was starting to get out of hand . 
Back to Top
Sponsored Links


Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 2:47pm
Originally posted by Whale Whale wrote:

[

I'm sure that you would be one of these pathetic victims Whale!Dead

The bank didn't kidnap you and make you take out a loan at gunpoint, did they?

No, you were too greedy, and wanted to spend more than you could afford, you deceived the bank, and didn't bother to read the loan contract ... the bank did everything that they can possibly do to assess your position, and explain the terms and conditions, and then provided you with enough documents reiterating that to kill a tree, and even suggested that you seek legal advice before you proceed if you are unsure ... but of course, the virtue signalers at the ALP are claiming that YOU are a victim.

Take some responsibility for your greed and stupidity for goodness sake, you pathetic moron!

You made your own bed, you sleep in it ... I should imagine a cardboard box under a bridge in your case!Wink





This from the person who is so money hungry and scared of missing out when others are making profits, that he recommended crypto currencies, which he had no understanding of Confused

I posted exactly that at the time, his gilt edge recommendation Neo, has gone from $135 to $7.50 , a loss of 95% 

The only thing that saved him from his stupid avarice was the difficulty he had in actually buying the things, now that is luck Wink

The cardboard box under the bridge insult belongs to a member who has not been seen on this forum for years, it is as effective now as then LOL
[/QUOTE]

So you have no argument, you must agree with me that these people are in general, a victim of their own greed, envy, laziness, and stupidity.

You are gradually learning Whale!

I'm very proud to be able to call you my favourite stalker!Hug 


In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
acacia alba View Drop Down
Champion
Champion


Joined: 30 Oct 2010
Status: Offline
Points: 26842
Post Options Post Options   Thanks (0) Thanks(0)   Quote acacia alba Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 3:18pm
Originally posted by Whale Whale wrote:

[

I'm sure that you would be one of these pathetic victims Whale!Dead

The bank didn't kidnap you and make you take out a loan at gunpoint, did they?

No, you were too greedy, and wanted to spend more than you could afford, you deceived the bank, and didn't bother to read the loan contract ... the bank did everything that they can possibly do to assess your position, and explain the terms and conditions, and then provided you with enough documents reiterating that to kill a tree, and even suggested that you seek legal advice before you proceed if you are unsure ... but of course, the virtue signalers at the ALP are claiming that YOU are a victim.

Take some responsibility for your greed and stupidity for goodness sake, you pathetic moron!

You made your own bed, you sleep in it ... I should imagine a cardboard box under a bridge in your case!Wink





This from the person who is so money hungry and scared of missing out when others are making profits, that he recommended crypto currencies, which he had no understanding of Confused

I posted exactly that at the time, his gilt edge recommendation Neo, has gone from $135 to $7.50 , a loss of 95% 

The only thing that saved him from his stupid avarice was the difficulty he had in actually buying the things, now that is luck Wink

The cardboard box under the bridge insult belongs to a member who has not been seen on this forum for years, it is as effective now as then LOL
[/QUOTE]

I seem to recall I was accused of living under a bridge once, some time ago now, altho cant remember where or by who.
animals before people.
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 3:21pm
Originally posted by Mr Prospector Mr Prospector wrote:


This is nothing more than the ALP's print media doing a little bit of gratuitous "bank bashing".

I work for myself, always read contracts and ask questions, always paid my insurances, and I'm afraid I'm sick of hearing about these "victims".

... even Julie Klein would have known what she was required to do after her interest-only period expired, after all, she has been a bank customer for 40 years! ... I wonder why she didn't take up the insurance that the banks are always vilified for offering to clients, to cover them in case of sickness and incapacity?

Oh well, it looks like she might have to sell her unit in Kew and downsize to a unit in Frankston or Altona ... I just hope she isn't concerned about the threat of African Youth Gang Violence.



You're missing the point of the article from yesterdays AFR . When these loans start to kick over and continue to do so, we will definitely see some fire sales in the property market . 

Also the banks aggressive lending policy was not sustainable or even good business for them as their risk was starting to get out of hand . 
[/QUOTE]

Sorry, that is media hyped clap trap.

Here's a little secret that the AFR "journalists" are fully aware of, but always seem to forget to mention, but I know from experience.

If you apply for an Interest Only Loan, lenders actually assess the loan based on Principal and Interest repayments, over the remaining term. That is, the loan might be taken over 30 years, and be IO for 5 years, the remaining 25 years is P&I ... the original assessment is based on your ability to pay the loan off over 25 years - not based on your ability to pay interest only repayments.

The vast majority of IO loans are to investors, and as is my experience, when your IO term ends, you need to renegotiate another IO term - and that will be assessed at the time.

People who took IO loans to buy a home would have been deemed creditworthy based on a 25 year P&I loan - and they would be aware that the repayments would change - if they claim they can't afford the P&I repayments, they may well need to sell or start living within their means.

As for fire sales, the only real reason for that would be a rise in interest rates (more likely we will see a fall), or a recession brought on by regressive economic policies - such as the Negative Gearing and CGT changes proposed by Labor and the Greens.

Anyone who bought in Sydney or Melbourne 4 or 5 years ago and has to sell, has made a capital gain of $3-400k on average just by dumb luck, and may well sell at below the peak anyway ... that's what usually happens.

As for "aggressive lending", the banks have policies designed to only allow people to borrow what they can afford - again if I want to borrow more, I need to deceive the bank in some way.

As the Banking RC has shown, any complaints about "aggressive lending" will be "aggressively" dealt with by the regulators ... I can't recall there being many mentioned as being prosecuted or even exposed in the home lending area?

By the way, these are ALL typical machinations of a property market cycle and a credit cycle ... there is nothing major that is going on that means any of this is much different to what we have seen historically ... again, the only artificial changes of concern are the crazy policies of the ALP/Greens, if they are elected.
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 3:53pm
I think the banks are more than a bit worried about overseas investors on interest only loans with their ability to pay P&I repayments on less than rigorously verified income documents . The article is indicating that the banks are nervous . 

If the market gets tougher and as well as that if China gets a cold , we get the Flu . The market is down about 8% from memory another serious drop will cause plenty of problems .
On a political note I think Labour may have to back off on their property policy if the market looks shaky if they get elected . 
 The banks want these loans normalised or off the books ASAP , Just iMHO . 
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 06 Jan 2019 at 7:35pm
Originally posted by Mr Prospector Mr Prospector wrote:

I think the banks are more than a bit worried about overseas investors on interest only loans with their ability to pay P&I repayments on less than rigorously verified income documents . The article is indicating that the banks are nervous . 

If the market gets tougher and as well as that if China gets a cold , we get the Flu . The market is down about 8% from memory another serious drop will cause plenty of problems .
On a political note I think Labour may have to back off on their property policy if the market looks shaky if they get elected . 
 The banks want these loans normalised or off the books ASAP , Just iMHO . 

The Sydney market is down about 8.9% this past 12 months, off the back of a sustained boom which overshot. Again nothing to see here.

The risks of a thousand different economic disasters here and overseas could hurt us - yes if China or the USA sneezes, we could catch a cold ... and that is why we can't afford Labor fiddling around with stuff they don't get!

The Labor Property Policies should blow up any hope of an election win ... if they stand by them, and if the Libs can properly articulate the cost and the danger to the economy - it is a massive disaster waiting to happen, that is even without fully analysing the unintended consequences.

Otherwise, if sanity prevails, and we retain the sound economic policies that are in place, "worried banks" and "property bubbles" are just more fodder for the nervous Nellies on another slow news day ... we have heard and read it all before.

Chinese investors have been out of the market in any volume for over 2 years, and in spite of all of the stigma about them (you would think they owned the whole country), Chinese still surprisingly lag well behind our major overseas investors - the banks will not lose a penny on any of those loans, not even the fraudulent ones.

Normal market cycles will look after the rest of the Banks' risk ... the fact is, that for all of their implied "reckless, aggressive, unconscionable" lending practices, default rates are much the same as they have been over the past 40 years, and don't deviate much ... makes sense that as much as they are demonised, the banks are amongst our biggest and most profitable businesses, year in year out, and the main reason that we have a stable growing economy ... 
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 6:31am
I think we've strayed way off topic here Doc and I rekon we'll probably have to agree to disagree particularly on the banks .
As far as "nothing to see" the fact that the banks have stopped lending to all areas of the economy and small to medium businesses can't even get loans speaks volumes for me . 

On a side note as well banks are a terrible investment , I just looked up CBA's numbers and their EPS average for the last 5 years is 1.98% (only just above CPI) . 
Their SPS or sales per share are almost static for the last 10 years i.e. no real growth in their business at all . They actually do make money  but there are way better businesses to invest in . (Morningstar). 
You are better off to borrow from them if they will lend you the money and buy a cheap apartment in the fire sales to come .
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 8:12pm
Trust me Mr P, whilst they are not without blame, all the big bank lending policies are being directed by APRA. The pimply faced uni graduate bureaucrats who can't get a job in the real world, are setting the lending policies for the big banks - in fact, they are auditing every loan decision! ... and it is all based on the implication of historical "aggressive, unconscionable, reckless" lending ... that there is absolutely no evidence of!

They are in fact creating issues that do not exist, so that they must step in and fix them, and so vindicate their budgets and jobs - it's what public servants do best! - create nothing, cost money, make stupid anti-business decisions ... and it only gets worse under a Socialist regime - bigger government, more red tape.

I'm not in the sharemarket myself, but anyone who is and is successful, has all 4 major banks in their Blue Chip Share portfolios.

Can't disagree with buying property, but do it before the Government is returned at the next election - economic confidence will go through the roof then!

If Labor wins, well we are all stuffed anyway.Wink
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
rusty nails View Drop Down
Champion
Champion


Joined: 20 Mar 2013
Location: Sydney
Status: Offline
Points: 3420
Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 9:14pm
APRA are auditing every loan decision?
....how can anyone so bereft of any knowledge, have the confidence to post this rubbish?

BTW, it takes literally less than a minute to google the trading charts of the major Banks.
Try it, you’ll find out how stupid your pronouncement that Banks have been a good investment in recent years was.

You just don’t get it, you have projections that houses will double over 10 years and you squeal like a stuck pig.
All Bank shareholders have lost money (WBC almost 30% past 2 years), and you tell us Banks have been good.....

But please, keep telling us all how clever you are.
It’s so sad it’s funny
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 9:26pm
... are school holidays over already?
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
maccamax View Drop Down
Champion
Champion


Joined: 18 Jun 2010
Status: Offline
Points: 29835
Post Options Post Options   Thanks (0) Thanks(0)   Quote maccamax Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 9:39pm
I've been looking for Rusty in the "dead Heads " thread .    pleased to see you back , safe & well .
   I think Banks are a good investment now .   Prices down and they are one group Government can't allow to fail.
Pay good dividends.

Only good Sydney / Melb. Real Estate doubles in 10 years .    Most of the Country is a long way from that.














<
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 07 Jan 2019 at 9:39pm
Originally posted by rusty nails rusty nails wrote:

APRA are auditing every loan decision?
....how can anyone so bereft of any knowledge, have the confidence to post this rubbish?

BTW, it takes literally less than a minute to google the trading charts of the major Banks.
Try it, you’ll find out how stupid your pronouncement that Banks have been a good investment in recent years was.

You just don’t get it, you have projections that houses will double over 10 years and you squeal like a stuck pig.
All Bank shareholders have lost money (WBC almost 30% past 2 years), and you tell us Banks have been good.....

But please, keep telling us all how clever you are.
It’s so sad it’s funny

Yes APRA has staff in every major bank.

YOU ARE WRONG, YOU HAVE NO IDEA.

I didn't say that banks have been a good investment at any time.

YOU ARE A LIAR.

I have not projected that property prices will double in 10 years - you may have!

YOU ARE A LYING FOOL

I have not said that banks are good.

YOU ARE A DERANGED LIAR

I'm pleased that you have kept your sense of humour seeing that 

YOU ARE A SAD, POORLY RESEARCHED, LYING TROLL.

Now until you can learn to be honest and not make gelati up, that is as much as I am prepared to even acknowledge your existence ... so have a good hard look in the mirror and just try to be better rustard!Big smile

... oh, and you are still not in my top 2 stalkers!Ouch

In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
rusty nails View Drop Down
Champion
Champion


Joined: 20 Mar 2013
Location: Sydney
Status: Offline
Points: 3420
Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 8:01am
Oh dear,
The pink crayon means someone is out of their depth again!

Your view that as APRA has staff working in Bank premises means that they are auditing ALL loans is ridiculously childish.
Overseeing Bank loans is only a small part of their brief.
They don’t have the resources to do this for even one Bank....

You didn’t say Banks have been a good investment, but you did say
“but anyone who is and is successful, has all 4 major banks in their Blue Chip Share portfolios.”
Please explain the difference.....

You didn’t say house values will double?
Well, you did state what capital appreciation rates should occur, and when used in compounding interest calculations it pretty much doubles the original value.....

Funny that you accuse me of being poorly researched, when you clearly have no understanding what APRA does, and what resources they have...

For you to think that pimply faced bureaucrats that couldn’t get a job anywhere else are dictating to Bank execs on million dollar packages what they can and can’t do in their businesses,pretty much sums up your total lack of commercial nous.
Back to Top
Whale View Drop Down
Champion
Champion
Avatar

Joined: 01 Jun 2009
Location: St Kilda Beach
Status: Offline
Points: 36644
Post Options Post Options   Thanks (0) Thanks(0)   Quote Whale Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 8:04am
Very well put Rusty, exposed his arguments as farcical. And you did not need to resort to abuse to make your points Clap
Back to Top
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 11:00am
I'm sure it's not something that is well understood , but real growth in money , can be and is generated from a banks lending policy .
When a bank approves a loan they don't actually have funds or gold in a vault somewhere they just type some numbers into a keyboard and your account is credited with those numbers .   

This is why it's critical that banks are regulated and their lending practices are carefully monitored . Fanny Mae and Freddy Mac anyone !!
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 2:40pm
Originally posted by Whale Whale wrote:

Very well put Rusty, exposed his arguments as farcical. And you did not need to resort to abuse to make your points Clap

It's always comforting when you support anything that rusty regurgitates - thanks Whale!Hug
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:14pm
Originally posted by Mr Prospector Mr Prospector wrote:

I'm sure it's not something that is well understood , but real growth in money , can be and is generated from a banks lending policy .
When a bank approves a loan they don't actually have funds or gold in a vault somewhere they just type some numbers into a keyboard and your account is credited with those numbers .   

This is why it's critical that banks are regulated and their lending practices are carefully monitored . Fanny Mae and Freddy Mac anyone !!

Not exactly right Mr P ... financial institutions "borrow" money whether that be securitised wholesale funds or off balance sheet funds (customer deposits, etc) for lending, and they then need to repay that money, and they simply earn a margin on the rates. The security levels and liquidity of assets are determined by APRA, which in itself influences lending levels. 

The very reason that our economy has been so robust for so long - apart from the fact that we have mostly had Conservative Governments in charge - is because we have the most highly scrutinised financial system in the world ... we are at the point now, where that regulation is over the top!

The Fanny Mae and Freddy Mac scenarios could never happen under our current regulations. 

For anyone who hasn't seen it, I recommend watching "The Big Short" ... it is quite amazing what happened.Thumbs Up
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
rusty nails View Drop Down
Champion
Champion


Joined: 20 Mar 2013
Location: Sydney
Status: Offline
Points: 3420
Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:19pm
Originally posted by Dr E Dr E wrote:

Originally posted by Whale Whale wrote:

Very well put Rusty, exposed his arguments as farcical. And you did not need to resort to abuse to make your points Clap


It's always comforting when you support anything that rusty regurgitates - thanks Whale!Hug
someone doesn’t know what regurgitate means


It’s a new revelation that you have a childishly simplistic notion of APRA’s role and resources.

It’s new that you don’t understand that Banks shares have been significant underperforming stocks for a few years(admittedly a similar theme, you don’t understand when you are making money in real estate, and your foray into crypto currency was clearly a disaster)
It’s new that you think that APRA employees are low level bureaucrats that are unemployable in the private sector,but have decision making authority in all the Banks.

You keep making a fool of yourself,and think that as long as you have the last word,you are winning....

Back to Top
Tlazolteotl View Drop Down
Champion
Champion
Avatar

Joined: 02 Oct 2012
Location: Australia
Status: Offline
Points: 15703
Post Options Post Options   Thanks (0) Thanks(0)   Quote Tlazolteotl Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:30pm
The most important function of a commercial bank is the creation of credit.


Therefore, money supplied by commercial banks is called credit money. Commercial banks create credit by advancing loans and purchasing securities. They lend money to individuals and businesses out of deposits accepted from the public. However, commercial banks cannot use the entire amount of public deposits for lending purposes. They are required to keep a certain amount as reserve with the central bank for serving the cash requirements of depositors. After keeping the required amount of reserves, commercial banks can lend the remaining portion of public deposits.

According to Benham’s, “a bank may receive interest simply by permitting customers to overdraw their accounts or by purchasing securities and paying for them with its own cheques, thus increasing the total bank deposits.”

Let us learn the process of credit creation by commercial banks with the help of an example.

Suppose you deposit Rs. 10,000 in a bank A, which is the primary deposit of the bank. The cash reserve requirement of the central bank is 10%. In such a case, bank A would keep Rs. 1000 as reserve with the central bank and would use remaining Rs. 9000 for lending purposes.

The bank lends Rs. 9000 to Mr. X by opening an account in his name, known as demand deposit account. However, this is not actually paid out to Mr. X. The bank has issued a check-book to Mr. X to withdraw money. Now, Mr. X writes a check of Rs. 9000 in favor of Mr. Y to settle his earlier debts.

The check is now deposited by Mr. Y in bank B. Suppose the cash reserve requirement of the central bank for bank B is 5%. Thus, Rs. 450 (5% of 9000) will be kept as reserve and the remaining balance, which is Rs. 8550, would be used for lending purposes by bank B.

Thus, this process of deposits and credit creation continues till the reserves with commercial banks reduce to zero.

This process is shown in the Table-1:

Credit Creation Process

From Table-1, it can be seen that deposit of Rs. 10,000 leads to a creation of total deposit of Rs. 50,000 without the involvement of cash.

http://www.economicsdiscussion.net/banks/credit-creation-by-commercial-banks-and-its-limitations/4155


"Even the things that I believe in the most, I doubt.”
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:31pm
Originally posted by rusty nails rusty nails wrote:

Oh dear,
The pink crayon means someone is out of their depth again!

hmmm ... might be right this time!

Your view that as APRA has staff working in Bank premises means that they are auditing ALL loans is ridiculously childish.
Overseeing Bank loans is only a small part of their brief.
They don’t have the resources to do this for even one Bank....

There are only 4 major banks, all of them currently have APRA staff on sight auditing loan decisions in light of policy exception.

You didn’t say Banks have been a good investment, but you did say
“but anyone who is and is successful, has all 4 major banks in their Blue Chip Share portfolios.”
Please explain the difference.....

Successful investors in any market have a record that has been built over decades. Successful Equities investors all hold Blue Chip Australian Shares for the long term, ie Major Banks.

You didn’t say house values will double?
Well, you did state what capital appreciation rates should occur, and when used in compounding interest calculations it pretty much doubles the original value.....

I have never offered an opinion as to what rates "should or would" occur, that was you.

Funny that you accuse me of being poorly researched, when you clearly have no understanding what APRA does, and what resources they have...

In fact, I do! I'm not a genius, it is on public record if you are interested.

For you to think that pimply faced bureaucrats that couldn’t get a job anywhere else are dictating to Bank execs on million dollar packages what they can and can’t do in their businesses, pretty much sums up your total lack of commercial nous.

Have you ever spoken to a Major Bank executive about their APRA audits?

Didn't think so!

You should stop piddling on your shoes rusty, you are embarrassing enough when you try to talk about stuff you THINK you have a clue about!LOLLOL
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:38pm
Originally posted by rusty nails rusty nails wrote:

Originally posted by Dr E Dr E wrote:

Originally posted by Whale Whale wrote:

Very well put Rusty, exposed his arguments as farcical. And you did not need to resort to abuse to make your points Clap


It's always comforting when you support anything that rusty regurgitates - thanks Whale!Hug
someone doesn’t know what regurgitate means


It’s a new revelation that you have a childishly simplistic notion of APRA’s role and resources.

It’s new that you don’t understand that Banks shares have been significant underperforming stocks for a few years(admittedly a similar theme, you don’t understand when you are making money in real estate, and your foray into crypto currency was clearly a disaster)
It’s new that you think that APRA employees are low level bureaucrats that are unemployable in the private sector,but have decision making authority in all the Banks.

You keep making a fool of yourself,and think that as long as you have the last word,you are winning....


So when someone asks you the time, do you always reply "Good Thanks" ... Wacko

You just make up answers to questions that were never asked ... and then you get the answers wrong anyway!!!Embarrassed
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:39pm
Image result for please do tell china crypto meme
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
Tlazolteotl View Drop Down
Champion
Champion
Avatar

Joined: 02 Oct 2012
Location: Australia
Status: Offline
Points: 15703
Post Options Post Options   Thanks (0) Thanks(0)   Quote Tlazolteotl Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:41pm
The Yankee banks caused the GFC because of a lack of underwriting standards. Since commercial banks are patently incapable of regulating themselves it is a very good thing that pimply faced young APRA regulators keep a tight rein on them. If anything they have been too lax- e.g. interest only loans.
"Even the things that I believe in the most, I doubt.”
Back to Top
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:44pm

In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

The reality of how money is created today differs from the description found in some economics textbooks:

  • Ratherthanbanksreceivingdepositswhenhouseholds save and then lending them out, bank lending creates deposits.

  • Innormaltimes,thecentralbankdoesnotfixtheamount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.

    Although commercial banks create money through lending, they cannot do so freely without limit. Banks are limited in how much they can lend if they are to remain profitable in a competitive banking system. Prudential regulation also acts as a constraint on banks’ activities in order to maintain the resilience of the financial system. And the households and companies who receive the money created by new lending may take actions that affect the stock of money — they could quickly ‘destroy’ money by using it to repay their existing debt, for instance.

    Monetary policy acts as the ultimate limit on money creation. The Bank of England aims to make sure the amount of money creation in the economy is consistent with

low and stable inflation. In normal times, the Bank of England implements monetary policy by setting the interest rate on central bank reserves. This then influences a range of interest rates in the economy, including those on bank loans.

In exceptional circumstances, when interest rates are at their effective lower bound, money creation and spending in the economy may still be too low to be consistent with the central bank’s monetary policy objectives. One possible response is to undertake a series of asset purchases, or ‘quantitative easing’ (QE). QE is intended to boost the amount of money in the economy directly by purchasing assets, mainly from non-bank financial companies.

QE initially increases the amount of bank deposits those companies hold (in place of the assets they sell). Those companies will then wish to rebalance their portfolios of assets by buying higher-yielding assets, raising the price of those assets and stimulating spending in the economy.

As a by-product of QE, new central bank reserves are created. But these are not an important part of the transmission mechanism. This article explains how, just as in normal times, these reserves cannot be multiplied into more loans and deposits and how these reserves do not represent ‘free money’ for banks.

Click here for a short video filmed in the Bank’s gold vaults that discusses some of the key topics from this article.

Back to Top
rusty nails View Drop Down
Champion
Champion


Joined: 20 Mar 2013
Location: Sydney
Status: Offline
Points: 3420
Post Options Post Options   Thanks (0) Thanks(0)   Quote rusty nails Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 3:47pm
Your words....
The pimply faced uni graduate bureaucrats who can't get a job in the real world, are setting the lending policies for the big banks - in fact, they are auditing every loan decision! ...

It’s childish that you now assert APRA having auditors on site, proves your point.
It’s not even close to being the same thing.
It’s dishonest or clueless to assert,as you do,that it’s the same.

I really can’t be bothered doing the same to the rest of your obfuscations, other to say that when you pull out the crayons,you know you’ve lost....

Back to Top
Tlazolteotl View Drop Down
Champion
Champion
Avatar

Joined: 02 Oct 2012
Location: Australia
Status: Offline
Points: 15703
Post Options Post Options   Thanks (0) Thanks(0)   Quote Tlazolteotl Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 4:08pm
In fact the more a sane person finds out about the predatory, irresponsible lending of the banks, the slacker APRA looks. They should have been far tougher, before the RC.



The Australian bubble is done and the bust looks historic


https://www.macrobusiness.com.au/2018/03/the-australian-bubble-is-done-and-the-bust-looks-historic/



"So there you have it, the heart of the great Australian bubble, arteries choked solid with control fraud. This is absolutely no different to US sub-prime, Spanish lunacy, Irish madness or Icelandic suidice.

No doubt Australia’s captured regulators, which are still denying knowledge of the above total collapse of banking practice, won’t allow a credit-crunching reset of lending rules. Equally, the RC cannot be ignored and the reset must come, just over more time.

But remember, it won’t be left up to them. None of the above touches on how markets will react. As explained Friday, there is good evidence that the exposure of the control fraud is already impacting funding costs and that it will get considerably worse as the business cycle pushes towards its end.

The key to the stronger reaction in Australian spreads versus everyone else is the extraordinary revelations in the RC driving risk through the roof. If the bubble is based upon predatory lending then the banks are liable and borrowers will be able to walk away from mortgages as prices fall. Even lenders mortgage insurance may be moot. This is the “jingle mail” moment.

The end of the Australian housing bubble is visible in plain black and white and the denouement is increasingly likely to be reach historically ugly proportions.

Get your money out of Australia."Wink
"Even the things that I believe in the most, I doubt.”
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 4:21pm
Originally posted by Tlazolteotl Tlazolteotl wrote:

The most important function of a commercial bank is the creation of credit.


Therefore, money supplied by commercial banks is called credit money. Commercial banks create credit by advancing loans and purchasing securities. They lend money to individuals and businesses out of deposits accepted from the public. However, commercial banks cannot use the entire amount of public deposits for lending purposes. They are required to keep a certain amount as reserve with the central bank for serving the cash requirements of depositors. After keeping the required amount of reserves, commercial banks can lend the remaining portion of public deposits.

According to Benham’s, “a bank may receive interest simply by permitting customers to overdraw their accounts or by purchasing securities and paying for them with its own cheques, thus increasing the total bank deposits.”

Let us learn the process of credit creation by commercial banks with the help of an example.

Suppose you deposit Rs. 10,000 in a bank A, which is the primary deposit of the bank. The cash reserve requirement of the central bank is 10%. In such a case, bank A would keep Rs. 1000 as reserve with the central bank and would use remaining Rs. 9000 for lending purposes.

The bank lends Rs. 9000 to Mr. X by opening an account in his name, known as demand deposit account. However, this is not actually paid out to Mr. X. The bank has issued a check-book to Mr. X to withdraw money. Now, Mr. X writes a check of Rs. 9000 in favor of Mr. Y to settle his earlier debts.

The check is now deposited by Mr. Y in bank B. Suppose the cash reserve requirement of the central bank for bank B is 5%. Thus, Rs. 450 (5% of 9000) will be kept as reserve and the remaining balance, which is Rs. 8550, would be used for lending purposes by bank B.

Thus, this process of deposits and credit creation continues till the reserves with commercial banks reduce to zero.

This process is shown in the Table-1:

Credit Creation Process

From Table-1, it can be seen that deposit of Rs. 10,000 leads to a creation of total deposit of Rs. 50,000 without the involvement of cash.

http://www.economicsdiscussion.net/banks/credit-creation-by-commercial-banks-and-its-limitations/4155



Is that Rupees or Rand?

The Australian system no longer has a requirement for ADIs to hold a percentage of liabilities on deposit with the ARB. It was replaced by a much less onerous deposit, but stringent reporting requirement.

It seems to have worked ok that way for the past 30 years ...
1988
AugustThe Reserve Bank issued guidelines for a risk-based measurement of banks' capital adequacy, broadly consistent with the proposals developed by the Basle Committee of Banking Supervisors.
The Treasurer foreshadowed the abolition of the SRD requirement and the removal of the distinction between trading and savings banks.
SeptemberFrom 27 September the SRD ratio was reduced to zero, and the funds in SRD accounts transferred to ‘non-callable deposits’. Subject to some transitional arrangements, all banks (trading and savings banks) would be required to hold in the form of non-callable deposits 1 per cent of their liabilities (excluding capital) which are invested in Australian dollar assets within Australia. The excess of the non-callable deposits over the minimum requirement would be returned to banks over a three-year period.
The distinction between savings and trading banks being unable to be totally removed without amendments to legislation, as an interim step, the ‘free choice’ tranche of savings banks was increased from 6 to 40 per cent effective from 30 September.
PAR reduced from 12 to 10 per cent. Banking (Savings Banks) Regulations amended to permit PAR as it applies to trading banks to replace the savings bank Reserve Asset Ratio.
In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
oneonesit View Drop Down
Champion
Champion
Avatar

Joined: 06 Aug 2012
Status: Offline
Points: 13732
Post Options Post Options   Thanks (0) Thanks(0)   Quote oneonesit Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 4:28pm
I certainly cannot see a soft landing this time round. Perfect storm brewing & about to hit
TBV Statistical Analyst - & often misunderstood !
Back to Top
Mr Prospector View Drop Down
Champion
Champion


Joined: 08 Dec 2008
Status: Offline
Points: 1727
Post Options Post Options   Thanks (0) Thanks(0)   Quote Mr Prospector Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 4:30pm
They were the rumours that I had heard and some loans officers with foreign language skills spent a lot of time at the photo copier . 
Back to Top
Dr E View Drop Down
Champion
Champion


Joined: 05 Feb 2013
Location: Australia
Status: Offline
Points: 24083
Post Options Post Options   Thanks (0) Thanks(0)   Quote Dr E Quote  Post ReplyReply Direct Link To This Post Posted: 08 Jan 2019 at 4:34pm
Originally posted by Tlazolteotl Tlazolteotl wrote:

The Yankee banks caused the GFC because of a lack of underwriting standards. Since commercial banks are patently incapable of regulating themselves it is a very good thing that pimply faced young APRA regulators keep a tight rein on them. If anything they have been too lax- e.g. interest only loans.

Evidence? ... there is none.

There is a difference between a "tight rein" and "strangling the life out of" ... this isjust a combination of overreach, fixing a problem that does not exist, bureaucracy gone mad. Most of these leftie uni graduates have never had a loan, but they do have their "book learnin" and did have their "gap year", but just can't save a deposit because they are the dregs of their class so they couldn't get a real proper paying job with Macquarie ... and accordingly they WANT the property market to crash ... just like Bill Shorten and the ALP/Greens promised it will under their policies ... hey, maybe THEY don't trust Bill to win the unlosable election?


In reference to every post in the Trump thread ... "There may have been a tiny bit of license taken there" ... Ok, Thanks for the "heads up" PT!
Back to Top
 Post Reply Post Reply Page  <1234 5>
  Share Topic   

Forum Jump Forum Permissions View Drop Down

Forum Software by Web Wiz Forums® version 11.10
Copyright ©2001-2017 Web Wiz Ltd.

This page was generated in 0.063 seconds.





Click here to view current promotions at Bet Easy.