What Game Theories Banks Will do Next?

Interesting read

What game theory says banks will do next...

Knowledge Source (Extract)


Australian Banks enjoy government guarantee, which means that if sh$t hits, the fan, the government (taxpayers) has their back.

The markets recognise this situation, and so are willing to lend them money more cheaply. As a result, Aussie banks are some of the most profitable in the world:





Christopher Joye at the AFR reckons the government guarantee saves them about 0.18bps on their funding costs. So a levy that slaps them with 0.06% on their liabilities, only claws about a third of it back.

So it’s only fair. And it many ways it helps level the playing field with smaller banks who don’t have a government guarantee.

But as my friend pointed out, the problem is that this isn’t directly tied to their funding guarantee. It’s just a levy. Just a tax. Just because ScoMo said so.

And this makes it dangerous. The UK introduced a bank levy a few years back, and guess what happened? Since then they’ve jacked it up 9 times.

9 times! And why wouldn’t they? It raises a lot of revenue, and everyone hates the banks. It’s like free money. Whee.

 

so maybe the govt should just drop the levy and charge .018bps for the credit support instead.

 

Maybe
Either way I think we will be wearing it, higher interest rates inevitable.

 

Nope, this cost will past on the the end user. Free money for the legalized thieves to waste.

 

Quote..
As my mate says, the banks can’t afford to roll over on this one. If they cop it sweet, and spread the cost out across their consumers, shareholders and staff, all it says to the government is that cookie jar is open.

Just illustrates the constrains that the Banks are facing lucky they have the talent for navigating them,but in the end it's always the shareholder that wear the costs..

 

Might be oversimplistic way to look at it but:
- CEO's and directors will continue to increase their salaries, but jobs will go if cost cutting is required; or
- costs are passed onto consumers; or
- shareholders get less; or
- combination of the above.

I assume super funds are big shareholders in these banks. So at the end of the day we'll still pay for it one way or another.

Year after year it's the same game of arguing who should be taxed more when actually, if we had a more efficient and competent government, there's probably plenty of tax money to go around.

 

Good doco on netflix called "Inside job"

 

^^^ this. Any business will ultimately pass increased costs of business on to consumers. Which means the bank super profits tax (that the government rubbished when they were in opposition) is simply a tax on everyday, working Australians. In other words, a tax hike for ordinary Australians.

Increasingly, Governments are implementing policies they rubbished when in opposition. As Nadia from Married at First Sight would say: "So much ********"

Unredacted quote here:

Married at First Sight 2017: Nadia finally calls BS on instant husband Anthony