Posted on 12/11/2008 6:03:58 PM PST by rabscuttle385
NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.
Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.
Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK). Some of the funds are being used for acquisitions.
"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.
(Excerpt) Read more at reuters.com ...
“They should hold 100% of their deposits in the vault?”
I don’t necessarily hold that view. Fractional-reserve banking wouldn’t be so bad if there was no Federal Reserve System, but that’s another matter altogether. All I’m saying is that not covering your demand deposits makes you fundamentally unsound. Again, it’s not a moral judgement.
well they didn’t get OUR money for a bailout :-)
They should hold 100% of demand deposits in the vault?
Jim Rogers is a jerk. He is abrasive. He is a little too chummy with the Chinese. But damn this guy has been 100% right about almost everything over the past 10 years. I remember he told people to sell stocks and buy copper, gold, oil, wheat, corn, etc. back in 2002. He even told people to buy futures and call options on them. He was nearly laughed off the FoxBusiness weekend panel. None of them are laughing now (ex. Copper is up 600% from that day)
I have always sort of distrusted Jim Rodgers because he has been a business partner with George Soros, but he has had some great insights speaking out against the bailouts. He doesn’t seem like a lefty to me.
“They should hold 100% of demand deposits in the vault?”
Did you read what I just posted? I didn’t say they necessarily had to cover their demand deposits. If they wanted to be sound, they would. If they wanted to offer 100% protection to their customers against bank runs, they would. But they’re in it to make money, and that’s their perogative. It doesn’t change the underlying fact, though.
If your think European banks don’t have a problem that you don’t understand the issue.
Yes.
I didn’t say they necessarily had to cover their demand deposits.
I'm sure they appreciate your approval.
If they wanted to be sound, they would.
I guess if profitability wasn't an issue. Maybe you should start a non-profit bank? You could advertise with a picture of a big pile of cash in the vault.
But they’re in it to make money,
The bastards!
It doesn’t change the underlying fact, though.
It's a silly idea.
So you say that banks should take in deposits and hold 100% of them and then pay 0-whatever interest rates on your money and then not do anything with it?
I’m pretty sure you never have started a bank business in your life nor do you have any close to understanding it.
By the way.. if that’s the way you do business.. let me give you 1 million.. promise me 5% and you also have to promise to keep the money buried in your backyard.
There isn’t enough bad mortgages to make every bank bankrupt.
Not even in the great depression did every bank go bankrupt.
I wonder if he might be short selling financial stocks still?
Even a non profit bank would have to cover their costs!
Your right.. people are free.. property is free....
I could be harsher to you but I’m really trying to restrain myself.
“So you say that banks should take in deposits and hold 100% of them and then pay 0-whatever interest rates on your money and then not do anything with it?
I’m pretty sure you never have started a bank business in your life nor do you have any close to understanding it.”
Again, it was not a moral statement on my part, simply a statement of fact. So long as banks want to lend other people’s money without holding enough currency to cover deposits, they are fundamentally unsound. That doesn’t mean they shouldn’t be able to be unsound. It is what it is
By the way, banks started out as warehouses for commodities, evolving into lenders and storers of currency. At first, of course, they most likely didn’t pay you to hold onto your corn. That changed once they realized what a profit they could make speculating on your goods/currency.
There is nothing inherent to banking that requires they pay interest to their customers. That is a convention, completely tied to the banks as lending institutions. Interest is the price of money, after all, and they wouldn’t pay you for your money unless it were useful to them on the other end.
If banks didn’t lend out money, their services might still be valuable enough to paying customers. It started out that way, as I’ve indicated. But this is all beside the point. Banks are lending institutions, and they lend out not saved capital, but rather other people’s money. Them’s the facts, and that’s that.
Again, I’m not saying this was some sort of moral violation, so long as we all realize what’s going on.
by “worse” what do you mean?.....millions losing jobs?...local and state govts not being able to collect taxes since no one is working?.....hyperinflation?...deflation?.....all of the above?
well...is he predicting the news or is he MAKING the news happen?......Soros his buddy has been known to try to sway markets, hasn't he?....Rogers is probably the same....
you’re dancing utherdoul
“Even a non profit bank would have to cover their costs!”
In the beginning, customers paid them for warehouse storage. That’s how it started. That changed along the way, as I’ve said, when banks became lending institutions. So long as everyone knows that’s what they’re up to, and that their deposits are not safe in the event of a sudden run, all the better.
If millions are losing job they are not going to be contributing to the economy. Gov’s are already not collecting as many taxes, especially property taxes due to foreclosures and such. I personally see dropping wages and hyperinflation. I dont think the government is being honest about unemployment numbers or inflation.
“Did you read what I just posted?”
“Yes.”
Then why did you reask the same question I just answered? How many times do I have to answer that I don’t think a law demanding banks keep 100% reserves is necessary?
“The bastards!”
Your sarcasm is wasted on me. I never implied that they’re wrong for doing it. Everyone knows what’s up. Everyone knows they can’t cover themselves in the event of a run. I really fail to see what’s controversial about my comments.
“It’s a silly idea.”
What is, that banks are unsound? Do you deny that they can’t cover their demand deposits? Do you deny that bank runs deny a fraction of the depositors their money? Really, this is not controversial stuff.
“I could be harsher to you but I’m really trying to restrain myself.”
Sincerely, I’m confused. Everyone knows banks don’t cover their deposits. You seem to be reading into my posts that I view banks as engagin in property theft. I don’t see how that’s possible, considering that it’s conventional that banks lend out money. Since everyone knows that going in, one could say that they abandon their sacred property rights.
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