The Banking Crisis.. Explained!

The Banking Crisis simply explained .....

Young Paddy bought a donkey from a farmer for £100.
The farmer agreed to deliver the donkey the next day.....
The next day he drove up and said, 'Sorry son, but I have some bad news. The donkey's dead.'
Paddy replied, 'Well then just give me my money back.'
The farmer said, 'Can't do that. I've already spent it.'
Paddy said, 'OK, then, just bring me the dead donkey.'
The farmer asked, 'What are you going to do with him?'
Paddy said, 'I'm going to raffle him off.'
The farmer said, 'You can't raffle a dead donkey!'
Paddy said, 'Sure I can. Watch me. I just won't tell anybody he's dead.'

A month later, the farmer met up with Paddy and asked, 'What happened with that dead donkey?'
Paddy said, 'I raffled him off. I sold 500 tickets at two pounds a piece and made a profit of £898'
The farmer said, 'Didn't anyone complain?'
Paddy said, 'Just the guy who won. So I gave him his two pounds back.'

Paddy now works for the Royal Bank of Scotland .

That isn’t even close to explaining the crisis because Paddy made money.

To reflect what is going on today, Paddy would have already been working for the Royal Bank of Scotland when he bought the dead donkey for £100. Then, upon realising the mistake, rather than the bank taking its losses and sacking Paddy, the Government would have stepped in and provided £1 million of taxpayers money expecting it would ‘stimulate’ the donkey back to life so they could sell it and get back their original £100. When that didn’t work, another £1 million of taxpayers money would be provided so that Paddy could be paid his bonus and the donkey could be propped up with cables and pulleys to make it look like it is alive.

This is deeply forken offensive to anybody who is irish. Do you think we are all brain dead moneygrabbin cornts. Do yer think in business that we would be so gormless as to enter into a market for dead donkeys? Our government is worth as much respect.

Where does it say he's Irish?

ffsear said:

Where does it say he's Irish?

Click to expand...

It doesn,t. Every irishperson is called paddy at some stage in their lifetime progression.

A thought-provoking observation was that European banks were major drags on global stock markets in early 2016. The entire global financial system can be affected by European banks. I am not saying that this particular story applies only to banks in Europe. US banks are guilty of it and so are banks all across the globe. It does appear that cash flow has become a big problem all across the globe and tax payer money has become a precious resource.

Global stock sell-off sparked by issues with banks

In addition to the weakness in the Chinese economy, the biggest factor in bringing down stocks all across the planet was the problems with European banks. This has become a problem again as Credit Suisse (NYSE:CS) among others have seen share prices plunge by as much as 30%. Royal Bank of Scotland (NYSE:RBS) and HSBC (NYSE:HSBC) are now trading lower than they did in February.

There are two major problems with the banks


Large amounts of non-performing debt is one issue. Secondly, negative rates from central banks in Europe.

Take the case of Italy. In this country, 18% of bank loans are said to be non-performing. About €200 billion of bank bonds are held by retail investors, a figure that is equivalent to 12% of GDP.

Unemployment has plagued the European continent

Austerity measures have contributed to keeping unemployment high. I think the net interest margin/spread is a big driver of this underperformance in europe. Combine it with some risk costs and the ROEs are very low, not even close zu cost of equity.