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The RBS banking group has warned 1.3 million customers they could be charged negative interest rates if the Bank of England cuts base rates below zero.
The group, which includes NatWest, wrote to its business and commercial account holders about the potential changes, which mean they could lose money even when they are in credit.
The letter said: "Global interest rates remain at very low levels and in some markets are currently negative.
"Dependent on future market conditions, this could result in us charging on credit balances."
The Bank of England's base rate currently stands at the historically low rate of 0.5%, where it has been for more than seven years - and some economists believe it should be cut further to stimulate the economy.
Source: Sky News
From October 1st, the Dutch bank [ABN Amro] is adjusting its conditions to state that the bank can give negative interest rates to account holders with a business checking or -savings account, ANP reports.
Source: NL Times
(Score: 3, Insightful) by fritsd on Wednesday July 27 2016, @10:17PM
I'm on a roll, so I'm going to continue my rant a little bit:
I called Economics a "science" for the following reason:
Science means that the underpinnings of the field of study have not been falsified yet, have been shown to be true and correspondent to reality (so far; of course in the future the ground rules of any science can change as new discoveries are made).
I never studied Economics, not even in school, but I believe from reading Internet rantings on Zerohedge etc. the following 2 "axiomas" are used in Economics:
(1) The standard model of an economic actor is an entity that has (1a) sufficient information, and (1b) acts rationally to their best perceived benefit, as an entity that buys or sells stuff.
(2a) Economic growth is something that is desirable, and Economic models are made such that they model and predict this economic growth.
(2b) If, according an Economic model, continuous economic growth is possible, then this model growth approximates economic growth in the real-life economy. In other words: there will be real-life economic growth if the real economy resembles the desired model.
Ad (2) there is a completely beautiful refutation of the growth on the TheOilDrum blog, which I can't find just now. Let's just summarize with R. Buckminster Fuller that we've got just the one "Spaceship Earth". Draw an exponential function one day.
If we convert the mass of the planet's crust to human meat, it won't take very long.
Ad (1) this is how George Soros [wikipedia.org] became so filthy rich. I read a book of him. Other people modeled reality on economic models, based on their belief system, theoretical background, gut feeling etc.
He didn't; he modeled reality on his belief of the belief system of *the other investors*. He didn't think like "what's the economy going to do?", but like: "what are the other people on the stock market floor going to do? when is there going to be a panic? what things are "too big to fail"? when do they seem surprised? "
The German article I refered to in rant #1 used the word "Risikostreuung", is that "diversification of risks" in English?? It sounds like "the solution to pollution is dilution": just make everyone a little radioactive, then the nuke plant owners don't have to build an expensive storage facility.
These two paragraphs are *SERIOUSLY DAMNING*: one from the German article, the other one from the Guardian article about Narvik:
This completely undermines "axioma" (1). Now I know I'm not really "money-smart", but I'm convinced that there are only very few people in the world that understand all the nuances of packaged Californian sub-prime morgage naked Credit-Default-Swaps [wikipedia.org]. And a lot of suckers who trust "their" bank manager's words "it's a real good product, I don't understand it myself, but my golf buddies think it's excellent value for money, and much better ROI than a savings account!"
I don't know if there are economic models that incorporate the variable known as "trust" [wikipedia.org].
But the Narvik community is going to save tax money for an extra 10-20 years now before they can rebuild their school. And this is because they didn't act as "rational actors", and tried to shaft some other ignoramus with their sub-prime CDS hot potatoes. Instead, they absorbed the damage, because they act as a shield to actual people living there. It's the non-economic variable of "duty", of "solidarity".
Europe has absorbed a massive amount of damage. I truly believe it is this that increased the growth of Beppe Grillo's Movimento Cinque Stelle [wikipedia.org] political party.
Many people in the EU will be very happy when the neo-liberal UK finally buggers off to become the USA's umpteenth state, loses its veto, and leaves the rest to FINALLY restructure the EU financial system with some serious banking oversight.
That's because we're kind, and nice, and don't like the smell and health hazard of bankers and their politicians swinging from lantern-posts.
Pity I'm too stupid & bad in Italian to follow the following article by M.5.S, about the Monte dei Pasci di Siena bank which is teetering this week:
http://selezione5stelle.com/il-salvataggio-di-monte-dei-paschi-di-siena-passa-per-la-nazionalizzazione/ [selezione5stelle.com]
Heh that feels better. Sorry that you had to read it..
tl;dr version: we need 21st century banks that function in reality.
(Score: 3, Insightful) by migz on Thursday July 28 2016, @07:00AM
If you want to understand more about the axioms of Economics then I suggest you read Human Action by von Mises, this is a good epistemological treatment of the subject. It's not mainstream but tt does address the status quo and it's faults.
Download the pdf / order a dead tree version from below, probably available in German as this is the Austrian School of Economics.
https://mises.org/library/books [mises.org]