The Australian Banking Sector

[jnkmbx]

I never said anything about a bank safety deposit box. However, it's more about moving in to cash ahead of a possible run on deposits than anything else. Read 'shitstorm', published by the Melb uni press(?) to see what happened last time.

*puts a sticker on piggy bank that reads 'Safety Deposit Box'*

I've known about bank runs since I watched Merry Poppins when I was little
Never thought I might actually see one in real life, but by the sounds of it it's getting likely.

Not long ago I was discussing it with someone and we agreed that as soon as we felt it was gonna happen, that we'd inform each other.
The idea is to be discreet of course, otherwise the mass panic ensures it occurs sooner and harder.

I stack 20 cent coins for such incidents.
Still, it would feel better to save every last cent if it were possible. :/

 

[Trichter]

I stack 20 cent coins for such incidents.
Still, it would feel better to save every last cent if it were possible. :/

Why 20s in particular?

For the record, I think the Australian banks are in a heap of trouble. But I don't expect they'll have to show their hand just yet. Give it a year, then maybe.

 

[Lovey80]

If just 5% of the country all went to the banks over a day or two and withdrew they would all completely shut down. Or even EVERYONE just withdrawing 5% in a day into cash...

 

[jnkmbx]

I stack 20 cent coins for such incidents.
Still, it would feel better to save every last cent if it were possible. :/

Why 20s in particular?

The 20s are easier to count and stack, the 5s are more tedious, so I prefer the 20s
Though the 5s are more rewarding because they will probably be the first to go.

You probably already know about how the metal content in 5/10/20 cent coins are slowly becoming more valuable than the denominated value, but just saying for lurkers reading this

 

[errol43]

Shorty after the crash of 08, I read somewhere that there are 35 places spread throughout Australia which the banks in major cities can access cash if there were to be a run on any branch. A telephone call and a wad of cash would be sent by armored car to replenish the banks that had a run against them..

Surely they must have plans in place for such a scenario.

Hope another SS member can shed a light on this.

Regards Errol43

 

[Au.Ag.Mzch]

I stack 20 cent coins for such incidents.
Still, it would feel better to save every last cent if it were possible. :/

Why 20s in particular?

The 20s are easier to count and stack, the 5s are more tedious, so I prefer the 20s
Though the 5s are more rewarding because they will probably be the first to go.

You probably already know about how the metal content in 5/10/20 cent coins are slowly becoming more valuable than the denominated value, but just saying for lurkers reading this

What about 50c coins?

 

[jnkmbx]

Why 20s in particular?

The 20s are easier to count and stack, the 5s are more tedious, so I prefer the 20s
Though the 5s are more rewarding because they will probably be the first to go.

You probably already know about how the metal content in 5/10/20 cent coins are slowly becoming more valuable than the denominated value, but just saying for lurkers reading this

What about 50c coins?

Even though they are also 75% copper and 25% nickel, their ratio between denominated value and metal content is worse.
20c: 20 cents / 11.30 grams = ~1.769 cents per gram
50c: 50 cents / 15.55 grams = ~3.215 cents per gram

Basically, you get more grams for your cents in a 20 cent coin than in a 50 cent coin.

 

[villiagegate]

Shorty after the crash of 08, I read somewhere that there are 35 places spread throughout Australia which the banks in major cities can access cash if there were to be a run on any branch. A telephone call and a wad of cash would be sent by armored car to replenish the banks that had a run against them..

Surely they must have plans in place for such a scenario.

Hope another SS member can shed a light on this.

Regards Errol43

Hey Errol,

The problem is one of confidence. In 2008 the government had a serious discussion about 'which banks we could afford to lose and which we couldn't.' They quickly realised that they couldn't afford to let any fail. This is how I see it :

The question is not wether the banks can ultimately make all depositors whole. The question is what a run does to their balance sheets.

Consider :

Debt markets lock up and the banks can't borrow to keep funneling in to property. Simultaneously depositors are spooked and start pulling cash. Cash that has already been commited to loans..

The question then becomes one of solvency, I'm sure with time depositors would be made whole, but from reading 'The Great Bust' by Jack Lang (thankyou to whoever it was that recommended it btw!), one realizes that depositors may be made whole in a creative way as they were then too should the issue become systemic.

I'm just thinking out loud here, but I'm willing to take the inflationary hit and sit in cash for 6 months or so while the future becomes clearer..

 

[villiagegate]

As a side note, banks class deposits as ASSETS.

Think about it.

 

[SilverPhoenix]

As a side note, banks class deposits as ASSETS.

Think about it.

WHAT????!!! Accounting Standards are explicit about this!

If you hold others people money, its your liability, cos you have to pay it back.

The loans you make could be considered assets, as could the mortgages held, b it not the deposits

Crooks.

 

[Midnight Man]

As a side note, banks class deposits as ASSETS.

Think about it.

Somehow, I don't see that working from an accounting point of view.

The money - from the banks POV - is owed to the depositor, thus, by anyones definition, it would be a liability.

 

[Shaddam IV]

As a side note, banks class deposits as ASSETS.

Think about it.

Somehow, I don't see that working from an accounting point of view.

The money - from the banks POV - is owed to the depositor, thus, by anyones definition, it would be a liability.

That's why they are called "banksters".

 

[villiagegate]

Sure, but for the issuance of covered bonds they're considered an asset as far as I understand.

 

[villiagegate]

If I'm talking out of my blowhole though, please somebody correct me? Don't wanna freak anyone out unnecessarily.

 

[Wout]

why not instead of putting money in a safe deposit box buy hard assets like gold/silver ?

 

[hawkeye]

If you owe someone money it's your liability.
If someone owes you money it is an asset to you.

The banks owe their depositors money so it is a liability to the bank and an asset to the depositor.

At any rate, I don't think that, whatever happens, we will lose our deposits. You may lose access to them for awhile depending on what happens. Also, much cash may be printed meaning you'll still have them but they will be worth less. If the bank goes bankrupt, the depositors get paid first from the sale of the bank's assets. The bondholders and shareholders suffer. I wouldn't hold bank shares for awhile.

I don't think people anywhere around the world have lost their deposits. eg. Ireland which has already had a massive housing crash, I think the people there still have their money (willing to be corrected on this if untrue).

Basically I'm happy leaving my money in the bank but I have emergency cash in case the banks shut down for awhile. And also of course plenty of gold and silver.

I don't see a need for more than that tbh. The govt will do whatever is necessary to make sure we keep our money I think. Anything else would result in total social chaos and I don't see that personally.

 

[Au.Ag.Mzch]

Don't forget that in Argentina in 2001-03, at the height of their crisis they shut down all the banks, then devalued the currency by knocking off a couple of zeros off the end and declaring the old currency invalid after a certain date. So people lost out regardless of whether they had cash in the bank or at home.

Also North Korea did the same thing a few years back (2008-09 I think) - 40,000 won became 4,000

 

[Lucky]

Don't forget that in Argentina in 2001-03, at the height of their crisis they shut down all the banks, then devalued the currency by knocking off a couple of zeros off the end and declaring the old currency invalid after a certain date. So people lost out regardless of whether they had cash in the bank or at home.

Also North Korea did the same thing a few years back (2008-09 I think) - 40,000 won became 4,000

Whoa!! Thats full on. I think i would shed a tear if that happened here.

 

[villiagegate]

why not instead of putting money in a safe deposit box buy hard assets like gold/silver ?

Because I will never go all in on anything.

Thank you for all the input guys!

 

[mickjohn]

Don't forget that in Argentina in 2001-03, at the height of their crisis they shut down all the banks, then devalued the currency by knocking off a couple of zeros off the end and declaring the old currency invalid after a certain date. So people lost out regardless of whether they had cash in the bank or at home.

Also North Korea did the same thing a few years back (2008-09 I think) - 40,000 won became 4,000

Excuse my ignorance, but that would include amounts of debt?

eg car loan for $20,000 becomes car loan for $2,000?
Car value obviously adjusts down as well...

or am i missing something?