Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Where is the capital to start a small local unit going to come from?

Credit unions are an interesting alternative.

I can imagine a kind of social banking where loans are made by a local unit to individuals, and the ties they create as much personal as social.

Defaulting on a bank loan is much less traumatic when the bank is faceless and distant. When people know the other people they owe money to and everyone is in the same community, they're - usually - that much more likely to want to arrange pay back.

You could argue that the roots of the Anglo disease is a cult of impersonality and pseudo-objectivity. When economists, politicians, CEOs and bankers are personally isolated from the consequences of their actions, they have no incentive to consider social relationsships.

This kind of levitation would be much harder if pay-back was personal.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Jul 15th, 2007 at 05:33:17 AM EST
[ Parent ]
Credit Unions are a very poor alternative, because they are merely deposit taking and lending institutions moving around PRE EXISTING wealth or "money's worth".

Banks create new credit=Money on the back of their capital base, and it is this supply of "new" value (actually it's deficit-based "anti-value") that serves as the lifeblood of our economy and provides the building blocks of new businesses.

And for the reasons you give, people are not too bothered about defaulting - and that is without even understanding (not one person in 10,000 understands) the reality of deficit-based "fractional reserve" banking. If they truly understood that, people would be trashing the banks wholesale.

The real alternative is for the members of credit unions and local businesses to get together within a local (or functional) "Guarantee Society" legal protocol and to mutually guarantee bilateral credit granted "peer to peer" between Members. This would take place between people who know each other or have some sort of "common bond" (which is of course a requirement for credit unions)

No interest is charged within this GS model, but costs and defaults are shared through making provisions into a "Default Fund". The result is "banking without the bank" ie no credit intermediary but a requirement for either a bank,credit union, ratings agency, whatever, as a service-provider.

Great for a Bank, by the way: they no longer have to put capital at risk since they no longer create the credit but instead manage credit creation, system integrity and operation.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jul 15th, 2007 at 07:01:38 AM EST
[ Parent ]
You can find CUs operating in the manner you outline in so far as they can under the banking regulations.  A CU must charge "Interest" on loans or be shut down.  A CU must pay "Interest" on deposits or be shut down.  How a Credit Union goes about charging and paying "Interest" depends on the political, economic, and social stances of the Board of Directors and the sneakiness of their legal team.  ;-)

Of course, when I was the President of a Credit Union we strictly followed the banking regulations and the rules and restrictions of Proper Banking Practice.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jul 16th, 2007 at 11:49:59 AM EST
[ Parent ]
My CU in Colorado charged interest on loans, but paid "dividends" on savings.  We were legally considered "members" instead of depositors.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Mon Jul 16th, 2007 at 02:39:50 PM EST
[ Parent ]
That is necessary legal verbage for a CU.  

Legally when you put money into your account you were buying "shares" in the CU and you wrote a "share-draft" instead of a check.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Jul 17th, 2007 at 12:48:14 AM EST
[ Parent ]


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