raghu wrote: > Do you have numbers for what portion of a bank's liabilities are in > the form of debt? My understanding is this is extremely hard to > measure because most of these debt-like liabilities are in the form of > derivatives and swaps.
I think Fred is right on this. I don't have the FoF accounts in front of me, so don't hold me to this (my numerical memory is pretty fuzzy), but it's known that the "deposits" of banks went from around 4/5 of total bank liabilities in the 1970s to 3/5 nowadays. Big drop. Meanwhile, "borrowings" went from 1/15 to about 1/5 in same period. Big increase. And this is just *commercial* banks. Shadow banking, which exploded in the period, largely unregulated, has higher leverage ratios. But, I should keep playing devil's advocate here. It's not clear to me what Fred (and raghu?) imply -- namely that the shift in the structure of bank liabilities has clear cut equity implications, so that help should be limited to depositors and debt holders be left to their own devices. Anecdotes about how this or that bank executive prioritized bonus payments, etc. shouldn't replace a broader analysis of the issue. Consider all banks, regular and shadow. Bank debt is (1) interbank and (2) other. In turn, other is (2a) central-bank held (e.g. Fed discount loans to commercial banks) and other other (2b). I don't think we want to go nationalistic here and emphasize the distinction between foreign and domestically held. Individually, interbank holdings have increased as a proportion of liabilities, but that's double counting if you consolidate the balance sheets of the banking system. FoF data can't help much on this since it only has regular interbank and not shadow interbank, which has exploded. These figures just indicate that the interdependence among banks has increased in the last 40 years, not a surprising fact under capitalism, but something apart from the underlying distribution of wealth. raghu wrote recently that we should distinguish between direct and indirect exposure to bank debt. That'd be great, because things are intermingled. But even without that, we can say at least one thing. At the end of the day, given the actual size of the shift after you remove the doubly-counted interbank component, equity effects can only be different if wealth distribution among the ultimate holders of nonbank-held bank debt (households or individual people) is *substantially* more unequal than wealth distribution among the ultimate holders of deposits. Question: Do we have evidence that the former are a *substantially* more democratic crowd than the latter? I haven't seen the data. One could argue that the shift in the structure of bank liabilities was accompanied by an increase in wealth inequality in the U.S. But how about global wealth distribution? The picture is more mixed. And what about the explosion in USD holdings by foreign entities, including governments and central banks from poorer countries (e.g. China). In his youth Marx wrote something like this: Workers are best off when capital grows fastest. But if capitalism is not challenged, then this only means that the expansion in the number and power of workers is equivalent to an increase in their ability to be exploited by capital. Saying that workers gain when capital expands is saying that workers are better at expanding the power of its exploiters, at forging the "chains of gold" with which capital drags them along. Of course, this general fact shouldn't keep us from trying to sort out these equity effects, since it is reflected in them that the challenge to capitalism germinates. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
