Posted by: graemebird | July 1, 2008

Advice To Nanu: The Big Four Banks./A Time Of No Rivalry.

Nanustalker has been asking about the CBA shares. Whether they are due to fall. I would say the answer to that is probably yes and definitely yes if the Reserve Bank doesn’t radically change course.

Three things to take into account is the short positions that JC says are there. Another matter is that the reserve bank could start pumping monetary base into the situation and we would not know for a couple of months. A third matter is that the shares could already have fallen a long way and may be historically at bargain basement prices.  So if you didn’t understand the banking racketthe shorts and the low price would spell BUYING OPPORTUNITY.

The thing is I DO understand the banking racket having worked in corporate finance and having learned the theory of it all. So what looks like a buying opportunity on the surface of things is likely a selling opportunity, depending on whats going on in the mind of Mr Stevens.

Its still a good bet to short them until Stevens changes his ways. Now why is this so?


Now you would think, would you not? That right now the banks would be making money hand over fist???? Surely if this were a normal business the banks would be making money hand over fist? Because they have existing customers. And essentially they are in the position to simply, almost arbitrarily, rip billions of dollars more off existing customers????

The reasons they have this absolutely awesome power go back decades. At least two decades in fact. But things have come to pass that when matters are not good for the banks they can cushion their own desperate straights by simply deciding to seize billions of extra dollars off their existing clients.

 Competition between the banks during times like the RIGHT NOW falls down to the lowest effectual level. Since the banks aren’t that keen on making too many new loans right now. That being the case their competition for market share is not there. And thats the only competition in a fractional reserve banking system that the bigger banks care about. Since the bank with the most market share can engage in a dissproportionate amount of counterfeiting.

But in times like right now the banks don’t care about market share. They just want to keep their nose clean. So there is simply no disincentive for them to reach into the pockets of their existing clientelle and pull out any cash and coins that might be there and further to get what is supposed to be their loyal customers to start living off the credit cards these self-same banks have so kindly supplied.

The condition of the last two quarters, and to a lesser extent the last year… the conditions of diminished competition are not normal for the big four banks. No matter how much we hate these guys this lack of competition has only been around for the last 2 quarters, and a little bit the last 4.

Normally the competition is quite feirce. But for the big guys its not directly a competition to serve the customer. Thats why you’ll, as a rule of thumb, get better personal service from the smaller banks.


The competition is only DIRECTLY for market share when it comes to the big four. Nothing else really matters. Since market share is what determines how much counterfeiting you can get away with.


Now these floating rates, while they aren’t totally unique to Australia are less important in most other countries. Most other countries the majority of loans are fixed rate loans and when the interest rates drop far enough you go and refinance. But somehow most of us have been armtwisted into these floating-rate loans. Not me. Not me.


While it is the case that the big four banks, during the last two quarters, could basically cushion their own act, by rifling mercilessly through your pockets… While this is the case…. The fact of the matter is that these big four banks are not cut out to make profits IF THERE IS NO COUNTERFEITING GOING ON!!!!!!!!

 If no new money is being created they simply will fall into a situation of loss-making.

So my advice Nanu. Is that you check the monetary aggregates. We have them up to the end of April as of this day. If the May figures come out, and M1 has dropped again, and if also the monetary base is about the same or less than it was…… SHORT THEM.



Even if every other bloke AND HIS MOMMA are shorting them, even if they are at bargain basement prices, if you can get that monetary information before every other bloke (AND HIS MOMMA) short them.

And set it up with your broker so that its just a matter of pulling the trigger when you get that information.

The fact is our big four banks are fundamentally unprofitable when they are unable to carry on their counterfeiting racket.



  1. graeme
    why did you delete the mark hill and thuggocracy threads?

  2. They were detracting from the more important science thread. The thuggocracy thing is poorly written. And I’d been wiping people for lying. So that puts you under a higher standard. Because in fact the picture of Dorian Gray could be the planets greatest authority on Hegel. He might be licking his lips and reading Hegel word for word in the original German by candlelight into the wee wee hours of the morning.

    Its hard to communicate to people also the distinction that Gruen and Leigh may not necessarily be trying to wreck the federation all on their own. And the real problem is its just a hazardous thing to allow a critical weight of these nutters to accumulate in Canberra. Until I can really make that distinction I’ll take that one offline.

    I took Kims offline because she showed some remorse for having gone too far. JC said something about me which was wrong and unfair but not an actual straight lie. And coming off a low base thats pretty good going for him.

    They are just all categorized as “private” and none of them wiped. But the revelation that modern physics is a gyp ought not be detracted from too much. That will come as some news to some people. They have built on their earlier mistakes to such an extent so that now the entire edifice can be seen to be the full on farrago of nonsense that it is.

  3. Some people have all the luck eh Monsieur Bird?

    With the departure of Andrew Leigh from the blogosphere and from the AFR, the AFR have asked me to step into his outsize shoes. So I’ve got a fortnightly column for six months. That suits me very well, as once a week can be a bit taxing after a while.

  4. Fucking hell. Its just disgusting. So you have these fuckwits in the AFR as well.

    I read Gruens last AFR piece yesterday. It was pathetic. And it was a bit like China giving a guarantee not to invade Taiwan for ten years but getting hold of Gibraltar, Aden and Singapore.

    You see he attempts to look free enterprise. But at the same time he tries to lock down a vastly expanded definition of what public goods are. I mean he’s telling us that SOFTWARE is a public good.

    It sickens me. It really does. These are fundamental economic illiterates. And look how the two of them just managed to tie this all up.

  5. Its not even funny. I mean there is nothing there to have a good laugh about. Putting up these morons as experts is really hurting us. Since no-one in power actually knows anything they’ve hurt our society with too much money creation earlier and again now with the collapse of money creation.

    And see all these stories of problem kids we are having now. This is the result of policies that Gruen agrees with. Gruen thinks our targeted welfare is just the bees knees. So because of these fuckwits we have an whole generation of income-support-children. We have a plague of child-crime, children being starved and neglected. And so forth. The recent press reports just the tip of the ice-berg. All this brought on by our embrace of stupidity and ignorance.

  6. Oui Monsieur Bird
    Very soon Australia will resemble my country.

  7. Your country has it sweet. You’ve got the nuclear energy in place. Then again what is worse? Being muslim migrant endowed or nuclear energy deprived? The thing is we don’t need to be either.

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