Thoughts on banks…

No wonder things never run smoothly, even when they are all reporting on the same situation Human nature, I suppose, topped up with pride.

We have the Spanish PM saying it is ‘not a rescue’ but a ‘victory for the Euro, the banks are not being ‘bailed out’ but ‘supported financially’ and there are ‘no conditions’ for receiving the money from European bail-out fund.

The rest of the EU, who are providing the funds, say it is a rescue/bail-out and that there will be conditions imposed upon Spain if they are to get the money.

The banks certainly do need rescuing after taking everyone for a ride for so long and it would be nice to think, although one sees little hope in reality, that things will change.

Certainly for the average person, a bank is supposed to be a safe place to store one’s money and provide an easy, or relatively easy, means of paying the odd bill.

So, let’s say you out €100 in your current account, for safe keeping, and don’t touch it at all, therefore maintaining a positive balance.

Every three months, roughly €7 (varying from bank to bank) is removed from your account for ‘maintenance’. That’s €28 per year. In addition, if you want (need) a bank card to enable withdrawal of funds at ATM’s etc, there’s another €15 per year. That’s €43 per year in total which will leave your account.

In just over two years, the money you deposited for ‘safe keeping’ will have vanished without you gaining any benefit whatsoever. If you had put it under the mattress, you would still have (barring theft) your €100 to spend at the end of the two years.

There is, therefore, more certainty that your money will disappear if placed in a bank than that it will disappear as the result of theft. There must be a moral (or immoral) in there somewhere!

In the meantime, the bank uses your €100 to invest (gamble). If the bank fails or needs a bail-out, it is the taxpayer (you) who, one way or another (increased taxes etc) has to replace it.

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