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Because I have a bank account with Nationwide, which is a “mutual” owned in theory by its members, like all other account holders I get their annual report and a chance to vote in it. This has just arrived.
It confirms what the papers said.
“Net interest income” was up from £3,562 million in 2021 to £4,498 million in 2022.
“Administrative expenses” only increased from £2,234 to £2,423 million. Result: profits went up from £1,597 to £2,229 million, an increase of 40 percent.That this will be due to interest paid to depositors increasing much more slowly than interest paid by those with a mortgage is confirmed by the fact that the the amount lent as mortgages increased by only 1.7 percent.
Anyone with an account with Nationwide can see the figures for themselves. They are on pages 21 and 22 of the booklet they will have been sent.
You also get a chance to vote on the salaries of the directors and top managers. The chairman got £525,000, the chief executive £889,000 and another executive £690,000. Nobody’s labour power is worth anything like that. They are creaming off a share of the profits. I always vote against.
Sputnik is reporting this as attempted coup:
Some of the comments are interesting with some taking an anti-Putin and pro-Prigozhin position.
Deposits by savers are not the only source of funds for banks to lend. They can also have recourse to the money market. They call this “wholesale” borrowing as opposed to “retail” borrowing from savers.
This is referred to in today’s Times:
“The extent to which banks profit from the spread between savings and mortgage rates depends on how they fund their loans. Banks that have more savings on their books than mortgages and therefore use the deposits to fund their home loans will profit more from a wider spread . However, banks with more mortgages than savings will use money markets to price their loans.”
A banker is quoted as saying that “margins on money market loans were generally about 0.5 per cent plus another 0.5 percent for risk.”
That would explain why banks and building societies would prefer to finance mortgages from deposits by savers rather than by borrowing from other financial institutions via the money market.
In any event, even if not all mortgages are made from deposits they still have to be funded from some source, not from thin air.
The other point to bear in mind of course is that banks (unlike building societies) make loans for other purposes than buying a house.
So much do banks need deposits from savers that they compete with each other to attract them. They also compete for ordinary deposits on which they pay no interest as they can lend this money too. If banks really could create money “out of thin air” by a “pen stroke” then they wouldn’t need to.
Note that “net interest income” is not the sane as profits. It’s a bank’s income. A bank’s profits are this less their costs (buildings, wages, computer systems, etc).
Found a way to read that article in the Sunday Mail here:
The figures are different from those in the i paper — they are for six banks not seven, but even for those in common they are not the same. But the definition of “net interest income” is the same:
“the difference between what the companies charge borrowers for loans and mortgages and what is paid to savers in interest”.
Which they give as £44 billion, £8 billion more than in 2021.
In any event, both papers take it for granted that banks are financial intermediaries, borrowing money at one rate to lend at a higher one. Not, as one of those who commented claimed, companies that “magically make money with a pen stroke” and then lend it — if that was the case their income would be much, much higher as they wouldn’t have to pay anything to savers since they wouldn’t need any.
I couldn’t read that article as you had to subscribe but it was the same in yesterday’s i paper under the headline “Banks rake in £4.8bn extra profits in ‘appalling rip-off’”. The article compared the “net interest income” from seven high street banks in 2022 compared with 2021, explaining
“Net interest income is the profit made by banks from charging higher interest borrowing costs on mortgages and loans, compared to what they pay out in interest on savings accounts.”
In other words, banks generate an income by borrowing at one rate of interest and lending at a higher rate, their profits being what is left after paying their running costs.
A table shows that between them the seven banks did have a “net interest income” higher by £4.8 billion in 2022 than in 2021. No doubt that would have been mainly due to not raising the interest rate paid to savers at the same time as they raised the rate they charged lenders (following an increase in the Bank rate).
But the total figures are also revealing. In 2021 their net interest was £27,998,000,000. In 2022 it was £32,761,000,000. The point is that there is no claim or pretence here that this was created out of thin air. It is clearly stated that it comes “from charging higher interest borrowing costs on mortgages and loans, compared to what they pay out in interest on savings accounts.”
“Since I was a child, I have always had many Jewish friends. They say that Zelensky is not Jewish, but a disgrace to the Jewish people.” (Putin)
https://tass.com/politics/1634177
I wonder what he thinks of Macron and Blinken who also support a regime he considers Nazi?
I hadn’t realised that she had taken up an anti-Russia stance right from the start. That’s understandable in the sense of condemning any side that starts a war. But to say, a year and a half later, that the Russian attack on Ukraine was “unprovoked” is another matter. It is taking sides.
What was going on before Russia invaded was that both Russia and NATO were provoking each other in the course of which the West called Russia’s bluff. . .
She has also taken the Ukrainian line that Russia blew up that dam. But we don’t know yet who did or what really happened. Even some pro-NATO commentators are withholding judgment. Apparently she knows better.
She could have taken the more cautious approach taken in this article, but she hasn’t:
https://www.leftvoice.org/sabotaged-dam-in-ukraine-a-reactionary-act-no-matter-the-culprit/
Further evidence that Greta has taken the NATO side in the current NATO-Russia war in Ukraine:
She’s now completely discredited.
More grist for the mill. This revealing remark by a Labourite spin-doctor to columnist Patrick Maguire in the Times on Monday;
“Which party’s manifesto will look most like 2016 Vote Leave and 2019 Tory offer?” one of Starmer’s closes aides put it to me last week. “It’s ours”
Of course it doesn’t matter what the politicians promise as while they propose, Capitalism disposes, and, once in office, they can only react to whatever the workings of the capitalist world economy throw at them.
Won’t it rather be the other way round, ie more surplus value as it grows being diverted into unproductive (of more surplus value) activities rather than the growth of these putting pressure on surplus value? Or maybe that’s just saying the thing from a different angle.
This was also discussed in two book reviews on the February 2021 Socialist Standard. Both authors reach the same conclusion that the increased productivity brought about by automation has not resulted either in more for everyone nor in mass unemployment but in more low paid and precarious jobs (sone of which of course will be productive).
Benanav writes as a declared socialist (in our sense) arguing at the end for a society of common ownership and free access. He used to be a member of the group Endnotes (https://www.akpress.org/endnotes.html
Very interesting. I’d heard of this but never looked it up. More here
https://en.m.wikipedia.org/wiki/Libertatia
Where it says that the priest Caraccioli argued that
“every Man was born free, and had as much Right to what would support him, as to the Air he respired.”
This was in fact the original doctrine of the Roman Catholic Church (before it had to find reasons to justify private property of resources). James Connolly in his polemic against a Catholic priest, Labour, Nationality and Religion, quotes from various early Christian divines to show this. For instance, these two:
“Nature furnishes its wealth to all men in common. God beneficently has created all things that their enjoyment be common to all living beings, and that the earth become the common possession of all. It is Nature itself that has given birth to the right of the community, whilst it is only unjust usurpation that has created the right of private property.” – St. Ambrose.
“The earth of which they are born is common to all, and therefore the fruit that the earth brings forth belongs without distinction to all”. – St. Gregory the Great.”Might be worth an article on Libertatia if you’ve the time.
Here’s a more measured approach to Artificial Intelligence than that of those who say that research into it should be paused because it could lead to the creation of a superintelligence capable of making humanity extinct;
https://www.bbc.co.uk/news/technology-65886125
Of course research into AI should continue even if we know that under capitalism it is likely to be misused (as it already is, as in the drone war in Ukraine). The same machine decision-making technology would be of great help in a socialist world in making decisions about the production and distribution of wealth without buying and selling.
The narrator here seems to be Thomas Sowell. Now (he must be in his 90s) a free-marketeer. In the 1960s he was a bit of a Marxist and wrote quite a good article in Economica in August 1963 on “Marxian Value Reconsidered”:
