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Owe your banker £1k you are at his mercy; owe him £1m the position is reversed (2019)
- Octoth0rpe 2y agoParticularly relevant for twitter these days.
- Rygian 2y agoRelated, on a broader level: “Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a god. Thoughts of a Biologist” (Jean Rostand) http://evene.lefigaro.fr/citation/tue-homme-assassin-tue-milliers-hommes-conquerant-tue-tous-dieu-51714.php http://evene.lefigaro.fr/citation/tue-homme-assassin-tue-mil...
- vidarh 2y agoVariants of that is older than Rostand [1] > To sate the lust of power; more horrid still, The foulest stain and scandal of our nature Became its boast — One Murder made a Villain, Millions a Hero. — Princes were privileg’d To kill, and numbers sanctified the crime. Ah! why will Kings forget that they are Men? -- Beilby Porteus (1759) [1] https://quoteinvestigator.com/2010/05/21/death-statistic/ https://quoteinvestigator.com/2010/05/21/death-statistic/
- xk_id 2y ago> numbers sanctify the crime That’s a gorgeous quote! Something Lord Henry in “The picture of Dorian Gray” would say.
- tuyiown 2y agoMy middle school was named after Jean Rostand, and we never heard that quote somehow, this is hilarious.
- mncharity 2y agoA variant I fuzzily recall (regards South Asia banditry?), which retains the TFA's power shift, is something vaguely like "kill one and they will hang you, kill a hundred and they will negotiate with you".
- s_dev 2y agoYou get this quote in Civ VI if you research banking. They attribute it to Getty as well. https://civilization.fandom.com/wiki/Banking_(Civ6) https://civilization.fandom.com/wiki/Banking_(Civ6)
- ricardo81 2y agoFirst place I'd heard the quote. Something I learned via Civ, an interesting idea no matter who it is attributed to.
- BuyMyBitcoins 2y agoI’ve always appreciated Civ’s quotes. I still quote the ones from IV.
- bryanlarsen 2y agoPerhaps true in 1945, but these days $1M is petty change to a bank. There are lots of people out there with $1M mortgages out there who are definitely at the mercy of their bank. £1 in 1945 is ~$25M today and even that value doesn't seem high enough for the quote to apply. I wonder where the cutover is? $100M? $1B?
- lesuorac 2y agoProbably whatever is less than your actual assets. You owe the bank $100 and have $0 to your name then they're just out. Although I guess they didn't lose sleep until it was a bunch of people's mortgages so probably ~250k.
- cmptrnerd6 2y agoIt probably depends on the bank somewhat. My local community Bank in a small rural town won't have many, if any, million dollar home mortgages, maybe some of the farm or business loans are that large. Also I hope you meant £1M is ~$25 M today and not £1 :D
- TheCoelacanth 2y agoI don't think local community banks typically hold onto a lot of mortgages. They would originate the loans and then sell them to someone else.
- CPLX 2y agoWorth noting that banks are, on average, a LOT bigger than they used to be. The popular conception of a bank, even when I was a kid, was a place that was based in your town and had maybe a few branches and took in people’s deposits and wrote mortgages and business loans.
- generic92034 2y agoDepending on where you live small local banks still exist. Although some merging processes are definitely happening, in my area.
- NeoTar 2y agoIt is said that Julius Caesar borrowed so much money to become elected pontifex maximus that he essentially forced his creditors to support his political ambitions in the hope of seeing some payment on the debts. So, essentially, ‘twas ever so.
- EGreg 2y agoIndeed. Shill your own bag. Saw it with Bitcoin too. And every company VCs invest in and the public invests in through wall street. “Too big to fail”.
- moffkalast 2y agoThat man really had the gaul to do anything.
- duxup 2y agoI suspect even just loaning powerful people money at that time was effectively being on them / a political act in the first place. Less so that it built up over time and surprised anyone.
- elmomle 2y agoThis is true to some extent, but his debtors had a strong interest in Julius Caesar's continued success--which means that even if his later actions were ones that the debtors would not have supported originally, their wagons had been hitched to his and they had a very strong incentive to support him.
- notahacker 2y agoAnd for a slight twist on the same theme, MMM Ponzi schemer Sergei Mavrodi, who had no political ambition whatsoever, ran for the State Duma (which granted him immunity from prosecution: the only issue he turned up to vote on) after his scheme collapsed and was voted in by thousands of people whose only hope of seeing the savings he'd conned them out of again rested on trusting his promises to sort everything out
- mongol 2y ago
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- leshow 2y agoAsk the Greeks how that turned out.
- DrNosferatu 2y agoThat was a smokescreen to bailout (a second time) indebted French and German banks: https://www.corpwatch.org/article/eurozone-profiteers-how-german-and-french-banks-helped-bankrupt-greece https://www.corpwatch.org/article/eurozone-profiteers-how-ge... Also, economist Mark Blyth has written extensively about this.
- TacticalCoder 2y ago> That was a smokescreen ... Yes and no. Yes it was a bail out of others. But Greece was 175% in debt. That's not the fault of the banks who lent money to Greece. FWIW it's widely documented too that, from the start, Greece cheated to get in the EU / Eurozone, with the help of one of the big four accounting firm, by completely cooking its book to hide how bad the economical situation of Greece was. So, yup, sure, "evil bankers". But somehow the greek government managed to reach a debt of 175% of its GDP. That's not the fault of capitalism / finance: that's the fault of government overspending.
- DrNosferatu 2y agoSure, there was this service to embellish the books provided by Goldman Sachs. But moving on from moral arguments, the crux is that only some 5% of the bailout money actually stayed in Greece [1]. Furthermore, it takes two to tango: the banks did not diversify their debt portfolio [2], they lent because they wanted to, and, knew Greek debt implied higher risk. After all, that’s why these loans commanded a higher interest compared to other sovereign debt. [1] https://amp.dw.com/en/most-of-greek-bailout-money-went-to-banks-study/a-19234391 https://amp.dw.com/en/most-of-greek-bailout-money-went-to-ba... [2] https://econreview.studentorg.berkeley.edu/a-tale-of-two-countries-a-history-of-the-greek-debt-crisis/ https://econreview.studentorg.berkeley.edu/a-tale-of-two-cou...
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- VyseofArcadia 2y agoIs the usage of "your banker" vs "the bank" a difference between British English and American English or a difference between 1940s English and modern English?
- dartos 2y agoI’ve never had a banker, so I just say “the bank”
- jon-wood 2y agoI think it's a period thing rather than a country one. People are likely to say they owe "the bank" over here in the UK as well. Back in the 40s though your bank manager had a lot more leeway in the debts they'd underwrite, and presumably had more personal investment in any loans that were defaulted on because they'd personally signed off on them.
- Ekaros 2y agoThere used to be much more personal relationships. So it was possible you had a banker a person you worked in with in the bank. Especially with a big bank. So certainly for them losing million might mean losing job, even if the bank itself was big enough to manage.
- lmm 2y ago> Especially with a big bank. No, especially as a big client, if anything more so at a small bank than a big one.
- pm215 2y agoAs a British English speaker I would say "the bank". I think it's not so much a difference between 1940s English and modern English as between 1940s banking practices and today's (especially for the more well-to-do customer) -- it implies that you have a personal relationship with an individual person at the bank who knows you and manages your money for you, and that just isn't the way banks work these days, except perhaps for the mega-rich.
- DrNosferatu 2y agoToo big to fail, too big to bail!
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- HPsquared 2y agoCouldn't the causality be reversed here? If you're powerful, people are compelled to lend to you. See the situation with government bonds. So many "paradoxes" make perfect sense if you flip the causality.
- happyopossum 2y ago> people are compelled to lend to you. See the situation with government bonds. Uhh, where are people compelled to buy bonds? People buy bonds when they think they're a good investment vehicle - not out of obligation.
- staticvoidstar 2y agoI think OP means internal compulsion, not external compulsion. If I have tons of money why wouldn't I want to try to "buy" influence.
- crazygringo 2y agoGovernment bonds aren't buying influence with anyone though. Campaign contributions, sure. But the idea that there is any kind of compulsion for citizens to buy government bonds seems false. I don't know, maybe in some dictatorships or something, but certainly not in western democracies.
- staticvoidstar 2y agoI'm not thinking of normal people, I'm thinking of people that own companies that have more money than several countries' GDP
- crazygringo 2y agoDo you have any evidence? The idea that Elon Musk or Bill Gates would buy bonds to try to gain influence in the US doesn't make any sense. Politicians like congressional representatives or the president couldn't care less if someone rich buys bonds. The bond market is enormous, even a rich person is a drop in the bucket. Government bonds are not an avenue for influence. There are avenues for influences, but bonds aren't one of them.
- _spduchamp 2y agoI've heard about a situation here in Toronto where a family had a double mortgage on their overvalued mansion. The bank would never get their money back on a power of sale, so instead of calling in loans, they just extended them more credit, and connected them with an investment manager to help them manage the money the bank was throwing at them. Wouldn't be nice to fail upward like that?
- xyst 2y agoThis is how we end up in another 2008 crash. Regulators asleep at the wheel, again
- ToucanLoucan 2y agoNot at all. They're not asleep, they knew about it. A few isolated people had reported exactly how 2008 was going to go down. The banks know the economy is underpinned by their assets, Uncle Sam is NEVER going to let them actually die, not in a million years. It would be the end-toll of the U.S. dollar as the defacto world currency, it would shred trillions of dollars in assets, far beyond the actual homes, I don't think Wall Street could ever actually recover from that. And like, I don't even think that's necessarily wrong? Like I don't know how you would let some of these banks actually die in such a way that wasn't immensely worse for everyone. My only real issue with it is that these are for-profit businesses that funnel absolutely stressful amounts of money up the proverbial chain. If we just as a society want to say that we're comfortable with the notion of supporting banks with public money because ultimately letting them fail is worse for everyone, that's fine. I get that. I just don't think anyone at the top of those banks should be ripping millions of dollars a year out of that institution. At that point, that's not a business, it's more analogous to a utility and it should be owned and operated by the state.
- AnimalMuppet 2y agoI saw at least once in 2008 that it was done right. I don't remember which institution, but it got taken over, the depositors were protected, the stockholders lost everything, and the management was replaced. And that's just about what you want, right? You want the depositors protected, both because they didn't make the bad loans, and because wiping them out is going to cause ripple effects that spread the damage. But the stockholders, the ones that profited (temporarily) from the bad loans? Wipe them out. The management? Wipe them out.
- dstroot 2y agoIf you owe the bank a million, the bank owns you. If you owe the bank a billion, you own the bank.
- _spduchamp 2y agoThe article is about origins of a quote and has variations on the numbers. 1,000 vs 1,000,000 100 vs 100,000,000 100 vs 100,000 More than smart-ass quotes, I'm curios about these sorts of flips in risk/value in a general abstract sense. What is this sort of thing called? What are examples on other domains beyond lending?
- aspenmayer 2y agoParaphrasing: Give a man a fish, and he eats for a day. Teach a man to fish, and he eats for life.
- Rury 2y agoIt's kind of the same concept as the student becomes the teacher, the slave becomes the master, etc. Anyhow, such a principle typically exists wherever there is an opposing relationship of sorts. In the case of money, for every debtor there is a creditor. Generally, people often equate having lots of money = wealthy, and those with lots of debt = poor. But you can flip this relationship, if those in debt never actually repay (in real terms), and instead simply repay their debts with further debt.
- nottorp 2y agoThe quote needs adjusting for inflation though.
- edm0nd 2y agoOwe your banker £1k you are at his mercy; owe him £1m the position is reversed (2019) Owe your banker £1,245.21 you are at his mercy; owe him £1,245,207.25 the position is reversed (August 2024) source: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator https://www.bankofengland.co.uk/monetary-policy/inflation/in...
- nottorp 2y agoLike that but since the first mention of the quote is in 1945... £36,268.59 and £36,268,585.70 according to the calculator you linked.
- fiftyacorn 2y agoWe need to revisit this after the credit crunch - "Owe Your Banker £1k You are at his mercy; Owe Him £1M the position is reversed; But if everyone owes the banker £1M then its everyone's problem"
- HPsquared 2y agoAnd if something is everyone's problem, we just ignore it.
- datavirtue 2y agoIt's so efficient.
- margalabargala 2y agoWhat I've heard is "if you owe $1 million, you have a problem. If you owe $1 billion, the bank has a problem. If you owe $1 trillion, the government has a problem"
- wanda 2y agoIf everyone owes the banker £1M, it's the insurer's problem. Then the government's problem when the insurer melts down.
- habosa 2y agoIt’s no coincidence the US, the most powerful country in the world, tries to get every other country to buy as much of its debt as possible. We owe everyone billions or trillions. They’d hate to see us (or our dollar) fall.
- sumanthvepa 2y agoThis is a bit of a misconception. The US need never formally default on its dollar obligations, as it can simply print dollars. It will never be in formal default, although, it would effectively have defaulted by inflating its debt away. The consequence for the US economy won't be pretty though.
- Supermancho 2y ago> The US need never formally default on its dollar obligations, as it can simply print dollars The assertion was that bond holders would hate for the value of the maturation currency to fall. This is true, regardless of the currency origin. Beyond that, printing more dollars or defaults, would influence USD value to some degree, but would not guarantee a decline in overall attractiveness. One of the pillars of US hegemony is OPEC appointing USD as the preferred trading currency, over the last 50 years. Another is the industrial capability that the US exercised in WW2. It demonstrated that the US is capable of incomparable mobilization, growth of production and innovation, when properly motivated.
- fuzztester 2y ago>It demonstrated that the US is capable of incomparable mobilization, growth of production and innovation, when properly motivated. B.effing.S. What hyperbole and hubris. This is American exceptionalism at its "shining" worst. The incredible stupidity of that statement (to use superlatives like incomparable, as you did) would be hard to believe among rational people, if not already seen in writing, as above... That capability you talk of, could apply to any country, when ”properly motivated". Example: India. 1947. Removed the British as the colonizer, non-violently, except for maybe sporadic incidents, and the 1857 rebellion. Motivations and results in the same ball park as your example, as regards mobilization (of the population to drive out the British). See: https://en.m.wikipedia.org/wiki/Colonialism https://en.m.wikipedia.org/wiki/Colonialism https://en.m.wikipedia.org/wiki/Colonial_empire https://en.m.wikipedia.org/wiki/Colonial_empire https://en.m.wikipedia.org/wiki/Mahatma_Gandhi https://en.m.wikipedia.org/wiki/Mahatma_Gandhi Production and innovation not relevant in this case, except maybe innovation of overthrowing an oppressor non-violently.
- petercooper 2y ago(This isn't a political comment, honest! But..) After reading The Art of the Deal, I get the impression this is a lesson Trump took to heart early in life. Always using other people's money to build and do things which, in turn, seems to give him more power than he might otherwise.
- RevEng 2y agoAlso explains how his assistants end up having to put themselves at greater and greater risk. The more they help him, the more trouble they face, and the more they hope he is able to bail them out.
- mr_toad 2y agohttps://en.wikipedia.org/wiki/Leverage_(finance) https://en.wikipedia.org/wiki/Leverage_(finance)
- rogerthis 2y agoSame thing in other industries. Worked on big telecom billing back in the days. There was the average fish like me whose bills go to a normal flow when unpaid, and the big fish, like government, big companies, etc that not even have to pay their bills (for a time, of course).
- teddyh 2y agoInstance from 1998: <http://freefall.purrsia.com/ff200/fv00123.htm http://freefall.purrsia.com/ff200/fv00123.htm>
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- mncharity 2y ago> to the British War Cabinet in 1945 [...] we have persuaded the outside world to lend us upwards of the prodigious total of £3,000 million. The very size of these sterling debts is itself a protection. The old saying holds. Owe your banker £1,000 and you are at his mercy; owe him £1 million and the position is reversed. Curious. That leverage lies in hope of some repayment, yes? But my very fuzzy recollection (surfed a tome on financing WW2 years ago), is the US "loans" were made without informed hope of repayment - it was just politically unacceptable in the US to say that up front. So while there were assorted small post-war repayments (often non-monetary - leases and such), the bulk was written off. Does the size of an unrepayable debt affect negotiations on the size of a token repayment?
- edent 2y agoI think you are mistaken. The UK only finished paying off these loans recently https://www.independent.co.uk/news/business/news/britain-pays-off-final-instalment-of-us-loan-after-61-years-430118.html https://www.independent.co.uk/news/business/news/britain-pay...
- recursivecaveat 2y agoThe wiki page for 'lend-lease' says the equipment and supplies was literally lent for the duration of war. ie "here's 10 tons of food, some oil, and a jeep, please give back whatever's left after you win." It claims the 2006 payment was the last settlement for when they sold what was left in Britain to the British after the war for pennies on the dollar in lieu of actually trying to return it. I always thought 'lend-lease' was a debt-for-supplies swap and not a literal lending of war material.
- mncharity 2y ago> In December 1940, [...] the British were no longer able to pay for supplies. [...] Lend-Lease [...] supplies it needed to fight Germany, but would not insist upon being paid immediately > Instead, the United States would “lend” the supplies to the British, deferring payment. When payment eventually did take place, the emphasis would not be on payment in dollars. The tensions and instability engendered by inter-allied war debts in the 1920s and 1930s had demonstrated that it was unreasonable to expect that virtually bankrupt European nations would be able to pay for every item they had purchased from the United States. Instead, payment would primarily take the form of a “consideration” granted by Britain to the United States. After many months of negotiation, the United States and Britain agreed, in Article VII of the Lend-Lease agreement they signed, that this consideration would primarily consist of joint action directed towards the creation of a liberalized international economic order in the postwar world.[1] EDIT: Oops - that article refers to postwar loans. The TFA might be referring to non-lend-lease wartime debt. But that might have been refinanced by... It's late. Edit about to expire. Don't know. [1] https://history.state.gov/milestones/1937-1945/lend-lease https://history.state.gov/milestones/1937-1945/lend-lease
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- pylua 2y agoSo, does this work at the country macro level ?
- gcanyon 2y agoI've heard this as, "If you owe the bank $10,000 you have a creditor; if you owe them $10,000,000 you have a partner."
- createaccount99 2y ago> "him" ¡Ay, ay, ay!, that's bad use.