Economics 201: Banking

Economics 201 - Banking

Just essential!

For interest:

- “Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous and frequently fatal to the banking company which attempts it.”
  - -Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, PART III. Of the Expense of public Works and public Institutions, ARTICLE I.—Of the public Works and Institutions for facilitating the Commerce of the Society.

Here is a huge vote of confidence in our banking system. Huge. (New York Post, June 30, 2011)
How did we get into this financial mess? Warning: The graphics are crudely drawn, and some of the language is just plain crude.
- And now it's a charming video
Magnetar Capital, an Evanston based hedge fund, did a lot to keep the the housing bubble going...and so did a lot to crash the world's economy. Yet more on Magnetar's dealings.
A nice diagram of this process (New York Times)
ATM Fees (Slate, Oct. 6, 2009)
How are banks dealing with tough economic times? Essentially, banks are just businesses, and so to increase their profits, they try to increase their revenues and cut costs.
"One man's ceiling is another man's floor" The house one family loses in a foreclosure, is the house another family now is able to buy. On net, how bad is this?
“The distinctive function of the banker,” — says Ricardo, “begins as soon as he uses the money of others”; as long as he uses his own money he is only a capitalist." — Walter Bagehot (1924)
Banking is not a very competitive industry in many parts of the country, so customers often don't get very many choices. (New York Times, March 7, 2010)
Some pictures of classic historical financial scandals (New York Times, July 18, 2010)
My favorite song about banking