Casino Capitalism Stop the financial gamblers European Law

“Casino Capitalism!” “Stop the financial gamblers!” European Law and Life Culture Lecturer: Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany • Unless noted, the course materials are licensed under Creative Commons Attribution-Non. Commercial-Share. Alike 3. 0 Taiwan (CC BY-NC-SA 3. 0) 1 Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Casino Capitalism by Hans-Werner Sinn -general introduction 02. 03. 2021 2 Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Welcome to Crash Course in International Bank Business! Indroduce my person and my work • My name is Dieter Lutzenberger. I come from Germany. • 我姓陸叫迪安. 我是德國人. • I work over 40 years in one of the largest Bank in Germany. • Therefore 20 years as Senior Vice President responsible for Foreign Commercial Business. • Member of the European Banking Association (EBA) Clean Payment. Working group in Paris, France. • Member of the Society for Worldwide Financial Telecommunication (S. W. I. F. T. ) international Payment-Working group in Brussels, Belgium. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Welcome to Crash Course in International Bank Business! Introduce my person and my work Meantime I am retired and live in Taiwan. • Guest-speaker: • in Taiwan at the National Taiwan University, Taipei and National Chiao Tung University, Hsin-Chu, • in Germany at the Baden-Wuerttemberg Cooperative Karlsruhe. State University, • Goethe-Institut, Taipei: Teacher of german business communication for Taiwanese students. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Contents of crash course • Hans Werner Sinn and his book “Casino Capitalism” in 6 points. • High speculative business has totally removed from the real economy. • Examples of high speculative business. • Ways to a better banking system. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Definition Casino capitalism • Casino capitalism is a term for crisis-prone globalized financial markets, which have become detached from the real economy. • The focus of financial markets are more and more highly speculative financial transactions. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Hans-Werner Sinn unconventiona 7

Personal informations of Hans Werner Sinn • He is a German economist, Professor of Economics and Finance at the Ludwig-Maximilians University in Munich and • President of the Ifo Institute for Economic Research. He has written several books on economic policy issues. • Born: 7 March 1948 (Age 65), Germany, 3 Children. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Kasino-Kapitalismus • One of the most prominent economists in Germany analyzed the current financial crisis. It explains why bankers have become gamblers and adventurers, and questioning the dubious role of rating agencies and the involvement of German banks. Sinn looks not only back, but also identifies the errors in the European and German rescue package and comments on the remaining risks. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

1. Hans- Werner Sinn, described in his book casino capitalism : • How did the financial crisis. • Causes of the financial crisis that began in 2007 as a series of policy failures and market failures. • What to do now. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

2. Hans- Werner Sinn, described in his book casino capitalism : • "The financial crisis is not a crisis of capitalism but a crisis of the Anglo-Saxon financial system, • which mutated into the casino capitalism • and has unfortunately also found in Europe , more and more imitators. “ • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

3. Hans- Werner Sinn, described in his book casino capitalism : • “It is the result of the inability of the international community, to create a uniform regulatory system for banks. • Rules must regulated the self-interest of the actors, that they can develop beneficial and productive as you would expect from a market economy. “ • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

4. Hans- Werner Sinn, described in his book casino capitalism : • Casino capitalism is a "deformation " of the market economy through a "Gambling by the banks” • Banks made their business with little equity capital and therefore have only little risk by themselves. • The banks have high profits for themselves and high losses must often pay investors or taxpayers. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

5. Hans- Werner Sinn, described in his book casino capitalism : • The banks should have for future risk positions, a equity capital of at least eight percent. • The rules for credit insurance, hedge funds, which remain far outside the balance sheet of the bank, should be tightened. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

6. Hans- Werner Sinn, described in his book casino capitalism : • He also called for a ban on short-selling and stronger rules of CDOs and for a return to lowest value principle. • And he called for a new business model for credit rating agencies. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Contents of crash course • Hans Werner Sinn and his book “Casino Capitalism” in 6 points. • High speculative business has totally removed from the real economy. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

High speculative business or casino capitalism • High speculative business has totally removed from the real economy and operates own artificial transactions. • The business serves only the pure profit motive and are highly speculative. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

”Financial institutions tend to detach itself from the real economy and rather work with high speculative financial transactions!” Der Spiegel, Germany • Bonus system of bank managers • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

"Casino capitalism" is also a political slogan “Back to the roots, back to the real economy!” Occupy wall street • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Can I ask you something? • What do you think, where does our money? 1. The state spends our money in circulation. 2. Banks create money out of thin air in the form of loans. 3. Money is put into circulation by the central banks. 4. Money is not created, it is always there. 5. With global trade creates money. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Answer No 2: Banks create money out of thin air in the form of loans. • The banks "create" the money they generate for themselves and the bank must have no stress. It refers to the deposit money from the computer, not money in paper form. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

The miraculous multiplication of money. • If you get a loan, you will want the sum to our account "registered". Done! • There is no need for money from other customers of the bank. You get very fresh, new money, which did not exist before! • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

money creating. • Peter gives the bank cash 10. 000 USD as deposit of his account. Bank safe Account Peter: 10. 000 USD Credit account Mary: 10. 000 USD Credit • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany • Mary needs a bank credit of USD 10. 000 Bank transfer of her account.

The miraculous multiplication of money. • So Peter and Mary together can spend $ 20, 000. Because 10, 000 USD just so out of nowhere produced. Sounds unbelievable, but that is how the creation of money. • Admittedly I have somewhat simplified, there's things like the reserve of the banks, the Central Bank demands. That's 2 percent or 200 USD. The Bank must be deposited this amount there. • Mary may have just taken loan only 9. 800 USD. • The U. S. has withdrawn its minimum reserve for a long time to zero percent. Banks can create as much money as they can find borrowers. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

air money • A bank lends so only air - a few numbers on the screen. • And from this air- or so called fiat* money, banks want from you debit interest. Do not forget that! • And so I hope, you understand better, why banks need and like it to give you loans and again loans. . . . *fiat lux („Es werde Licht“, history of creation • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

• But what happens when today Peter and Mary both go to the bank and withdraw from their account their US-$ 10, 000 ? • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

• Black friday - bankrun – banking collapse • 10. 000 USD Account Peter: 10. 000 USD credit • 02. 03. 2021 Account Mary: 10. 000 USD credit • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Don t trust the deposit insurance of the banks! • 10. 000 USD Account Peter: 10. 000 USD credit • 02. 03. 2021 Account Mary: 10. 000 USD credit • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Different ways to create up money • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

coins • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Money paper • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

US-Dollar • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Treasury bonds • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

If a country needs money: Treasury bonds • Fed print treasury bonds • Banks buy from FED and sell on customers Fed • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany • Customer buy Treasury bonds

Electronic money • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Contents of crash course • Hans Werner Sinn and his book “Casino Capitalism” in 6 points. • High speculative business has totally removed from the real economy. • Examples of high speculative business. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Example: real economy transaction • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Real economy. Exporters and Importers Mechanics: How does an Open Account transaction work? Exporter Documents GOODS 1 2 PAYMENT Importer 3

Real economy. Exporters and Importers Mechanics: How does a Payment in Advance transaction work? PAYMENT IN ADVANCE: The Importer sends payment directly to the Exporter and waits for the Exporter to send the goods and documents. The Exporter has the stronger position of contract negotiations. Exporter 2 GOODS PAYMENT Importer 1

Example: short selling transaction • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

short selling transactions • Investors borrow financial instruments such us Futures, forward-swaps foreign exchange or securities and sell to a special Broker house. • After 3 month speculators hope of falling exchange rate. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

short selling transactions • So Investors buy futures back at lower price. This is the profit of Speculators. • They give back the paper to the bank where they have borrowed the future -paper and pay small lending-fee. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Soros: "Man who broke the Bank of England" • Soros was very famous in 1992 as "Man who broke the Bank of England" - the man who was forced down the Bank of England. • Convinced of an overvaluation of the pound Soros made massive short selling. • The Bank of England could not hold against and the pound exchange rate collapsed. • Soros' profits gone up. Estimated $ 1. 4 billion earned him the bet. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

How works the Euro-exchange rate speculation – short selling? You lend me some? • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

How works the Euro-exchange rate speculation – short sales? I sell you with good price! Sell EUR 1. 000 and get USD. Exchange rate = 1 EUR =1, 40 = USD 1. 400. 000 (EUR mal 1, 40) • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

How works the Euro-exchange rate speculation- short sales? • After 3 month rate =1 EUR= 1, 30 USD • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

How works the Euro-exchange rate speculation – short sales? Super! Much cheaper than before! After 3 month Bank 1 buy • With my USD 1. 400. 000 I buy EUR Futures EUR 1. 000 and pay USD 1. 300. 000. So I have a profit of USD 100. 000. 10. 000 • Dieter Lutzenberger, Landesbank Baden-Württemberg, • 02. 03. 2021 billion /Milliarden = profit 1. 000 Billion/Milliarden Germany

How works the Euro-exchange rate speculation – short sales? Thanks for borrow! • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany • With my USD 1. 400. 000 I buy EUR Futures EUR 1. 000 and pay USD 1. 300. 000. So I have a profit of USD 100. 000. 10. 000 billion /Milliarden = profit 1. 000 Billion/Milliarden. Minus charge for rent future of 3 month. • 02. 03. 2021

Contents of crash course • Hans Werner Sinn and his book “Casino Capitalism” in 6 points. • High speculative business has totally removed from the real economy. • Examples of high speculative business. • Ways to a better banking system. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What actions should the banks starts? • Banks have to have higher equity-capital. • Better regulating of shadow-banks. • Stop short-selling transactions • New business model for credit rating agencies. • Return to lowest value principle. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What actions should the banks starts? • Banks have to have higher equity-capital. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Banks have to have higher equity. • Bank needs in future a equity capital ratio of 9 percent of the weighted risk assets. • These steps are intended to prevent the collapse of the global financial system, as in the case of the Lehman bankruptcy. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What actions should the banks starts? • Banks have to have higher equity-capital. • Better regulating of shadow-banks. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What are shadow banks? • They are created when banks outsourced business in so-called special purpose entities. These companies were based in offshore financial centers (OTC transactions). • Such shadow banks are mainly hedge funds, private equity funds and money market funds. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

OTC Business. Over the counter. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What are shadow banks? • Shadow banks are organizations they make similar bank business but outside of officially bank controlling. • In contrast to banks they are not subjected to regulation. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Control of shadow banks similar to banks • “Shadow banks can be dangerous to the financial system. ” German newspaper “Spiegel”. • "Similar to the banking sectors, shadow banks must have the stringent capital requirements and they reduce risks and debts. " German minister of Economy Mr. Roesler • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What actions should the banks starts? • Banks have to have higher equity-capital. • Better regulating of shadow-banks. • Stop short-selling transactions • New business model for credit rating agencies. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

4. Points for a new business model for credit rating agencies. • In the future, separate agencies for evaluation and advice. • Agencies are not to be paid by the sellers but the buyers of the financial products. • Control (Basel-III) system of rating agencies. • Europe should develop a counterweight to the American rating agencies. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

What actions should the banks starts? • Banks have to have higher equity-capital. • Better regulating of shadow-banks. • Stop short-selling transactions • New business model for credit rating agencies. • Return to lowest value principle. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Return to lowest value principle. • And a reorientation from the U. S. accounting standards (IFRS) back to the German standards. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Return to lowest value principle. • Not continually adjust the valuation of bank investments to the changing market values. • Always for reasons of creditor protection, the cautious valuation method should be selected. • Comparison of market value and acquisition value always use the lowest of these two values. • 02. 03. 2021 • Dieter Lutzenberger, Landesbank Baden-Württemberg, Germany

Thank you very much for your attention. • If you have in the future any questions please contact me: • My e-mal adress: Dieter. Lutzenberger@gmx. de • My phone no. : Taiwan +886 93 0070 260 • My phone no. : Germany +49 175 183 4250

版權聲明 頁碼 作品 版權圖示 來源 / 作者 1 The Single Dude’s Guide to Life & Travel / Jacques http: //www. singledudetravel. com/2011/02/guest-post-casinos/ 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/12/17。 2 Frank Rumpenhorst / DPA http: //www. stern. de/wirtschaft/geld/2 -kursmanipulation-im-grossen-stil-tatort-boerse 1607779. html 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/10/05。 7 Flicker / IW Köln http: //www. flickr. com/photos/iwkoeln/5706615552/ 本作品以創用CC「姓名標示」通用 2. 0版授權釋出。 9 Ähnlichen Artikel verkaufen http: //www. ebay. de/itm/Kasino-Kapitalismus-von-Hans-Werner-Sinn-/380684103599 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/10/05。 23、27、28、 34 BOYWFINANCIAL SERVICES/ author unknown http: //boysfin. ca/#!pretty. Photo 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/10/05。

版權聲明 頁碼 23、35 23、27、28 作品 版權圖示 來源/作者 Brad http: //www. edulang. com/blog/english-addicts-user-interface/ 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/10/05。 Flicker/ Bank. Simple http: //www. flickr. com/photos/banksimple/5957360141/ 本作品以創用CC「姓名標示-非商業性-禁止改作」通用 2. 0版授權釋出。 30 Flicker/fdecomite http: //www. flickr. com/photos/fdecomite/6035847386/ 本作品以創用CC「姓名標示」通用 2. 0版授權釋出。 31 黃琪 本作品以創用CC「姓名標示」臺灣 3. 0版授權釋出。 32 Wikipedia commons/ Hidro http: //en. wikipedia. org/wiki/File: USDnotes. png 本作品屬公領域之著作。瀏覽日期： 2013/10/05。

版權聲明 頁碼 33 34 38、39 作品 版權圖示 來源 / 作者 Wikipedia / 作者不詳 http: //en. wikipedia. org/wiki/File: South_Carolina_consolidation_bond. jpg 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/10/05。 Wikimedia commons / RRZEicons http: //commons. wikimedia. org/wiki/File: User-customer. svg 依據著作權法第 46、52、65條合理使用。瀏覽日期： 2013/12/14。 陸安迪, Landesbank Baden-Württemberg, Germany 以創用CC「姓名標示－非商業性－相同方式分享」臺灣 3. 0版授權釋出。 43 Harald Dettenborn http: //en. wikipedia. org/wiki/File: George_Soros_47 th_Munich_Security_Conference_2011_crop. jpg 以創用CC「姓名標示」德國3. 0版授權釋出。瀏覽日期： 2013/10/05。 44 陸安迪, Landesbank Baden-Württemberg, Germany 以創用CC「姓名標示－非商業性－相同方式分享」臺灣 3. 0版授權釋出。

版權聲明 頁碼 作品 來源/作者 版權圖示 63 Wikipedia commons/ Unknown author http: //en. wikipedia. org/wiki/File: Flag_of_Germany. svg 本作品屬公領域之著作。瀏覽日期： 2013/10/05。 63 Wikipedia commons/ Unknown author http: //zh. wikipedia. org/wiki/File: Flag_of_the_Republic_of_China. svg 本作品屬公領域之著作。瀏覽日期： 2013/10/07。 Flicker/ My Tudut 63 本作品以創用CC「姓名標示－非商業性－相同方式分享」通用灣 2. 0版授權釋出。