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Comment by kogepathic | Hacker News Reader

> That also imperils banks across the world, which have lent $400bn secured on smoke-spewing ships.

So, why should we care? Presumably the banks have paid analysts to determine that was a sound investment.

If governments are doing their jobs, banks should be able to eat this kind of loss without becoming insolvent. Otherwise why bother having regulations at all, if every minor hiccup means taxpayers have to bail out the banks?

Why do I care if shipping companies go out of business because of over capacity? Isn't that what market forces are all about?

So we should keep dangerously polluting ships running, because the banks that loan the shippers money will lose their shirts for several quarters if the shipping company goes bust?

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Who on earth are you arguing with? The article doesn't say you should care or that the banks should be bailed out. In fact, it's a neutral analysis of the status quo with a positive slant towards a green solution.

I don't quite understand the sentiment. There is no word proposing bailing out banks or shipping companies in the article. Instead, an arrangement is proposed where multiple charterers would share the cost of upgrading the ship over more than one contract period. Such arrangement would logically seem preferable over the insolvency of any party, which causes wider mayhem.

The underlying message in that sentence "banks [...] which have lent $400bn" is that we cannot enforce stricter regulation on ships, because it would hurt banks that lent the money.

It is also true that banks have so little equity that they easily get insolvent. In the beginning of the nineteenth century banks were around ~30% equity. Nowadays ~1-2%.

I read it the point of the sentence was was to illustrate why the banks are unwilling to lend even more for the green tech retrofitting, since the shipping business is troubled and already heavily indebted. The stricter regulations will anyway come in place by 2020-2021.

Banks trying to keep risks minimal actually sounds great to me. If you increase the equity, they can take bigger risks, but then again estimating risk is always by definition guesswork and can backfire in disastrous ways (think 2000s subprime crisis).

So, why should we care?

Unprofitable ships are scuttled intentionally. Insurance companies then have to pay off the loss and the seas have to eat the pollution. I'm not sure how those very real externalities fit in with your free market trivialization.

Any links to that statement that I can read?

The Vanity Fair article on Nick Sloane covers his career as a salvage master and touches on scuttling:

https://www.vanityfair.com/news/2014/12/nick-sloane-costa-co...

Another scuttling but for a different reason:

http://www.slate.com/articles/health_and_science/science/201...

I think the GP is making an appeal to how regulation should work.

Ideally, regulation should make it so bank stock holders eat the losses for poorly thought-out loans and should prevent all the various sleazy ways international shippers escape responsibility for their decisions.

What happens, though, is because regulators can't do that, they wind-up paying shippers and other polluters to change the bad decisions they already profited from (providing extra credit to upgrade ships, for example).

It is a shame but what can you do?

> Ideally, regulation should make it so bank stock holders eat the losses for poorly thought-out loans and should prevent all the various sleazy ways international shippers escape responsibility for their decisions

Exactly. I'm fine for ports to ban polluting ships and for the companies who own these ships to go out of business. It will be better for the environment to have these ships out of service.

However it sounds like the major issue to overcome is the banking industry's unwillingness to lend more money to the shipping industry (e.g. throwing good money after bad)

Ideally this wouldn't be a problem as banks would admit the loans were a poor investment and write them down

Why do you care that these companies go out of business?

The answer is that you care because you need all the stuff you consume that comes from across the oceans.

You care because you complain if the stuff you buy is more expensive, penalizing companies that use cleaner shipping nethods.

You care because (I think) you are not the one committing your money to create a less contaminating medium of transportation.

At the end of the day, you care that these ships are operational because it's better for you and you don't care about the damage for the future of others.

you above is not just you but all of us.

Funny enough, governments should do less of that job. Canada had a famously sound and famously stable banking industry without much regulation in the 19th century. (In comparison to frequent failures in their more regulated southern neighbour.)

The same goes for the free banking episodes in Scotland, Australia and France.

If you think that the US banks are/were more regulated than Canadian banks you would be incorrect.

See the sources mentioned in https://www.alt-m.org/2015/08/08/thats-right-famously-sound-...

> which have lent $400bn secured on smoke-spewing

Shipping bubble?

This is sarcasm, right?

Government's sole purpose is to protect big banks and companies and fool the people it's for their own good.

That's the kind of claptrap nonsense that got us here.

Government is - at best - an emergent agent with a lot of internal incentives to keep itself going. It does what the people in it want to do. It does what legislation tells it to do modulated by the people interpreting and implementing those statues.

Big Banks and certain Companies and industry advocacy groups spend a lot of money on putting people friendly to them into Government, and that introduced a bias in the collective decision-making process. It should be (and will be eventually) counteracted.

Sure, there are different ways to do something about this, the extreme is of course to abolish the Government, but if you were to think a bit about the consequences and requirements of such a change, you'll see that it's not really the best option.

> It should be (and will be eventually) counteracted.

10,000 years and still waiting

It'll take some time, as people understandably don't like to use their brains, much less being told that they should drop their irrational cognitive patterns and that they should learn game theory.

We're still not done with this Enlightenment thing.

Big banks and certain industries don't spend all that much money (in the grand scheme of things) on getting people into power, and the recent election showed that the more well funded candidate doesn't necessarily win.

Big banks and certain industries have outsize influence because we are a capitalist country where peoples' well being depends on having a job, which is created by a company and bankrolled by banks.

That's why industries like the auto industry have so much more political weight than the tech industry, despite the latter being far richer.

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