Bail us out

October 25, 2008

Banks hoarding cash

Filed under: bank bailout, credit crunch — Tags: , , , , — stanleymilgram @ 4:01 pm

the dirty little secret of the banking industry is that it has no intention of using the money to make new loans

This from the New York Times, but the situation is the same in the UK.

Vast amounts of money handed to the banks, claims that this will be used as “leverage” (that word again…) to make the banks restart the economy. And this doesn’t happen. Never mind that “lending at 2007 levels” is just storing up trouble for later.

Call it a Jubilee or call it an Amnesty, it’s time to clear the books and write off everyone’s debts.


October 17, 2008

More evidence that the money is going to the wrong place

Filed under: bank bailout, greedy bankers — Tags: , , , , , — stanleymilgram @ 4:29 pm

Provided by BBC’s Robert Peston, whom I was amused to discover is being blamed for some of the world’s economic woes (since everything is fine n dandy with the banks and anyone who says otherwise is a terrorist).

Since [the bank of England’s rate cut], the LIBOR interest rate charged by banks for lending to each other over three months has barely moved.

And that matters, because banks set their prices for credit provided to households and businesses off that so-called interbank rate.

Or to put it another way, banks aren’t passing on to us the full cut in the interest rate which the Bank of England thinks is necessary to prevent a deflationary recession.

This fits a pattern, that I haven’t had time to fully blog yet, of actions being taken by banks and shareholders to reinforce their positions at our expense. See, for example, the complaints about non-payment of share dividends.

In this case, an action (with an implicit cost to the public) made for a purpose, to “unbung” the apparently-vital system of lending between banks, is instead being used to shore up the security of individual banks. Public funds, selfish use.

Any actions taken in this direction will face the same problem: the banks and their shareholders do not care about the public good, like measures to prevent job losses. They want their dividends, bonuses and expense accounts back, the rest of us can go hang.

What if we took action that bypassed the banks. Let them go to hell. They aren’t the economy, we are. If people need money to access what they need, then let us get it from elsewhere, an institution that we control and that we can trust. (No, the government doesn’t fit the bill either…)

October 15, 2008

The real victims of the credit crunch

Filed under: real victims of the financial crisis — Tags: , , — stanleymilgram @ 10:00 am

…are the ordinary people who stand to lose their jobs in the recoil from the banks’ cowboy behaviour. People like David Salt featured here.

Sat alone at home with, by his own admission, not much to do, Salt believes that banks offering unrealistic credit are ultimately responsible for his job loss.

That makes the bail-out even more painful, he says.

“The government is pumping all these billions into financial institutions so they can lend us money again. Can’t they give me a few hundred quid so I can retrain on a computer course?”

The bailout of banks might mean that they don’t go to the wall but they are experts in making others suffer for their mistakes. The more that they carry on business as usual after this debacle, the bigger the next crisis will be. Pumping in more credit to the system isn’t going to solve underlying economic problems.

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