Figures from the Bank of England show that since the run on Northern Rock in 2007, average interest rates have fallen from 3.47% to 0.99%, with £108 billion in savings receiving zero interest (compared to £22 billion in 2007). And this when inflation has been above 4%. This adds up to £60 billion in lost interest to savers in the last 3 years - equivalent to £1000 for every man woman and child in the UK. So in addition to the £120 billion bailout by Gordon Brown, there is another £60 billion bailout by UK savers.
This revelation comes as the European Central Bank lends European banks another 500 billion euros, on top of £500 billion lent in December, at the extremely low rate of 1%. Anyone been offered 1% on a loan lately? Thought not. Being a bank must be a wonderful thing! The more calamitous your performance, the more money the goverment throws at you. And it doesn't say anything about your failure to lend, or the fact that you only lend at extortionate interest rates. One wonders how much more money can be thrown at the banks before someone in power comes out and says that 'saving the banks' has not been worth the candle.
When will it be recognised that banks don't 'create' wealth? Their only function is as a place to deposit savings, and as a source of loan capital, which they 'create' whenever they offer a loan to a person, company or government. That loan is fictitous capital - it only becomes real when a productive activity makes it so. However since 2008 banks have not been adding money to the economy at all. They have absorbed billions more than they have lent. The rest of society has been pouring money into the banks in order to restore the balance sheets that were destroyed by years of reckless lending and speculation.
Presumably when Gordon Brown, that old socialist, agreed to bail out the banks he believed he was 'saving' the economy from a catastrophe. But isn't what has followed in the last four years been a catastrophe? It certainly has for Greece. We keep on giving money to the banks, and they keep on taking. Anyone tried to get a mortgage or loan lately? Notice how the banks charge a massive premium in interest rates over the rates they themselves borrow at from the central bank. They are making huge returns on the money they lend to householders and companies. May be the rates for big borrowers are better than those for individual borrowers. But I know from friends and associates how expensive it is to borrow right now.
What does this mean? It means that society is funding banks, not the other way round. How long will we continue to do this before it is recognised that the western banking system does not work, that it is a legalised form of fraud? We should not be trying to re-create what existed in 2007 or even in 1987. We need to go back further than that, or perhaps, much better, create something new - banks that we own (or at least have a golden share in) and which are mandated to serve the public, social development, and productive economic activity. Not just their overpaid managers and shareholders. The private banking system is an emperor without clothes with a politician standing in front of it carrying a tin can for donations in one hand while using the other to cover up its private parts.
This revelation comes as the European Central Bank lends European banks another 500 billion euros, on top of £500 billion lent in December, at the extremely low rate of 1%. Anyone been offered 1% on a loan lately? Thought not. Being a bank must be a wonderful thing! The more calamitous your performance, the more money the goverment throws at you. And it doesn't say anything about your failure to lend, or the fact that you only lend at extortionate interest rates. One wonders how much more money can be thrown at the banks before someone in power comes out and says that 'saving the banks' has not been worth the candle.
When will it be recognised that banks don't 'create' wealth? Their only function is as a place to deposit savings, and as a source of loan capital, which they 'create' whenever they offer a loan to a person, company or government. That loan is fictitous capital - it only becomes real when a productive activity makes it so. However since 2008 banks have not been adding money to the economy at all. They have absorbed billions more than they have lent. The rest of society has been pouring money into the banks in order to restore the balance sheets that were destroyed by years of reckless lending and speculation.
Presumably when Gordon Brown, that old socialist, agreed to bail out the banks he believed he was 'saving' the economy from a catastrophe. But isn't what has followed in the last four years been a catastrophe? It certainly has for Greece. We keep on giving money to the banks, and they keep on taking. Anyone tried to get a mortgage or loan lately? Notice how the banks charge a massive premium in interest rates over the rates they themselves borrow at from the central bank. They are making huge returns on the money they lend to householders and companies. May be the rates for big borrowers are better than those for individual borrowers. But I know from friends and associates how expensive it is to borrow right now.
What does this mean? It means that society is funding banks, not the other way round. How long will we continue to do this before it is recognised that the western banking system does not work, that it is a legalised form of fraud? We should not be trying to re-create what existed in 2007 or even in 1987. We need to go back further than that, or perhaps, much better, create something new - banks that we own (or at least have a golden share in) and which are mandated to serve the public, social development, and productive economic activity. Not just their overpaid managers and shareholders. The private banking system is an emperor without clothes with a politician standing in front of it carrying a tin can for donations in one hand while using the other to cover up its private parts.
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