Thursday, July 30, 2009

Nationalise the banks!

It's pretty obvious at this point that the banking system worldwide is in a vast mess, and (despite what they may tell you), it's not looking any rosier for the near future.

The "green shoots" in the US seem to constitute a speculative stock market run due to the massive multiple stimulus actions (paid for by the taxpayer), which have underpinned a bounce (of the dead cat variety?) in the market which isn't based on any fundamental health in the economy. In other words, when this stock market bounce runs out of steam and investors (realising that there are no sound fundamentals) run for the exits again, hold on tight.

We've heard many times that the banks are "too big to fail" - that they are of such systematic importance to society as a whole, that they simply cannot be allowed to go bankrupt - and that this systematic importance is the reason that we (the taxpayers) have to underpin the banks balance sheet when push comes to shove. Now, I can accept the premise that the banks are so important that they cannot be allowed to fail, and therefore, that we as a society may have to support them, financially if necessary.

What I cannot understand is - if we as taxpayers accept there is a need to support a crucial industry such as banking with our own money when the going is tough for them, then why would we allow our interest in the banks to be sold for a moderate profit when the banks return to health, and leave the serious money to be made by corporate interests when the banks are back to printing money off our backs as we struggle to repay our own private debts to them?

In other words - if the banks are of such societal importance, why are they not permanently nationalised? This way, when times are tough, we back the banks. When times are good, the profits from banking would benefit all of society, not just shareholders and vastly overpaid board members. I guess the answer is in the italics.

If we are going to socialise the risk, can we at least socialise the profit too?


The other thought that occurred to me recently was that it is very odd that when there is a balance-sheet crisis in the health industry (the industry that keeps us alive), it requires either new work practices, more efficiencies, less/more management, or best of all, more privatisation.

Contrast this with when there is a balance-sheet crisis in the banking industry (the industry that keeps us in debt), - this type of crisis requires a eye-bogglingly vast bailout with your own money (and your children, and your grand children's money) to ensure its continued survival in its present form.

1 comment:

Anonymous said...

Our government have royally fucked us over. Put yourself in their shoes, they know they fucked up, they really know how fucked up the country/economy is, they are doing nothing except trying to show bravado to a weak opposition. We, the public, are doing nothing. These people should be ran from government. They dare to terrorise us even more by declaring they need the time to put things right. Arseholes. They walked us into this mess of getting on ‘the property ladder’ ie buy a shit house far from your ideal location, because supposedly in a few years the house will be worth enough to be able to trade up to a better built more suitable house (in this imaginery world, this house will not have gone up in price whilst your shit house will). Now we are all in crap houses that will be worth nothing by retirement time and these fuckers are taxing our balls off, that is, the ever decreasing few that still have a job. These government ministers should be verbally assaulted on the streets, and if the chance arise, a good smack would do them the world of good. Argueably, its something they should have got a long time ago. Fuckin arseholes, we are letting them get away with this.