Pyramid Comment: Banking Panic - The Plan (3rd Encore)

Confidence or arrogance?

Either way, it is typical behaviour of the 'bully' to expect grace and favour, but never give it. In fact, turn the screws tighter. By definition, roundabouts go around and what goes around comes around. Again and again. But each time the ride costs more. The banking system has created the situation by throwing money at 'borrowers' as the fuel to sustain the demand for it. So, when the whale unsurprisingly goes 'belly up' the system demands that it be helped. The growth in house prices is a classic symptom of the disease: perceived 'worth' creates an escalating 'value' and so promotes the need to borrow especially since salaries never match the increases. It's in the plan. Inevitably and predictably, the system will fail and the solution of lending to the banks that created the situation will take place: 'create the problem and provide the solution'. That in itself generating more debt as interest is attached to any 'loan'. Help arrives by way of technical finance from the lenders of last resort to add more fuel to the money-making engine.

Alistair Darling in the UQ (aka UK) makes noises that sound like quite demanding conditions: not "put billions into banks only to see it disappear out of the door [to shareholders] again" and "all the banks knew what was on offer. They knew the terms and conditions and they signed up to them". However, a "demonstrably better deal" would be the responsibility of the banks. Compromises are already being suggested involving the preference shares owned by the government that should be repaid before any dividend is offered to shareholders.

The labour market 'expert' of the Bank of England's monetary policy committee (David Blanchflower) said the 164,000 rise in the jobless total (to 1.79m) was "truly horrendous and much worse that I had feared". Sounds like an "expert". Like bankers making sound decisions about lending with the consequence that shares around the globe drop in value and consequently businesses become cheap to buy. Like a bank or two.

The lender of last resort becomes the taxpayer.
'Borrowed' funds are then 'lent': to the taxpayer.

The taxpayer is trapped in the middle while the circus comes full circle and in perpetuity, but each time feeling the increase in the gripping pressure of the exerted control.

Perfect sting and completely invisible
yet very tangible

Pyramid Comment

Thursday, October 16, 2008

Banking Panic - The Plan (3rd Encore)

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