Whitehall sources said that they had discovered that some major UK lenders – including RBS, HSBC and Barclays – have had only 20 per cent of their balance sheets made up of "traditional" loans to UK households and firms.
Meanwhile, up to 80 per cent is tied up in loans to foreign nationals and companies, bond issues and other investments.
These "Whitehall sources" are even dimmer than we thought then. We all knew, although they apparently have only just cottoned on, what being an international financial centre meant.
Just as banks in the domestic economy are intermediators, they accept the savings of one group and distribute them to become the borrowings and investments of another, so do banks internationally. Chinese savers use a bank in London to lend to a Russian nickel oligarch. Now you can question whether that\’s a sensible thing for anyone to do but to say that savings, capital, should not be allocated internationally is to argue for economic autarky. We want investments to be made in other countries and someone, somewhere, has to provide the infrastructure to make that possible. And just as happened in the first era of globalisation, 1870-1910, it was London that became the centre for those who did so.
OK, now I do know that there are those who argue that this sort of international financing shouldn\’t be happening: but to be a "Whitehall source" and claim that you\’ve only just found out about it is to portray yourself as an idiot.
A Government source said: "It was pretty breathtaking to discover these figures. They provide further evidence that so many of the problems we are all facing started with bad banking practice on the international markets and were not simply caused by problems with the British economy."
Passing the buck this is called, no?
Ministers want to see banks focusing much more on old-style lending to British households and businesses in the form of mortgages and other bank loans.
And that would kill millions upon millions of people. Someone, somewhere, has to be moving capital from low return areas like the rich world to high return but risky areas like the developing world. That\’s how the developing world is going to get rich, when they have the capital available to build and develop. And it looks like "whitehall sources" are going to insist upon stopping London, the current world financial capital, from being the place where that happens and all so that domestic problems can, for political reasons, be blamed on those beastly international financiers.