Yes Michael

Most immediately, banks should be made to increase their lending to businesses and homeowners substantially. M4 lending, which measures this, has fallen from a growth rate of 19.8% in February 2007 to just 0.3% in May this year, and it may well be negative by now. Top management in the part-nationalised RBS and Lloyds should be instructed to reverse this trend straight away, and if they fail or decline to do so, should be replaced by those who will. If HSBC and Barclays do not follow course, they should be required to do so by regulation.

To whom Michael, to whom?

We\’re in a recession, as you may have noticed. This means that business plans which might or would have been viable in the boom times are no longer viable. So where are we going to find these viable business plans to lend the money to?

Capital ratios should be raised to levels large enough to absorb any imaginable banking failures.

Um, Mickey, sorry, but raising capital ratios at the same time as you insist upon expanded lending simply isn\’t possible. You can have one of the two but not both. It\’s that pesky real world shit intervening in your grand plans once again.

4 thoughts on “Yes Michael”

  1. It always makes me smile when I read from such folk that banks should be made more financially robust, should cut reckless lending, and yet get hammered for not lending enough.

    The ignorance of basic economics – that life is about making choices between scarce resources – is hardly a great advertisement for education in this country.

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