RBS shares closed at 19.67p, down 5.3pc, while Lloyds fell 2.9pc to 27.56p and Barclays closed at 146¼p, down 2.8pc. Shares in Standard Chartered, which had avoided much of the recent slump, fell 2.5pc to £13.29. Only HSBC avoided the losses, but still ended the day flat at 511p.
The falls came as investors continued to worry about funding conditions for European banks, with shares in several major French, German and Italian banks closing at new lows despite the imposition more than a week ago of short-selling bans on financial sector companies.
No, really, it is impossible.
For, as we know thanks to the sterling work of people like Anne Pettifor, banks themselves are the creators of credit. They produce it simply by pressing a few keys on the computer.
Thus it is impossible for there to be a bank funding crisis as banks just create the funds they need out of thin air. For how can there be a shortage of funds if funds are simply created from nothing?
Which, of course, is where the analysis of the Pettifors of this world falls down. Yes, the banking system as a whole is the creator of most of the credit in the economy. This does not mean however that individual banks are able to create their own funding out of nothing: it also shows that they\’re not able to capture the benefits of the credit creation.
If they were, there could not be a funding crisis. That there is a funding crisis shows they cannot.
Which leads, in the end, to the total implosion of the idea that if we just nationalised credit creation then all would be right with the world. There\’s not a profit there to be captured as the very existence of the funding crisis shows.
So park that theory over in the corner along with all the others which result from fundamental misunderstandings of the real world.