Man\’s a genius I tell\’ee.
The solution to our banking woes?
Candidly, we have to prepare now for the complete, even if temporary, nationalisation of banking.
How excellent, we\’ve now just bankrupted every sovereign in the world. For of course when the sovereign owns the banks then the banks\’ liabilities become liabilities of the sovereign.
This is what Ireland did, recall, in what has quite rightly been called the single most stupid and damaging action of the entire crisis.
And then what do we do?
I call my solution Network Banking. Think of it as a bit like Network Rail.
Network Rail as the model? Blimey, even we at the ASI who pushed for the whole thing agree now that it didn\’t turn out quite like we\’d hoped it would.
In every case however the depositor will know that a reasonable proportion (but not all, in the case of very high-value depositors) of their funds will be subject to guarantee, and all of those funds will be placed on deposit with the Bank of England each night to back that up.
Hmm, so all banking funds have to be deposited at the BoE overnight do they? Through CHAPs as that\’s the only way to do it. But aren\’t we going to have a Tobin Tax which charges a fee on every CHAPS transaction? Why, yes we are in fact, at least we are if Ritchie has his druthers.
Which means that annual interest rates to depositors will be around and about minus 12.5% (250 banking days, o.o5% tax) or 1.25% (0.005% tax). These are negative interest rates recall, not positive ones. This is what you will lose for the privilege of having a deposit account.
I suppose we could exempt such transactions from the tax: in which case the tax ain\’t gonna raise any money, is it?
Why is it that the man never bothers to piece things together?