Mervyn King: banks need more money!

The Bank of England governor Mervyn King has again made it plain that more money needs to go to the banks. This is despite an already massive sum of 500 million pounds ploughed into the banking system. The Daily Telegraph (British) warns, in its quiet, semi-Tory way, that ‘nationalisation of the banks is getting closer…’ It’s amazing to contemplate that the the government doesn’t already own the banks, instead they seem happy to keep financing the banks’ acquisition and merger projects.

Gordon Brown, meanwhile, having taken an unannounced trip to Baghdad (and risking a shoe attack which he might not be quick enough to dodge) has declared that British forces will ‘finish the job’. Whatever that means, it does make clear that money will still be spent on the military to keep their uneasy equilibrium in a battle that will never really “end”. Someone needs to explain this to Mr. Brown. Whilst they are at it, they might also explain that writing blank cheques to the banks doesn’t seem to encourage them to extend credit to borrowers. Indeed, he would have more success were he to actually bypass the middlemen and give the cash directly to people who are trying to borrow from the banks. Of course he wouldn’t do that, it has a very faint whiff of socialism about it, and this PM is dedicated to the market. Another question he needs to answer is how money keeps being miraculously ‘found’ when so many public services have suffered underfunding? The usual excuse there centred on inefficiency, yet how ‘efficient’ is it to give away money to banks that fail to recirculate it into the economy?

All this money to rescue a system that is corrupt, inequitable, inefficient for producing widespread and sustainable prosperity, is it worth it? Does anyone really want it anymore? The answer from this quarter is a resounding NO.


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