As shares drop further today, and (despite the bail-outs and buy-outs) the banks still won't lend to each other ('LIBOR remains 2% above central bank rates, an unprecedented 'spread') isn't it becoming clearer that, as I've said before on this blog, there is only one real answer: the commercial banks have to be NATIONALISED and/or remutualised (Roughly, my suggestion would be: permanent nationalisations of the 'big four' etc., and permanent remutualisations of the former building-societies). This combined with a new strict and long-term regulatory regime to be introduced soon, might actually do the trick (of preventing a vast financial and economic meltdown). Banks need to be forced to lend, for the public good. There should be more inter-bank lending; more lending to small businesses etc.; and we need to fund a 'Green New Deal' to 'pump-prime' to escape a depression while saving rather than trashing our ecosystems.
At present, by contrast, money is being destroyed by bank 'hoarding' of bail-out etc. money; there is still, therefore, and incredibly, a liquidity crisis; there is still therefore risk of good sound institutions in both the real and the money economies being taken down. And there is ongoing pressure to trash our ecosystems – look for instance at the looser rules that E.U. member-state governments have this week pressed for on emissions reductions, specifically citing the economic downturn as their reason/justification for this.
The amount we are investing in the banks requires them to be owned by us, as a matter of natural justice and fairness. The amount that they have profiteered by over recent years (vast dividends, bonuses, etc) must never be repeated. The need to have them work in the public good, for the good of the real economy, requires them to be controlled by us.
How long will it be before the world's Governments realise that they need to abandon the remnants of laissez-faire ideology and the fantasy that finance can continue be run on a globalised, privatised, virtually rule-free basis, and actually grab this problem by the scruff of its neck, and take ownership and control of it? This needs to happen soon, or we may never know the answer – because the entire system may collapse completely.
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