Tuesday, 10 February 2009

A = B x C

A = B x C
A = economic meltdown
B = Bankers
C = Chancellor of the Exchequer.
It's simple sum and it works like this:-
I listened to an edited version of the parliamentary committee interviewing the Bankers today.
I am sorry but I have seriously lost my sense of proportion when it comes to Bankers. They've always been too big for their boots. They adopt the same assumptive superioty of languange and attitude beloved by that other alledgedly useful commercial class, estate agents.
Let's get this straight, banking is a very simple business. It has two bits of work to do. One, it operates as your fiduciary by offering an account management service. A clerking job. Two, it takes the money you deposit and acting as your intermediary it lends it out to someone. The difference in price between what they pay you and what they charge someone else is their commission. Right, having set that out I will concede that this simple model can get more complicated in action, but the essential model is as simple as I have set out.
Now then, in the past about twenty years, there has been a consolidation of banking businesses such that there are now about 6 actual banks. They all offer the same service at the same price. There is zero differentiation. They are a cartel. A cartel supplier of a monopoly product.
What is the monopoly product. Money. In the UK that's Sterling.
So who makes this product? Yep, the UK government, currently under the control of the well know one eyed Scots idiot.
So, suppose you are supplying this monopoly product and the manufacturer massively increases the amount he supplies and slashes the price? What are you going to do? How are you going to make money storing this excess product? You can't. You have to sell it on. And sell it on in vast quantities.
In short then, however nice it is to hear the multi eyed not necessarily Scots (althgough one of the banks was) idiots apologising, when are we going to get the real grovelling mea culpa from the other key player in this disaster?
You tell me.


AntiCitizenOne said...

Basel 2 mandates and increase in money stock.

Bill Quango MP said...

Hell has yet to experience the recent climate that we have just enjoyed. Until it does...