4th December 2008
I wrote this post yesterday, and then accidentally deleted it….Trying again.
Readers might know that the British Queen visited the London School of Economics recently and asked Professor Luis Garicano, director of research why, if the hole in the international economic system was so large… “everyone missed it?´ A very good question to ask of the LSE’s neo-liberal faculty. Yesterday she opened the new session of Parliament and proposed restraining binge-lenders along with binge-drinkers. Not a moment too soon – for binge-lending continues, but only to the chosen few.
According to figures released by the Bank of England for October, lending to non-financial corporations – that’s businesses large and small – slowed to 6.7% year on year, while to households it contracted 0.8% – year on year. Over the past two months – as the recession worsened – lending to non-financial corporations fell by 0.7%. In other words lending to the productive sector of the economy – the sector that employes people, makes goods, delivers services, keeps a roof over the heads of families – contracted. By contrast, lending to ‘other financial intermediaries’ (OFIs)’ (hedge funds etc) accelerated again, rising an extraordinary 42.9% year on year. (Graham Turner, 2nd Dec 08).
In other words the banks are still binge-lending, but in a quite dysfunctional way – to their debtors and counter-parties in the finance sector. Perhaps its not enough merely to constrain lenders. Perhaps its time the Queen of England took a leaf out of the book of a predecessor: Lewis Carroll’s Queen of Hearts, who had only one way of settling all difficulties, great or small: ‘Off with their heads’ she would say – without a second thought.