06 August, 2010
Mo’s Law
Maurice Merhet
The banks have proved themselves to be dishonourable.
How? Why? Alternative?
How?
1. By loaning money to people who could not pay it back. Reason – so as to take their
property and make a large profit.
2. By refusing personal loans and suggesting customers use credit cards. The bank then
charges 18% on the overdraft. Not only that – if you are £10,000 over on your credit
card and have paid back £9,900 they still charge you 18% on the full amount. This is
legalised extortion.
Why?
So as the banks can pay themselves large and excessive bonuses. It is we, the public,
who are doing the paying. This makes it very bad for the whole British economy. The
banks are so powerful it is they that rule the economy not the government.
Alternative:
As we own 84% of the Royal Bank of Scotland this is what we do. We pay depositors
2% interest and loan out money at say 10% on secure loans, credit cards on collateral at
12% on a sliding scale. We would not pay bonuses but a fair wage.
This one move would force the banks to do they same which would benefit the whole
economy. They would no longer expect depositors to be satisfied with ½% nor lenders
prepared to pay 15%.
One added advantage – this would free all these very clever but overpaid bankers so that
they could do something useful for society that was not dishonourable.
This is Mo’s Law.
There are several reasons why the Gov does not intervene with RBSI.
ReplyDeleteThe first, which I heard on the BBC Radio, was that the best staff would leave to go to other banks where there are bonuses; indeed, it would be easy to headhunt them.
The second is that if the Gov intervenes in the market, then the shares of RBSI would probably fall (because of a lack of confidence in the bank), and more Gov money would be needed to stabilise it.
Ideally what the Gov. wants is a rising share price, so they can offload their shares at least on par, but preferably with a profit. That's why they are doing nothing much; they don't want to "own" a bank; they want to get rid of the ownership, and get the much needed funds back to use in the public sector.
It is easy to make excuses for the banks.
ReplyDeleteWhat is their place in society: to make us all debt-slaves so that they can control the countries, or having a few banks who exist to provvide essential and honest service to the citizens?
If a few other mad-hatters want to play casinos, they can do it with their own money!
Point 1 is not quite the whole story. The trouble with banks and double-entry book-keeping (DEBK) is that any money that is actually sitting in the bank vaults is regarded by DEBK as a debit on the bank, not a credit. The bank is therefore desperately trying at all times to move the debit off its balance sheet by lending the money on.
ReplyDelete