Commentaries (some of them cheeky or provocative) on economic topics by Ralph Musgrave. This site is dedicated to Abba Lerner. I disagree with several claims made by Lerner, and made by his intellectual descendants, that is advocates of Modern Monetary Theory (MMT). But I regard MMT on balance as being a breath of fresh air for economics.
Sunday 23 January 2011
More bank skullduggery that should be broadcast from the rooftops.
Everyone in Britain now knows that horrendous costs are being imposed on Irish households to pay for the fraud, criminality, etc by Irish politicians and bankers.
However, it seems that the same thing has been going on in China for years and on a hundred times the scale. For several years, Chinese households have had their standard of living supressed by around 20% or so to pay for the non performing loans in the Chinese bank system that existed ten years ago. See this article by Michael Pettis. (Hat tip to Naked Capitalism for the information)
As for the current lot of non performing loans, seems the Chinese authorities have not started to think about what to do.
The costs imposed by the world’s banking systems on households are utterly horrendous.
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As Pettis points out, someone has to pay for the overreach of the financiers and it is always households. It's happening all around the world now, with a bit of different twist in each locale. And the financiers are back at it again!
ReplyDeleteNice post Ralph,
ReplyDeleteIt seems to me that throughout history, the elites outside of the west routinely become desirous of the dominant western financial asset, often to the detriment of their own country's citizens. Right now it seems that both the USD and/or the Euro will do for these 'zombies'.
Here today, it is the Chinese leadership desire for USD balances, but for now the Chinese are placating their population despite this suppression. I think that this phenomenon is ultimately dangerous to both parties. Although in some cases like Japan, OPEC countries, it seems like it can go on indefinitely.
I believe that ultimately this is the same suppressive force at work currently in North Africa (petrodollars) that the people over there are rebelling against. Iceland rejected it and now Ireland is having a go at it.
Interesting times!