Monday, 10 January 2011

The Telegraph does the banksters’ bidding.

Having made fools of themselves in the credit crunch, and lost some influence with governments, banks are now trying to re-capture governments. And it looks like banks have got the Telegraph on side, at least in relation to the latest Bank of England Quarterly Credit Conditions Survey – to judge by a totally distorted bit of reporting in The Telegraph.

The Telegraph Business section had a front page report (7th Jan) on the latest edition of the above survey. The article was entitled “Basel III squeezes bank loans”. And the thrust of the article was, as the title implies, that the BoE’s survey had found that Basel III was restricting bank loans.

Problem is that is not what the BoE’s survey says at all.

The reality is that Basel III was scarcely mentioned in the BoE survey. Most the survey was pretty boring: it claims there are no dramatic changes happening as regards credit conditions right now.

The only mention of Basel III was that “A couple of lenders commented that . . .the amount of capital available for lending had been somewhat tighter and more uncertain following the Basel III announcement in September. Though it was difficult to assess the prospective impact of Basel III, lenders commented that capital would constrain net new lending to some extent going forward.”

That’s about 60 words devoted to Basle III in a report consisting of about 3,000 words. And that’s not counting several pages of tables, charts, etc.

Moreover, it seems that only “a couple of lenders commented” on Basel III (though the wording of the BoE survey is not 100% clear here). I have not yet discovered exactly how many lenders took part in this particular survey, but it seems that the intention when this quarterly survey was first set up was to involve between 10 and 30 lenders. (See p.3 of the “Consultation Document” here (scroll to bottom of page).

Now 2 out of 10 or 20 is not what you might call an overwhelming majority!

How much did the banks pay the Telegraph for that article? Sorry, I better put that more politely – how much advertising did banks offer to place on the pages of the Telegraph in exchange for the article?

Or I could put it even more politely: how many weekends for Telegraph journalists on yachts owned by senior bank officials were offered in exchange for the article? There are numerous ways of putting it.

An entirely different explanation is that the Telegraph is for the most part a newspaper for fuddy duddies who cannot imagine anything much apart from the status quo. It is a newspaper devoid of IDEAS. And the status quo just prior to the credit crunch involved banks ruling the roost, so according to Telegraph logic, banks must go back to ruling the roost.

The reality is that the role banks play in an economy is very variable. For example, bank assets and liabilities in the UK have expanded a whapping ten fold in the last 30 years or so. To what benefit? Economic growth is no better now than in the 1960s.

Channel stimulus to the Main Streets of this world rather than the Wall Streets, and that puts cash into the pockets of ordinary households, plus banks are cut down to size.

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