Politicians are suckers. Most of them are so dumb you don’t even need to bribe them in order to get them to do
what you want, though a few million pounds fed into Tory and Labour Party
coffers, possibly in exchange for peerages, certainly makes politicians see
“sense” (sense as viewed by banksters).
Anyway, Vince Cable, the UK’s “business secretary” is keen to
let banks get away with dangerous capital ratios so as to make it easy for
banks to lend (i.e. increase the amount of debt). As Anad Admati, professor of economics at Stanford
University put it:
“…Vince Cable, the United Kingdom’s business secretary,
recently accused Bank of England regulators – whom he called “capital Taliban”
– of holding back the country’s economic recovery by imposing excessive burdens
on banks. Cable appears to believe the banks’ lobbyists when they claim that
lending and growth would suffer if banks were forced to “hold more capital.”
The point that Vince Cable clearly doesn’t get is that while
it is certainly possible to implement stimulus by having private banks go on a
lending spree (house price bubble anyone?), there is a much better way of
effecting stimulus, and that’s simply to feed money into the pockets of
ordinary households and/or increase public spending.
Moreover, increased spending by households and/or the public
sector increases demand for the output of most firms, and where appropriate,
those firms will AUTOMATICALLY invest more (either funded by borrowing or
retained earnings or by issuing more equity). Those firms do not need ignorant
Westminster politicians inducing them to invest or telling them when to invest.
Nor do they need the latter ignoramuses telling them whether to fund investment
from retained earnings, debt or new equity.
Simon Jenkins has for years been poking fun at the pro-bankster
and anti-household policies pursed by Vince Cable and other Westminister
politicians. E.g. see here. See also his paragraph starting
“Britain’s only counter-recessionary policy…” here. Or see paragraph starting “Britain
has less excuse…” here.
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