It’s a grim, grim, grim outlook for the world economy as it stands right now with banks failing everywhere and governments stepping in to salvage them by lowering interest rates and pumping money into their banking system. Australia, Japan, Germany, Iceland, United Kingdom and of course, prime suspect United States.
We’ve read about the Americans coming in with their USD700 billion rescue plan for their financial system.
Yesterday, the UK government stepped in to provide a STG 31.5 billion bailout of the Royal Bank of Scotland, Lloyds-TSB/HBOS and Barclays. That’s a staggering amount of their tax-payer’s money. It shakes the British banking system to the core and dispels any lingering myth that the British financial system is the most conservative in the world. And I’m not even going to mention the state of the American banking system other than to say that it creates an even bigger stink. A cavalier, anything goes attitude that has gone all bad, like the smell of durians to the Kwai Los.
Here’s an excerpt from an interesting article that I read yesterday on the bbc online:
“The incompetence of RBS and of HBOS means that we as taxpayers have had to bail them out to the tune of £31.5bn. Chances are that this is the moment when future historians will say that the tide turned decisively against almost-anything-goes, laisser-faire financial capitalism … which has been the prevailing ideology for almost 30 years.
“Till just a few weeks ago, the City and our banks – the financial services industry – swaggered that they were the great British success in a country with few other world-beating industries. But as boom year followed boom year, and fat bonus followed fat bonus, many banks and bankers became over-confident, arrogant. They forgot the essence of good banking, which is to know your customer, to measure the risks when lending or investing, and to never lend more than the customer can afford. A great and enduring bank is almost invisible, a dull and self-deprecating provider of basic services – not the puffed up, too-clever-by-half firms that many big banks became over the past few years.”