The People's Bank:A Bad Idea?

[TrueBlueTerrier]

http://depressionwatch.blogspot.com/200 ... -idea.html" onclick="window.open(this.href);return false;

The latest noises coming out of the crack economic team assembled by Gordon Brown (self-confessed super hero) are laying forth plans to create a 'People's Bank' around the Post Office infrastructure. Government mouthpiece Lord Mandelsson has said the new bank will have a clear 'social purpose'. The idea has been welcomed by the mainstream press as novel and something that will kickstart lending. Clearly there is also the advantage that this could be the way to save the post office from privatisation and as a consequence branch closures. So it will save jobs, retain branches and garner votes for Crash Gordon and his team. Shrieking Shriti will no doubt be able to announce that green shoots are starting to pop up all over the country near post offices.

So overall a great idea, espeically if credit starts flowing again right? No wrong, this is a bad idea. It seems that as the crisis progresses we are essentially treated to a procession of ideas from the politicians as they have no clue themselves (Crash Gordon admitted this himself at WEF when he linkened himself to Titian), their hope being that the public likes one of these ideas. Now in a climate where a large part of the Banking system is already in the hands of the Government why does one more nationalised bank make sense? What is the need for it? Could the lending not be kickstarted through Northern Rock if it was really needed? I do not see the logic of the Post Office Bank. This is pure political spin

Clearly a Post Office bank would carry an implicit guarentee for all deposits by the government, so this will hurt the private banking system. The idea looks great now, but once we start to come out of the crisis this will replace one mess with another as it cannibalises the existing business of the high street banks. I am also baffed by the idea of a 'social purpose' to lending. Clearly this is code for 'bad loans' to projects that are not profitable - so eventually this People's bank will end up with a mountain of bad loans that the 'People' will end up owning. This is always the consequence of any government sponsored lending institution. Also I fail to see this logic of wanting to kick start all kinds of lending - mortgage lending has no need to be kick started and kept at pre-crisis levels. That was one of the reasons we got into this mess, banks are finally lending resposnsibly and will lend more as conditions ease, no need to start lending to anyone who wants to buy a home. Again however it is a political issue.

There are clearly businesses that need lending to meet short term financing needs. However a People's bank is not needed for this. The Government would be much better of setting up a Business or an Industrial Credit Institution that serves only the commercial sector. This is something that happens in many developing countries in the world and works reasonably well, I fail to see why this should not work. There would be no need to build an expensive branch network and short term credit can start to flow quite quickly if this mechanism was used.

However as far as the People's bank goes - I hope the People give it the thumbs down and see it for what it is - political spin and a cheap vote garnerning exercise.

[Yahoorsur]

Re: The People's Bank:A Bad Idea?

A. No,it's a good idea,and heres why
http://news.bbc.co.uk/1/hi/uk/6162786.stm" onclick="window.open(this.href);return false;

[POSTMAN]

Yes,and anything that kicks those greedy profit driven scumbags in the bollocks is good in my book.
Whether i work for The Royal Mail group or not.

[k979aaa]

Yes,and anything that kicks those greedy profit driven scumbags in the bollocks is good in my book.
Whether i work for The Royal Mail group or not.

Yes but how can a service/business not afford their pension while offering too do pensions/life insurance such as well as lend money when it has too borrow from the government/private companies too invest in it's self!.