The saga continues. I realise that I do hark on a bit about the economic situation in these editorials, but it is very much a subject that it is at the forefront of our world of business at present.
Where exactly are we with this “recession”?
Basically, nobody seems to know. It is undeniable now that there is some kind of recovery taking place, although it cannot be described as substantive. The markets are rising inexorably, albeit in a bit of a “three steps ahead and two back” fashion. Economic activity generally is back on the programme: the housing market seems to be moving; multi-national companies are back on the takeover treadmill; the “scrappage” scheme has lifted the motor industry; the retail sector is reporting increased activity, although admittedly accomplished largely by special offers and reductions.
At the same time, jobs are being lost, business unable to stand the strain are going under, and politicians of all colours are telling us how we are going to suffer all kinds of cuts and privations to pay the cost of preventing the threatened melt-down of the world’s finances.
So we are not exactly in a position to sit back and relax at the prospect of a return to happier times.
Except for the banks, that is.
It is probably not my place to be overcritical of banks, and I hesitate to tread on toes; I readily accept that we would all be a fine pickle without banking facilities to depend on. However, I talk to a lot of people in the business community and the community at large, and I am only too well aware that whatever the realities may be, there is an overwhelming perception that banks are not playing the game.
Their profits are back in the mega-millions league, huge bonuses have been, and will be, paid — and all on the back of tax-payer bailouts which have not resulted in any increase in loan or cash flow facilities available to the people who are going to have to pay for it all. The banks say they are lending to businesses again. I am not saying that they are not lending per se to business, what I am saying is that business people I talk to are not receiving a positive outcome from requests. Of course, banks should be taking more precautions, otherwise we would not have learnt anything from the mistakes that got us into this position; but somewhere along the line common sense must prevail.
Mortgages are another area I continually hear negative reports; again, it is right for lenders to be cautious, but let’s not make mortgages as rare as gold dust!
There is world-wide talk by economists and politicians of the need for tighter regulation of the financial institutions, of curbing bonuses and cutting executive wages. Talk, but no action.
It seems to me that most people feel the Government did the right thing in rescuing the banks – and I agree with that. It has become evident as we hear more details of the situation after the fall of Lehman’s that the world really was teetering on the brink of a total breakdown of cash supplies.
All the more reason, then, why it should never be allowed to happen again. It is time for banks to put the money the taxpayer has given them to good use for the benefit of the donors; and it is time that the politicians acted on regulation and legislation to ensure that they do so, now and in the future.
