Tag Archives: Moneylending

First Greece . . . Now Puerto Rica and Ukraine

debt photo

After 2008 there were words of intent about changing the gambling practises of the banking community but one abuse continues to follow another. However it is now becoming very clear that it will not be the regulators that bring the banks to heel but their own greed.

We have become more educated about the reality of why Greece can no longer service its debt obligations, resulting in growing sympathy and support for the manner in which they are fighting back. Although there are now hints of giving further ground to their creditors they have done the rest of us an incalculable service in opening our eyes to the reality of the financial abuse going on across the Planet.

We now hear that the tiny island of Puerto Rica has just put its hand up to the impossibility of its debt situation and Ukraine is following in the footsteps of Greece, with more debt being piled upon the Ukraine people to meet existing debt obligations. With the debacle of Greece fully in the headlines and sympathy growing for their cause the idiocy of repeating the ‘Greek Mistake’ with Puerto Rica and Ukraine beggars belief.

This is an exact repeat of the 2008 sub-prime mortgage scandal, where debt was piled upon people who the banks knew could not afford it. To protect themselves from their own bad practise they then packaged up this bad debt with good debt and sold the bundles on to each other in a global ‘pass the parcel’. Except there was not just one winner at the end, because the taxpayer made them ALL winners when the parcel finally unfolded.

With the revelations about Greece, Puerto Rica and Ukraine, not to mention Italy, Portugal and Spain (that we know about), it is obvious that the banks have not changed any of their dangerous lending. The global financial system was left riddled with bad debt from 2008, a lot of which is still in there and now being topped up with vast amounts of sovereign debt. These countries and many more, including the UK, have become saturated in debt because our taxes were stolen and then replaced by debt we simply could not afford through that earlier theft.

The blame and responsibility is entirely that of the banks, as I do not believe for one minute that any country walked into the headquarters of the IMF or Goldman Sachs and put a gun to their CEO’s heads demanding “Give us dosh OR ELSE”!

The people who lost their houses in the sub-prime fiasco suffered the indignity of sleeping under bridges or in tents, staring helplessly at lost homes that remained empty for months, if not years. This is now the fate of the rest of us, who are staring on equally helplessly as our national assets are sold off (stolen) at rock bottom prices and our social service become as empty as those former homes, all in the name of ‘Austerity’.

We refer to them as banks but these are not the practises of traditional banking, who looked after their own interests by ensuring they only lend their money to responsible people who they know could both afford and take responsibility for that debt.

It is obvious from the growing number of hands going up in default that the common denominator is moneylending practise and not banking practise. That it is going on at such a global scale is serious cause for concern, because we are not talking about financial issues here but those of power. The brutal fashion in which Greece is being treated demonstrates the need felt necessary to fully assert that power as they continue their odious debt lending.

Greece may be considering weakening their current stance but they are also having their lawyers study the nature of their debt obligations with a view to having it formally classified as ‘Odious Debt’, that they may then legally return it from whence it came. That would be a game changer!

Odious Debt is a far bigger can of worms than ‘Austerity’ and would heap a stigma upon the banking system that could challenge its very foundations. And if Greece does not follow through, someone else will, as I believe our growing awareness of the reality of what is happening is placing the writing on the wall!

 

Until the next time.

 

Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes

Did the Church really cause the financial collapse!

Churches photo

Many years ago I had a bank manager as a next door neighbour. He was a lovely man, a bit like Captain Mainwaring in Dad’s Army, who cared about people but without the pomposity. After he retired we began to see the closure of bank branches and the centralisation of banking services.

When I asked his view on these changes he said that we were now witnessing the end of banking in the true sense of the word, as banks began to place greater emphasis on money lending.

The difference he told me was that in his day when a customer came for a loan he would ask three questions: Could they provide collateral, could they afford the repayments and was it necessary?

This last question differentiated ‘banking’ from ‘money lending’ because the bank were concerned a customer might take on the very real responsibilities of debt for something impulsive and frivolous. This could then cause them to reduce their ability to meet the everyday demands of running a home, bringing up a family and, of course, repaying the loan. Managers were trained in the traps debt could lure human fallibility into and sought to protect their customers from their own weaknesses as part of sound business principle and practice.

Sadly they were often loathed and feared because of this but their actions came from a moral perspective based on religious values that dominated Society until the cultural revolution of the 1960’s. Since then our religious institutions have seen the power of their moral values over Society diminish, only to be replaced at a similar pace by financial values that are both narrower and more shallow in guiding our actions.

As the reasons for the financial collapse of 2007/8 have emerged it is clear that good banking practice was not the cause but rather irresponsible money lending. Loans actively pushed at people, who could obviously not afford them, whilst offering opportunities for high interest rates by trading on human fallibility. Knowing these loans could not be responsibly serviced, they were then ‘packaged’ up with ‘good’ loans and sold to other banks as AAA rated investments.

I am not seeking to judge but rather highlight a mind-set, no longer driven by religious moral values that had been a tried and tested code when my neighbour ran his bank branch. Because of this we now have a global financial system made toxic by bad debt, which not even the people who caused it have any idea of how bad it is, after pumping $16 trillion into it. Six years on and still the banks are ‘fragile’ and unable to support business and Society the way they used to. Indeed, this mind-set is now telling us that, through their actions, unemployment and debt could become the ‘new normal’!

Human misery of this magnitude can only be achieved without compassion, I would suggest and mirrors that which caused the nuclear disaster at Fukushima, or the oil spill in the Gulf of Mexico. Here again, we have no idea of the true extent of the disaster through our irresponsibility but we do know it is spreading. These growing crisis are the result of traditional moral standards being replaced by narrow goals that are now beginning to rule our lives, particularly in the West and something Osama Bin Laden did and others seek to continue fighting vehemently against in the only way they know how.

In this new global world, where the power of corporations can be greater than that of governments, profit is the worst possible yardstick by which to live our lives and manage this Planet and its resources. As a species we desperately need to find a new moral ground from which to operate.

Traditional religious institutions may have shot themselves in the foot, by abusing their powers in the past but we have to find a way of either resurrecting them or replacing them. Another financial collapse is looming on the horizon now, as banks continue their ‘unbanking’ practices with no responsibility or concern for the hardship they are causing.

It may be their undoing at the end of the day, only time will tell. It could also be the catalyst for the people to demand and seek a new moral code . . . but seek and find one we must!

 

Until the next time

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Thinking from his book: Global Magna Carta. Returning Power to the People . . . If They Want It!        By J T Coombes