Just before all my readers let go an involuntary sigh at the thought that I have leaped upon yet another bandwagon, I’d like to say that this is not some generic thought log about how the ‘credit crunch’ has affected me and/or those around me. Rather it is a little ‘insight’ as to what I think might have caused the whole bloody thing.
As we all know the world recession that we have slipped into was as a result of the irresponsible lending which fuelled the economic boom that was a recurring characteristic of the last few years. The same boom that Gordon ‘Mr Bean’ Brown claimed was thanks to his dutiful overseeing of the British economy while he was chancellor of the exchequer. I however think that even thought the thousands of houses that were reposed just before the value of the worlds most popular currency was bastardized beyond recognition, there was an even more fundamental trend that I feel was responsible for the situation that we currently find ourselves in. I call it the selling of money.
The financial markets have always been powered by the banks. These in turn have relied on loaning money to each other and to the public to make profit. Think about it; how do you make profit in a business? Sell your product. What is the main commodity of a bank? Money. Some time ago the whole thing was backed by the real estate market. Nowadays, (even before the credit crunch,) real estate was deemed not profitable or fast growing enough, and the money was invested elsewhere. To be precise, in selling loans to another bank or company. This caused a vicious circle, that meant that banks were lending money to other banks who in turn were indirectly lending in back to them. As we all know the value of money is defined by labour. If there is no labour, currency gets devalued. What the banks did in essence was to take labour -and indeed any equitable commodity- out of the whole process, and thats why they’re where they are now…
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