Recovery Of The Nation And Greed

Recovery Of The Nation

The banks are once again showing they can make fat profits but while bankers are smiling and looking forward to fat bonuses what about small businesses and the ordinary guy (or girl) on the street?

Consumers Save Banks

The global banking system has only managed to survive over the last three years (since the credit crunch began) because of the help from their respective governments (that’s you, me and businesses) who are paying for the banks wealth through our taxes.

Without the massive support given a considerable number of banks throughout the world would have declared bankruptcy. The protection and support given was the only thing stopping them from going under.

But What About The Rest Of Society?

Small businesses and property development have never seen things so bad for over 50 years with output from most sectors dropping at least 5 per cent and the average consumers real spending wealth being reduced by 10%. This alone could have serious implications for the recovery of small businesses in particular.

If the current situation continues, banks will continue to see massive profits but at the expense of the rest of society, especially small business. Is this the thanks we get? It’s reported that some businesses may take 10 years to recover from the recent financial crisis.

The Bottom Line

We all need an efficient banking system but should the banks be making surging profits?

It seems to me that banks are placing themselves before the rest of society (again) instead of learning from their mistakes and looking towards the greater good. Banks seem to be intent on looking towards the bottom line of their own balance sheets rather than helping to drive the economy out of this recession, which ironically would probably improve their balance sheets even more.

Although banks say they are doing everything they can to help businesses, is this really the case?

Low Interest Rates?

Governments have, in general, maintained an abnormally low official bank rate for the last 16 months, yet loans though theoretically available, have exorbitantly high interest rates and such stringent conditions attached that it’s almost impossible (or not financially viable) for people to borrow. Some banks are even charging up-front fees on new load facilities, definitely not a good sign for small businesses and the public.

These reasons, plus the demands of greater security against loans mean that most small businesses in particular cannot afford to expand their businesses and climb out of this recession.

Caution Is Called For

Yes the banks should be cautious, we don’t want a repeat of the last scenario, but they seem to have become ‘risk averse’ to the detriment of those small business with a healthy history, stable background and sound business sense. This has to be morally wrong. Our banks are an inherent part of our society and as such should be looking to profit society, not just themselves.

Kick Starting The Economy

The governments around the world are doing their best to kick start our economies and yet the same banking institutions which required rescuing are now hampering the recovery.

Some banks, such as Barclays (UK) have managed to weather the storm through good business sense and a prime business strategy without the need of government rescue. Maybe other banks should look to their example.

Are bankers, once again, only interested in building their own bonus pots? Until the banking fraternity wake up, reorganises and reassess they bonus arrangement the changes of a strong economic recovery are a long way from certain.

It’s only by working with the rest of society and being an integral part of a healthy society that we will all survive the trials and tribulations yet to come.