Government created banks, with the government already owned by the criminal banks just opens it up for more criminal banks that they can market as “new…and improved.” Corporate slime is slippery, yes?

Larger businesses should create their own business to business currencies. Saying they can’t do anything is nonsense, the materials and labor are still there so nothing is stopping it except their irrational belief in the religion of the FED. Its just like the building crew showing up to a well supplied site and saying they can’t build because they’re out of inches. Time for a reality check, let’s turn our brains on, unplug from the matrix, whatever term you prefer but essential action is required to at least balance our rhetorical blather.

However, it is now emerging that even children in rural India are becoming victims of the crisis: http://bigotblog.wordpress.com/2009/02/19/the-global-slowdown-affects-education-in-rural-india/

And it is India’s much criticised nature of hoarding gold that’s coming o the rescue

Time to create a lender you can bank on

In Australia we like to moan about our banks. The poor service levels, the high costs. But at least we’re faced with a functioning system, still remarkably intact after the trauma of the past 18 months.
Contrast that with the mess that is banking today in the United States and Europe.
These prior pantheons of the “Great Moderation” are struggling to survive, shadows of their former selves. Lost without generous state handouts, they have proved poor servants of their customers and their ailing shareholder base.
Which raises the question: Why rescue these shoddy shells? Is there any lasting value in pouring billions and billions of good dollars into patently bad businesses?
Or should we start again, through some form of state-owned, state-funded, banking model?
We’re in the throes of nationalisation by default. Governments are moving up the share registers of a range of ailing banks. Not through any desire to part-own a failed business model, rather because it appears to be the only viable option.
But is it? Why not a more radical alternative? Welcome to “Government – the bank”. And I don’t mean state funding of the banking system. I’m talking direct consumer and business lending. By government. To the people. Supplanting the bank’s traditional middleman role.
Rubbish, I hear you say. Banking is an intermediary function that has no place for government. Too complex. Innovative. Boasting efficiencies driven through competition.
Perhaps, but these are concerns that are hardly borne out by the mess we’re facing today.
Let’s look at that mess. New capital supplied by the state. Lending and borrowing guaranteed by the state. An old model teetering under the burden of past innovation.
It’s also a model that is proving surprisingly inflexible to change. Governments and central banks have been pleading with banks to increase lending as a means of boosting economic activity. But to no avail.
Cash has been pushed into the system only for it to sit unused on balance sheets. You get the feeling that if any one factor ultimately triggers a shift towards a “government bank” alternative, it will be this lending intransigence.
The banks argue, with only limited justification, that they’ve been asked to loosen their lending criteria, while at the same time being told to tighten reserve requirements and risk oversight.
But this “you can’t tell us what to do” attitude has frustrated authorities to the point where alternatives are being sought.
For instance – why not simply create a cleanskin bank, capable of channelling new lending to the market. Mortgages, business loans and consumer credit. This can be Treasury-funded or securitised under government-guaranteed bond issuance.
It would provide a more focused conduit that could offer far greater bang for the buck on any “financial aid” dollar provided.
Such an entity would compete head-to-head with the commercial and retail banks. We’d invariably see enhanced competition as banks relaxed lending criteria to compete with the state-controlled alternative lender.
So is this going to happen? Possibly, though initially not on any grand scale. We may instead see more examples of government-sponsored special purpose vehicles providing alternative sources of funding.
In the UK, the government has the option of creating something new, or simply expanding its two wholly owned financial “orphans” – Northern Rock and Bradford & Bingley.
In the United States, this could involve enhancements and expansions of the two existing government agencies, the Small Business Administration and the Federal Housing Administration. Given the chronic problems facing the housing market, the FHA is an obvious early candidate for president-elect Barack Obama.
So prepare for a change. To date banking sector support has been akin to shuffling an already dog-eared deck of cards. It may be time for authorities to deal themselves a fresh hand – from a new pack.