Monday, July 26, 2010

Vince Cable is wrong and dangerous

A lot of people have gone from seeing Vince Cable as the messiah to seeing him as a charlatan that predicted 14 of the last 3 recessions. However, I think people see him as mostly harmless. This is wrong, he is a dangerous idiot who simply does not understand anything about finance or economics.

This latest piece of lunacy proves it.

To summarise what this madman believes:
1. Banks are not lending enough, or as he puts it, "acting in the national interest".
2. Banks must lend more.
3. In order for them to lend more, bonuses should be linked to lending levels.

Now, there is little doubt that one of the many reasons for the economic crisis we are in was utterly irresponsible lending by the banks. There were more egregious sins, mostly committed by the Government, but the banks got themselves into an awful hole by lending carelessly to people that could not pay it back. Much of this was also forced upon them by the Government, much like in the US.

As a direct result, banks are now being ordered to shore up their Tier 1 capital ratios, which has the knock-on effect of reducing the available pot for lending.

Yet Vince Cable wants banks to lend more, and to be paid according to how much money they pump into the system. This is the same Vince Cable that railed against bankers' bonuses - "I think the bonus culture which continues is unacceptable. The coalition agreement makes it very clear that unacceptable bonuses are continuing and that is something we want to try to stop and that reflects the lack of moral compass."

Can anyone see a wee contradiction here? Bankers' will lend to unsuitable people again, in order to boost their lending levels. This lending means they will get bigger bonuses. These loans will default, fucking up the banks' balance sheets and probably leading to more Government intervention, given the wobbly nature of these banks' finances anyway.

And which incompetent Lib Dem cretin will be the first to shout at the banks for paying bonuses for irresponsible lending? I wonder...

1 comment:

  1. All Vince does is prove that a Doctorate in Economics doesn't prevent one from being a complete arsehole.

    Oh, and that the Biased Bollocks Corporation is gullible.