What banks do better than anything in recent years is convince their central bank that they will perish without another huge amount of money to prop them up. The thinking is that we need the big banks to keep functioning so that they can loan money to support businesses and fuel the economy/jobs.
Yet, time and time again we forget that this indirect approach of spending money to help the citizens puts the stimulus incentive on those who have almost zero interest in investing the money as intended. So rather than loans to big banks as a means to an end, the big banks become an end in and of themselves.
More to the point all these bailout loans are spent on banks acquiring failed portfolios of other banks that have failed ever more than them. And then in a clever slightly more profitable way the bankers reorganize the portfolios to maximize their ownerships while mitigating/hiding their losses/liabilities. It’s a high stakes shell game where the banks keep getting bigger and the resource available to fund them keep getting smaller.
Throughout this entire crisis the biggest banks have managed to get much, much bigger for the benefit of their own interests rather than the interests of the people whom they are supposed to be serving. This must end…
For example, look what happened this week in Europe:
“The near half a trillion euro take-up of ECB funds represented the most the bank has ever pumped into the financial system and exceeded almost all forecasts. A total of 523 banks borrowed with demand way above the 310 billion euros expected by traders polled by Reuters,
“The take-up was massive … much higher than the expected 300 billion euros. Liquidity on the banking system has now increased considerably,” said Annalisa Piazza at Newedge Strategy.” http://reut.rs/uCgKN2
How much longer can this go on?