Banks suffocate the real economy by denying loans


ECB governing council room . (ECB photo library).

ECB governing council room . (ECB photo library).

Yesterday the European Central Bank released data on Eurozone bank deposits and loans for December 2012. According to this report deposits by households and the non financial business sector increased during 2012 by at least 4%, while the loans to private sector (non-financial businesses and households) continued to decrease. The diverging direction of increasing liquidity and deposits and the decreasing credits to the economy, stand witness of the continuation of the almost anti-social policies followed by the banking industry of Eurozone.

Despite this profoundly egotistic practice by commercial banks, the governor of the European Central Bank, Mario Draghi, insisted last week that governments should continue their austerity policies, because the financial sector of the single money zone is still…fragmented.

He means obviously that commercial banks are still reluctant to give out loans to support the resumption of activities and job creation in the real economy. And this presumably because Eurozone governments have not yet squeezed enough their subjects,, with more taxes and less social protection so as to create the new surpluses needed by the financial system to return to its old practices of risky placements and fat bonuses.

Bank loans to the non-financial business sector and households, the real players in the economy, are following a continuously declining course over the past five years. The only exemption to this continuous denial of the banking sector to support the real economy was towards the end of 2009 until the end of 2010 (for ECB financial statistics see the link below).

During the last months of 2009, in view of the then raging uncontrollable financial crisis, the ECB started to apply its extraordinary policies, giving out to banks trillions. In 2010 some of it found its way to the real economy. After 2010 however the banks returned to their selfish game of absorbing whatever liquidity was available, deposits and ECB loans alike and guarded it jealously, to cover the holes they had inflicted to themselves in the “good times”.

According to the European Commission services estimates over the past four years Eurozone banks have received €4.5 trillion in financial support. To this unbelievable sum of money delivered to practically bankrupt banks for free, one should add the deposits placed in the banks by the real business sector and the households.

Despite of that liquidity bonanza the Eurozone’s banking industry, during the last two years, is continuously decreasing its loans to the real economy, despite the fact that all along this time the single money zone was constantly increasing its creditworthiness.

Draconian fiscal austerity programmes and cuts on all and every facet of government expenditure, plus unlimited liquidity to banks from the ECB have gradually repelled any danger of Eurozone falling apart. Yet all that is not enough for the banking sector and Draghi wants Eurozone governments to keep squeezing their citizen, until the banks feel they can start again spinning around other people’s money.


ECB financial statistics:



the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The EU approves a new package of budget assistance to the Republic of Moldova to support rule of law and rural development reforms

Greece did it again

Coronavirus: Commission unveils EU vaccines strategy

South Sudan’s women caught up in ‘futile man’s war’ UN gender equality chief

Border management: EU signs agreement with Montenegro on European Border and Coast Guard cooperation

How personalized care can tackle the late-life loneliness epidemic

Has Germany rebuffed ECB on the banking union?

Will Boris Johnson’s victory lead to a no-deal Brexit or is there still time?

The Role of Medical Students in Sex Education

ECB: Reaching the limits of its mandate to revive the Eurozone economy

A new world that demands new doctors in the fourth industrial revolution

Protection of transported animals: Parliament establishes inquiry committee

Vaccination campaigns are wars against fake news

EU steps up economic partnership with Kenya to boost job creation

Medical students, climate change and health: an unorthodox combination

Iceland’s slowdown underlines the need to fix structural issues

Here’s how the WTO can help address plastic pollution

Rohingya crisis: EU strengthens humanitarian support with €10 million

EU Parliament raises burning issues over the FTA with the US

Here’s how India became a global clean energy powerhouse

Public climate finance to developing countries is rising

EU to relocate 40,000 migrants across the bloc: first step of a long due substantial reform?

What does artificial intelligence do in medicine?

Shaping the Conference on the Future of Europe

Will we join hands for a tomorrow without antimicrobial resistance?

Germany tries to save Europe from war between Ukraine and Russia

EU-China Leaders’ meeting: Delivering results by standing firm on EU interests and values

One million facing food shortages, nutrition crisis after Mozambique cyclones: UNICEF

Climate finance for developing countries reached USD 71 billion in 2017

Pandemics are here to stay. Here’s how to prepare for the next one

3 things to know about women in STEM

The Mental Health Hero in You

Mobile 360 Africa 11-13 July 2017

Remarks by President Juncker at the joint press conference with President Tusk ahead of the G20 Summit

If the Current Situation in Hong Kong Arose in the West

Explained, the economic ties between Europe and Asia

How many more financial crises in the West can the world stand?

Foreign fighters: ‘One of the most serious dimensions’ in global counter-terrorism struggle

Millennials (and Gen X) – Here are the steps you should take to secure your financial future

First do no harm. Why healthcare needs to change

Why climate change matters for future health professionals

Solutions for cultural understanding: medical students’ perspective

Third EU-Western Balkans Media Days: EU reaffirms comprehensive support to media freedom in the region

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

COVID-19: Commission launches European team of scientific experts to strengthen EU coordination and medical response

At last Britain considers a super-soft Brexit

EU Budget 2020 conciliation talks suspended

What business leaders can learn from jazz

Reading the smoke signals: The long-term consequences of Amazon wildfire on global health

Greta Thunberg tells world leaders ‘you are failing us’, as nations announce fresh climate action

The West and Russia accomplished the dismembering and the economic destruction of Ukraine

LGBTQI+ and medicine

Our food system is no longer fit for the 21st century. Here are three ways to fix it

European Solidarity Corps: three years on

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

Living to 100: why we should plan for more sushi, chocolate and work

UN, African Union make significant joint commitment to global health

Eurozone: Austerity brings new political tremors

Human Rights and Democracy: striving for dignity and equality around the world

Somalia: UN Security Council condemns terrorist attack in which dozens were killed or injured

More Stings?


Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s