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: http://www.ecb.europa.eu/stats/money/aggregates/aggr/html/index.en.html.

 

 

the sting Milestone

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

Markets can accelerate the transition to a low-carbon economy

Decades of progress ‘can be wiped out overnight,’ UN chief laments at climate session in Yokohama

The sun’s impact on Earth and weather celebrated, as planet marks World Meteorological Day

The EU and North Korea: A Story of Underestimation

These countries are the most peaceful – in 3 charts

Is history a new NATO weapons against Russia?

Poliomielitis: climatic changes and impossibility in border control

A new bioeconomy strategy for a sustainable Europe

3 things to know about women in STEM

Businesses can lead a revolution in disability inclusion

Digital transformation and the rise of the ‘superjob’

This underwater restaurant teaches you about the ocean while you eat

The Parliament sets the way for the European Banking Union

Migration policy affects attractiveness of OECD countries to international talent

What have the banks done to the markets making them unable to bear cheap oil?

Climate resilience is make or break for businesses. Here’s why

EU budget for 2019: do more for the young, SMEs and the climate, urge MEPs

Chinese tech investors are turning towards MENA. Here’s why

Climate change helped destroy these four ancient civilisations

These are the challenges facing India’s most sacred river

Lessons in disaster relief from the world’s most cyclone-battered state

UN urges protection of indigenous peoples’ rights during migration

Germany is the world’s most innovative economy

Blockchain can change the face of renewable energy in Africa. Here’s how

AI can be a game-changer for the world’s forests. Here’s how

Yemen: UN envoy asks Security Council for more support ‘to move back’ to the negotiating table

This massive project in Spain is the latest milestone in Europe’s solar power boom

Cultural Intelligence: the importance of changing perspectives

What happiness can teach us about how we measure human development

Venezuela: European Parliament calls for additional sanctions

A pandemic of solidarity? This is how people are supporting one another as coronavirus spreads

Global Citizen-Volunteer Internships

Children are so hungry in one British town they are eating from bins

COP21 Breaking News_03 December: Transport Industry Drive for Improved Energy Efficiency and Electro-Mobility to Stem High Growth of Emissions

How to make primary healthcare a favourable career choice for medical students: strategies and reflections

China rare earth prices soar on their potential role in trade war

How AI and machine learning are helping to fight COVID-19

A day in the life of a Venezuelan migrant in Boa Vista, Brazil

What makes Copenhagen the world’s most bike-friendly city?

Lack of investment and ambition means Youth Guarantee not reaching potential

What does a good digital ID look like?

Youth unemployment: think out of the box

European Banking Union: Like the issue of a Eurobond?

The Eurogroup has set Cyprus on fire

5 ways Denmark is preparing for the future of work

UN ‘prioritizing needs’, ramping up aid, as Hurricane Dorian continues to batter the Bahamas

UN welcomes ‘record’ Brussels conference pledge of nearly $7 billion to support Syrians

US prosecutors now target Volkswagen’s top management, upsetting Germany

IMF: When high yield goes boom

Austria, Italy, Portugal, Spain receive €279m after natural disasters in 2019

How I met the Panda Woman

Commission sets moderate greenhouse gas reduction targets for 2030

Antitrust: Commission seeks feedback on commitments offered by Broadcom concerning TV set-top box and modem chipset markets

Brexit: the Withdrawal Agreement passes the first European Parliament test

Eurozone: There is a remedy for regional convergence

Amending Guatemala ‘reconciliation law’ would lead to unjust amnesty, warns Bachelet

Find unity ‘to halt Libya’s senseless unraveling’, UN envoy urges Security Council

Algorithmic warfare is coming. Humans must retain control

GSMA Outlines New Developments For MWC19 Shanghai

Parliament makes EU electricity market cleaner and more consumer-friendly

More Stings?

Advertising

Speak your Mind Here

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

WordPress.com Logo

You are commenting using your WordPress.com 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