An interesting article was published in The Quaterly Review of Bank For International Settlements. The article is this, Have public bailouts made banks’ loan books safer?
|taken from Musica, fe y pensamiento|
I don’t want to punish my readers with a technical economic article, but it can be summarized briefly:
After having been rescued with thousands of millions of public money (OUR money), rescued banks did not reduce the risk of their new lending significantly more than non-rescued banks. That is the conclusion of this article. The whole thing can be read here (pdf), if you dare.
So, the answer to the question of the title (Have public bailouts made banks’ loan books safer?) is ‘NO’, they aren’t safer.
And the conclusion is obvious: a new financial crack is possible and even probable.
What will our Governments do when that happen? Governments will try to get money for banks once more, of course, but how? It will be difficult to raise VAT and other tax again, it will not be possible to continue taking money from public health and other public services, because they are being dismantled already. Maybe send the army to steal money into homes? I would not rule out that hypothesis.