tag:blogger.com,1999:blog-191345550099999047.post1851893083599772234..comments2023-12-14T04:52:06.713-08:00Comments on Finnginn: The Ricardian Equivalence HypothesisFinnginnhttp://www.blogger.com/profile/11408363976804920106noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-191345550099999047.post-16532561959327474132014-02-18T03:16:21.491-08:002014-02-18T03:16:21.491-08:00I wish I'd left school with a sensible idea......I wish I'd left school with a sensible idea...Finnginnhttps://www.blogger.com/profile/11408363976804920106noreply@blogger.comtag:blogger.com,1999:blog-191345550099999047.post-20458417012883703022014-02-03T15:21:49.043-08:002014-02-03T15:21:49.043-08:00Yep, I agree that some people would go and buy a m...Yep, I agree that some people would go and buy a motorbike. But the problem is that the guy they buy the motorbike from would then use to repay the loan he had from the bank. What the government has got wrong is that they've whipped up hysteria about the evil bankers (with justification originally), but in the process they've scared the banks off doing what they need to be doing to get the money circulating again. You're totally right that the banks lending money is what's necessary. But at the moment they're not doing it, because they spent years giving 95% mortgages to people who couldn't repay them with the interest rates at the time. That was thoroughly irresponsible. They all got their fingers burned, and now they'll lend you something like 70%, because they're frightened of doing it again. But that makes absolutely no sense, because interest rates are at record lows, so the people who originally couldn't afford it now could.<br /><br />So, rather than wittering on about bankers bonuses (which are obscene to the man on the street, and make good headlines in the press, but are actually irrelevant to big picture), Cameron needs to tell the banks that if they want to hold a banking licence in the UK, they need to be prepared to make suitably sized (but not irresponsible) loans to small business operators, and individuals in the street, so that 25 year olds with a job can buy houses, the corner shop down the road can afford to build an extension, and someone who leaves school with a sensible idea can find some way to fund it.<br /><br />This has got rather heavy. I think, in essense, we probably agree, we're just disagreeing on where the money should come from. I don't think a windfall is necessary. The banks already have it. The government just needs to concentrate on making them give it out in exchange for their licence which allows them to make money out of the financial system. JRAnonymousnoreply@blogger.com