a must read from 2011.....................From Daily Reckoning Australia
''Savers didn’t care how the bank was managing its loan book. They
didn’t care they were helping to inflate the housing bubble. Savers
just wanted the best interest rate. How many savers connect a higher
savings rate with the possibility the bank is taking a higher risk with
its loans?''
Not many we’d wager.
And that’s the ultimate reason why the banks were bailed out. A
failure to bail them out would have destroyed faith in the banking
system. And this would have made it hard for the surviving or new banks
to attract depositors.
And naturally that would make it hard for those same banks to extend
credit – which would be disastrous for them given the engorged size of
their loan books. How would they keep the Australian housing Ponzi
scheme going then?
They couldn’t.
That’s why banks worldwide had to be bailed out at all costs.
Failure to do so would have resulted in the end of the current banking
and money system. And when housing markets crashed overseas, the banks
needed more bailouts.
Without it, it would have meant an end to the privileged position of
the bankers and central bankers… no wonder they prefer a long rather
than a short depression.''
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