Matt Phillips points out that Europe's poor economic growth outlook is down to too much banking.
Intuitively they seem to do good things for the economy by lending cash to people to buy houses and start up businesses.
'Not really. Overbanking means there’s not enough profitable business to go around. As a result, banks then compete is by making riskier loans or operating on skimpy beds of capital—or in the case of many banks, both. The shortness of capital means that as banks accumulate bad loans, they’re reluctant to declare them. So instead they “evergreen” the loans—continually restructuring them, pushing out the payback dates. That makes the banks look healthier but creates an inefficient banking system, as it ties up capital in those loans that could otherwise go to healthy companies that could generate growth'.
Although the finance industry knows that the sector is way too big in Europe, with even the IMF reckoning that European banks need to dump some $4.5 trillion worth of assets through 2013, it is rarely covered in MSM. The waters on the subject are muddied by legislation and regulatory frameworks which promotes lender forbearance which remains udebated as to it's long term usefulness in accepting the truth of our financial position both personally and as a country. Analysts who ask the real questions are unremittingly vilified.
As of 2008 Ireland had 700% banking liabilities as a percentage of home GDP.
The results of the unrelenting position of many of our EU partners that the Irish population must finance the legacy debt of this sector as part of our national deficit is pointed up everyday in newspapers, on TV chanells and radio airwaves.
The story telling of the changing of 21 parts of the finance act by the powerful IFSC finance lobby group gained little traction.
'A total of 21 changes to the Finance Act were made to accommodate the sector including a contentious incentive that allowed foreign executives with companies based in Ireland to pay tax on only 70 per cent of income between €75,000 and €500,000.
The Revenue Commissioners opposed another incentive that allowed executives to claim tax relief on school fees up to €5,000 but after further lobbying the relief was included in the Act'.
All i can surmise from this combination too much banking, legislative processes designed to suit them and MSM mud is that populations, countries and legislators are seemingly 'cowed' by these 'financiers' so that their (the finance sector's) optimum lifestyle is maintained at the cost of YOUR family.
IFSC lobby group powerful in shaping policy - The Irish Times - Mon, Oct 08, 2012
Here’s the “massive cover-up” in Europe’s ridiculously large banking sector – Quartz