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Ever since central banks decided to raise the rate of interest they charge commercial banks to borrow money from them (the bank rate) the financial pages of the papers have provided a continual stream of evidence to expose the Thin Air School of Banking as, well, a load of hot air.
Here’s an example from today’s Times:
“The Financial Conduct Authority, which is the industry regulator, also warned the industry last July that ‘the pace and scale at which firms pass through higher interest rates to savers needs to improve’.
Banks have responded to this pressure by improving their savings rates, while depositors have also become more active in managing their money by moving their cash to accounts that pay better rates of interest.
(….)
These deposit trends, combined with more intense competition in the mortgage market, are putting downward pressure on banks’ margins after a period of rapid expansion.
Lloyds Banking Group said in its first-quarter results last week that its net interest margin, which reflects the difference between what it charges for loans and pays on deposits, fell to 2.95 per cent from 3.22 per cent a year earlier.
Similarly, NatWest’s first-quarter margin slid to 2.05 per cent from 2.25 per cent in the same period in 2023.”Of course banks need deposits — people or institutions lending them money — to function. That’s what they do — borrow money at one rate of interest and lend it at a higher rate. To suggest that banks can, and do, just create out of thin air the money that they lend is just ridiculous.
Well, the CWO theory has been disproved by the facts. The last world war (which ended with a couple of atom bombs being dropped) ended in 1945. That’s nearly 80 years ago. Meanwhile capital accumulation has continued way beyond replacing what was destroyed in WW2. Yet while wars have continued there has been no world war.
80 years is a long time. 80 years before 1939 is 1859. Capital accumulation since 1945 is many times greater than in the period 1859 to 1939.
Clearly there is something wrong with a theory that says that capitalism needs the destruction caused by world wars to keep going.
Hopefully, you are at least reassured that a world nuclear war does not have to break out for the reasons they give.
Another mention in the local media:
Lambeth and Southwark election candidates for London Assembly
We had to ask for the original version to be corrected because it had us advocating TUSC’s programme of reforms.
I know that’s not what you believe but the CWO at least have a theory about why the End is Nigh even if a completely mistaken one. You have no theory of why there’s going to be another world war, this time involving nuclear bombs. Just your own irrational fear unless your talk about those in charge of states going to war to avoid losing face can be called a theory.
Anti-antizionism bill passed:
https://news.yahoo.com/house-vote-gop-antisemitism-bill-200600525.html
As Hugo Rifkind pointed out in his “Ban the marches and Jews will get the blame” article above, this will be counter-productive in that it will tend to increase genuine antisemitism since some people will blame “the Jews” in general for this restriction on free speech.
Old Moore has a rival. This, from the mayday statement in Aurora, the paper of the left-communist CWO:
“The new scramble for Africa, and the Chinese and US manoeuvres in the Pacific, will not be limited to military moves by their proxies for ever. The future that imperialism is preparing for us is a future full of destruction, death and cruel barbarism never seen before”.
A real mayday message if ever there was one.
Their argument is that capitalism needs a world war to destroy capital so to enable capital accumulation to continue as reconstruction. If that’s true we may as well eat, drink and be merry (even with the lads).
Fortunately, their understanding of how capitalism works is wrong. Capitalism doesn’t need a world war for capital accumulation to continue.
Four of us handed out 400 or so of our leaflet at the May Day event in central London today, a march from Clerkenwell Green at the edge of the City to Trafalgar Square for a rally to be addressed by various leftwing trade union leaders including Mick Lynch.
We decided that the easiest way to move our stall from Clerkenwell Green to Trafalgar Square was to go with the march. But behind which banner? Certainly not any of the “Marxist-Leninist” contingents from workers from the Middle East and Asia with their hammer and sickle banners and especially not the one with a huge picture of Stalin. In the end we settled for Haringey trades council which happened to be the last one. So, we were as far away as possible from the vanguard(s).
The sad truth is that without the “Marxist-Leninist” contingents there would only have been a few hundred there. The trade union banners were followed only by 3 or 4 people. Also, some there seemed to think that there were on a pro-Palestine march.
At one point a man obvious City gent crossed the road between the marchers. We asked him if, as a capitalist, he felt intimidated by a workers’ march. He replied that he didn’t.
You mean the USA has plans to get Georgia to join NATO so it can move its missiles closer to Russia?
The first bank failure this year in the USA occurred a few days ago:
Look at the reason:
“Republic First Bancorp was seized by Pennsylvania regulators Friday, following a failed deal earlier this year to infuse the Philadelphia-based regional bank with new funds, amid a decline in deposits and a struggling mortgage lending business.”
Those who believe and teach that banks create out of thin air the money they lend have a number of questions to ask themselves.
1. If a bank can create money by simply making a loan (such as granting a mortgage), how come its mortgage lending business can be “struggling”? Couldn’t it simply reduce the rate of interest it charges and attract new borrowers that way?
2. If a bank can create money out of thin air, why would it need depositors? They would just be a drag on its finances through having to pay them interest? Why would a decline in depositors create a problem? It ought to improve a bank’s financial situation as there’s less interest to pay savers.
3. If a bank doesn’t need outside funds, how come that it can be saved by an infusion of funds from outside? Why would that make a difference?
Basically, a bank’s business model is to borrow money at one rate of interest (from depositors or other financial institutions) and lend out a part of that at a higher rate of interest; its income being the difference between the two.
So, the amount of funds a bank has or can get limits the amount it can lend and so its income. Similarly, if a bank can’t find borrowers (because the rate of interest is too high) then its income is reduced. That’s how a bank can get into trouble.
Every bank failure shows the absurdity of the Thin Air School of Banking yet it still won’t lie down.
Southwark News report, published today, on that Herne Hill hustings:
The Southwark News in its article on the mayor and assembly elections
https://southwarknews.co.uk/news/politics/london-elections-2024-how-do-they-work/
refers its readers for details on who the candidates are and what they stand for to this site:
https://whocanivotefor.co.uk/elections/gla.c.2024-05-02/london-assembly-elections-constituencies/
where, in the appropriate places, there is a link to a copy of our election leaflet.
Leafletting today in Brixton:
https://www.blogger.com/blog/post/edit/10048538/4446544912577219645
150 or so there and in Clapham High Street. A further 250 in Streatham Hill.
More tweets from the hustings:
Discussions about alternative ways to increase housing stock. @Chrissie_W13 advocates modular construction @ChrisD_French talks about repurposing office blocks@ShinyShep: need to retrofit
Adam says the solution is abolishing capitalism.
— Herne Hill Forum (@hernehillforum) April 24, 2024
Adam says the police exist primary to protect property rights, not support the community.@ChrisD_French said mayor should not be police and crime commissioner- that should be someone else and met needs reform.@ShinyShep emphasised need to reform the met
— Herne Hill Forum (@hernehillforum) April 24, 2024
Leasehold reform. Member of public said @SadiqKhan had not carried out commonhold pilot scheme he had said he would@LabourMarina said she would look into the pilot issue.
Adam said leasehold is a feudal relic
— Herne Hill Forum (@hernehillforum) April 24, 2024
@ChrisD_French doesn’t own a car. Need a pavement up approach. Active travel is great but we need pavements clear of clutter and hire bikes
Adam said we should have free public transport.@LabourMarina said LTNs have improved active travel options
— Herne Hill Forum (@hernehillforum) April 24, 2024
Photo from the Herne Hill hustings;
Candidates now making final short speeches.
Thanks to all of them for putting themselves forward, and for attending tonight.
Thank you also to everyone for participating so positively.
A great community event. pic.twitter.com/vYjd7dZwIx
— Herne Hill Forum (@hernehillforum) April 24, 2024
