The Great Depression Online

Great Depression Online Archive Issue:

Helping People Ruin Themselves

Great Depression Online
Long Beach, CA
August 19, 2008

Inside This Issue You Will Discover…

*** Bankers Are Not Cool Enough
*** No Longer Giving People What They Want
*** Helping People Ruin Themselves
*** And More

Bankers Are Not Cool Enough

In what must be the most telltale indication to date that the credit bubble is leaking gas, we find that bankers are forbidden membership to London clubs.

“‘We don't want the archetypal City idiot, waving his cash about at the bar and braying like a buffoon and annoying women,”’ said Downey, 42 [Owner of the East Room club on the edge of London’s financial district], whose club charges men an annual membership fee of 350 pounds ($655),” reports Camilla Hall for Bloomberg.

There seems to be a glut of uncool financial types in London these days…even politicians are welcome…

“Financial workers, who make up 85 percent of employees in London’s City square mile, are being shut out of the most exclusive clubs.  Passed over by centuries-old establishments such as White’s and Brooks’s, which prefer nobility, military officers and politicians, bankers aren’t welcome at the newest venues either.  They’re not cool enough, said Mark Wakefield, U.K. head of clubs at the Quintessentially concierge service.”

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No Longer Giving People What They Want

Next we’ll hear that bankers are the dregs of society.  But what for?  All they did was give people what they wanted – more money.

And after luring the public into excessive debt over the last 20-years by extending the cheap credit of central banks so that people could buy things they couldn’t afford…banks are now less hasty to lend money just when people need it most.

While they may still be able to get into a club in the U.S. if they want, they’re not greasing the wheels of the consumer the way they use to.

“The second half of 2008 looks like it will put the ‘self-reinforcing’ into ‘self-reinforcing credit spiral’”, says James Saft for Reuters.

“Banks in the U.S. are cutting back savagely on credit to individuals, making mortgages and consumer loans tougher to get and more expensive.

“Borrowers in turn are missing more payments, prompting more writedowns and leaving the banks still less to lend.

“All of these factors are magnifying one another.

“And the banks themselves say it is going to get worse.”

Helping People Ruin Themselves

Still, it wasn’t just the bankers who got us into such a fix.  For the bankers were only playing their part…and they were trying to help people.

If you’re a banker, how else can you help people if you don’t extend them lots of credit?  And if a person’s determined to ruin themselves, isn’t helping them in this endeavor the proper thing to do?

Mr. Jones got a raise.  Mr. Smith didn’t. 

The following week Mrs. Smith bumped into Mrs. Jones at the market just as she was getting out of her new Lexus.  That night Mrs. Smith told Mr. Smith that her Ford Taurus was no longer good enough.  That she should drive a Lexus too.

The next day Mr. Smith went down to the Toyota dealership…he’d seen some friendly financing arrangements advertised on his new plasma TV he’d bought on credit three days before.  Why not?, he’d remember saying.  If Mr. Jones can have plasma TV, so should I.

And on and on.  And so forth and so forth.

The lenders were more than happy to oblige the Smiths… 

Until suddenly they weren’t.


M.N. Gordon
Great Depression Online

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