Wednesday, 10 December 2008

Credit and credibility

It's odd to reflect that the current financial crisis should have a marginal effect on most individuals' everyday lives. So the financial markets were creating vastly inflated opinions of themselves based on selling each other dodgy products. But the dodgy products were only in their domain. My company's paint is pretty much the same stuff we've been selling for 35 years, barring the odd technological advance. Eggs are eggs, bread is bread, so why should we care if some bankers managed to dupe each other on a massive scale?

The banking system is all about trust, as most bankers will say. And now all that trust has gone to pot because the banks don't know if they can trust each other any more, because they've all got dodgy products they're trying to offload.

But what about the rest of us? Eggs are eggs, bread is bread, and paint is paint. As long as we pay our debts and provide our goods & services, there's no reason for us to fall into the black hole that banks have created for themselves. Unless they try to use us to fill it.

Maybe the only thing we can't trust is the banks.
'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.'
Thomas Jefferson 1802