In a month or two
• retailers and home mortgage borrowers won’t be able to service their loans from the banks
• private landlords won’t be able to service their loans from banks as their tenants are unable to pay their rent.
As a result property prices will collapse, rendering banks insolvent as much of their lending that isn’t dependent on vanishing future profits is secured on property. While central banks will continue to pump huge amounts of liquidity into the banking system, liquidity is not the same thing as solvency. Banks will inevitably go bust, necessitating governments to rescue them again, as it did in 2007-8, and, as they did post 2007, seek to re-balance the economy with a further round of ‘austerity’ for workers.
My speculation? No, it’s effectively what Larry Summers, the celebrated economist and former director of the National Economic Council under President Obama, was saying today on Bloomberg.
Summers predictably declined to predict how all this would all turn out. The aim for communists surely has to be to socialism. We allow banks this time to go bust while securing continuance of their money transmission and their other, essential i.e. non-speculative activities – something the Vickers Report should have ensured but which it failed to do. We close down tax havens. We appropriate the appropriators.
Meanwhile, the immediate need when Covid-19 has been brought under some control will be to hold the UK government to account. Why is our death rate heading to be the highest of any developed nation? Why were Johnson and Prince Charles tested when others were left to die? Why was the warning from the SARS outbreak ignored? Why has the government been closing hospitals and A&E, including the threatened closure in our area of Epsom and St Helier Hospital? Why has the NHS been used as a bargaining counter in trade negotiations with the USA? Why did the government fail to protect NHS staff with PPI?
We need more than just whistle blowing for the NHS every Thursday at 7 pm. We need immediate accountability post Covid-19, then to start building a better world.