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June 2008

“Financialisation” is a neologism invented to characterise certain trends on the American economic scene, and so the international economic scene, in the opening years of the 21st century. Would it be fair to propose another neologism, “fin­ancialitis”, to describe the inflammation of hostile commentary on capitalist financial institutions and, in particular, on organisations which label themselves “banks”?

Traditionally, British newspapers have been friendly towards these institutions, but recently the Financial Times has positioned itself as a critic of the financial structures found in free-market societies. Its chief economic commentator, Martin Wolf, has written a series of outspoken articles advocating more state intervention and control.

The inability of Northern Rock to fund its balance sheet last summer and the subsequent run on its deposits may have started the latest bout of financialitis in Britain. But the condition has been aggravated by the US Federal Reserve’s decision to extend a loan to Bear Stearns as part of a larger rescue effort, even though Bear Stearns is not, strictly speaking, a deposit-taking bank. Bear Stearns is instead a market-maker and underwriter of securities. These two activities are not only the most distinctive and riskiest in modern capitalism, but are also very highly paid.

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Tom MacFarlane
June 6th, 2008
8:06 AM
Nonsense on stilts. Only today The Independent has reported that the Competition Commission has reported that banks' customers are being ripped-off by ersonal protection insurance: "Taking out PPI can add £3,000 to a £7,500 loan. But many policy-holders have found that they cannot make a claim because they have a medical condition or are self-employed. Those who do claim find payments usually last 12 months or less." The inquiry's chairman Peter Davis, who is deputy chairman of the commission, said: "We've found serious problems with the PPI market and consumers are paying for the lack of competition. "Distributors don't appear to compete much with each other on either price or quality of PPI – neither do they appear to do much direct advertising to win customers from each other." Inquiry chairman Peter Davis: "We've found serious problems with the PPI market and consumers are paying for the lack of competition. "Distributors don't appear to compete much with each other on either price or quality of PPI – neither do they appear to do much direct advertising to win customers from each other." Which just about sums up the whole cartelised set-up. Funny how those who preach "free markets" turn out, on examination, to be supporters on oligopoly.

Tom MacFarlane
June 5th, 2008
12:06 PM
Tim, I wonder what Murray Rothbard would be writing about the current problems within banking and financial services? http://www.lewrockwell.com/rothbard/frb.html

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