Once again, I do not think you are aware of how the banking system of today operates and its history. You're confusing a lot of different financial mechanisms. Also, your assumptions about the actual start of the debt crisis are plain wrong. The primary trigger was the Bank of International Settlements, the secondary was the oil run up. It was no accident.
once again i think you are missing my point. i think you are all missing the point i am making. you are looking at the banking system as a way of institutions getting as much of the money in circulation they can in their own possession. rather than a requirement to provide investment for businesses to grow. for example the situation with small businesses not being able to get credit is related to the economy being able to produce output. the businesses produce output so if they do not get the money they require they do not function thus do not produce output. the banking system is needed to get that money to the businesses that need it to produce that output. if the businesses do not have the ability to get those resources they will not be able to produce output. therefore for an economy to produce. that money has to get to them. that is the function of the banking system. NOT to get as much of the money they can for themselves. sure someone can get more money by investing in something else but does that enable those small businesses to continue if that money is invested somewhere else. NO. that money is not where it needs to be and the business fails as a result and output falls. to get people to invest in these small businesses the return they get has to outperform the risk otherwise like you said they can invest somewhere else. so if the interest rate is lower and the return does not justify that risk then people will invest somewhere else the businesses will not get that money and they will fail. I will read that link you sent me. however i doubt it change my mind as 1. i don't think you are understanding the point i am making 2. the banking system as you see it is self serving and not doing its function and 3. as the following link suggests i am correct in my summation that small businesses are not getting credit even now. http://news.bbc.co.uk/1/hi/business/8169596.stm if businesses are not getting credit it means the banking system is failing because it is not getting the money where it needs to to enable output. it has become a way getting the money that is there in the possession of institutions and individuals and thus does not do its real function. it has failed. so another method of getting resources to that those businesses or initiatives is needed to fill the gap. that is my solution.
Because your point is mostly rambling with nonsensical assumptions & conclusions. For the third time, please educate yourself about how the current monetary system functions. You have to understand the problem before you come up with solutions. The link I sent you is a good start. The fact that small businesses are so reliant on credit to run their everyday operations is a symptom of a much greater problem. A real business produces on its own if it is profitable.
i have read the link before. i have read other paper like 365 macroeconomist are wrong etc. i do not agree with that school of thought. it is not a case of lack of understanding. the letter i wrote if you read the top sentence states that the letter contents was in relation to small business funding. my solution was another way of generating capital not linked to credit at all as i see the current system failing. you do not see that in the letter because i do not explain my solution. i understand that the banking model has progressed from saving deposits however if i explain all of that it will take 325 pages. my point of the letter was the banking system is failing to do its function look at my alternative not an in depth report. the arguments i put in although not all of the story are still valid. the lack of demand for credit derivatives has meant more banks have to hold more risk. the fact that the bank acts as an agent for individuals and that the individual saving more creates a disparity of saving and lending is one of the reasons why the it seems the banks are not lending out as much as they hold. there are others but why would i explain all of them in letter when the objective i have is met. you also assume the books you read are correct. are they? do you know everything to know whether they are or not? no. one thing is certain though the businesses are not getting the credit they need thus the banking system is failing. my solution was an alternative. the examples of why it was failing are valid but not all of the reasons. the letter served its purpose.
I'm sorry but you are delusional & clueless. There is significant private equity & hard money lending available. But most of these small businesses are pure crap and were only able sustain themselves due to cheap credit. That game is over, so these piece of crap businesses have got to go. Good riddance. You're obviously not aware of the situation behind available capital in the market today. There is plenty of private investor capital, but it is very selective, as it should be. Quite the opposite, you want to create some crazy plan to save the crappy small businesses that had no real economic reason to be operational in the first place. I stand behind my initial observation, you really do not understand how the financial system works. And you are wrong on what started the financial crisis. There was demand for the credit derivatives, as long as more credit kept pumping. That is where Bank of International Settlements comes in.
what about the start up capital fro new businesses. it is not just the current businesses but new ones starting up that cannot get credit. plus a lot of those businesses can be very productive but might not be able to cover the cost of staff or new stock for an order and although they have business (demand for the good or service) because they cannot get the stock to produce or the money to pay the staff to perform the service they fail. you missed the point of the letter. and i think what it was trying to explain. please read my pm. i also don't think there is a reason to fall out over this. it is mainly us disagreeing on schools of thought. please read my pm and read my letter again it might make more sense.
If you had any experience with start-up & venture funding, you would know that there is a world of investors out there who cater to that. If the idea is sound, it has a good chance of getting funded. Also, banks do not give unsecured loans to start ups, even during the good times. You needed collateral. You don't have a point and you're making little sense. You just keep babbling about some secret mechanism based on your inaccurate assumptions. That's really what is gathered from your posts. Just explaining your magical mechanisms in simple terms would suffice as making a point.
it is not just start ups like i said a lot a businesses fail due to cash flow problems. one other point is that i am commenting in relation to the english system. are you english or have you been in the england. if not how do you know the situation.
Once again, if the business is so dependent on credit just run its basic operations during the easy times, it deserves to fail during the hard times. If it is so dependent on credit, then its business model is garbage. Let me guess something, you're an academic and never spent any time in the business world. Current financial & monetary systems of the world are based on the British central bank.