As a data processor for Experian for I was able to observe from my desktop as the global markets crashed. When Northern Rock started to turn sour, there was a run on the bank. This was in 2007. No one, and everyone could have predicted what was going to happen.
The day I started for Experian, the 15th September 2008, it is the same day that Lehmann Brothers filed for Bankruptcy. Over the following months I witnessed a spectacular failure in the capital markets.
People I knew worked at major banks and told me to withdraw all the money I had as it probably wouldn’t be there at the end of the day.
The government then decided to bail out the banks. It was a necessary and immediate step.
What then happened is what I perceive to be the stupidist thing. Companies started to behave opportunistically, and some started to panic as well. So they then started laying off staff. Now those people who have been laid off, don’t have their money going in to the bank, which causes the bank more problems. Then all the places that those people would spend their money, like pubs, shops, markets, retailers, restaurants and so forth no longer have the money coming in, and so they have to lay off staff. Then the places where those staff would spend money, in the same sorts of establishments, those establishments would close down and the spiral continues.
People feel more detached from the financial world than they do from the political world.
This is why bailouts should have been at a more basic level. Our pubs are dwindling at an unparalelled rate, our markets are now all but gone and other businesses have panicked/been opportunistic. When I say a business has been opportunistic, what I mean is that they have laid off staff,and lowered pay and hours, citing the recession as a cause while many companies such as Experian and JCB have actually increased in size and year on year profits.
If, after the preliminary bailout, the government had instead decided to focus on keeping people in jobs, punishing companies who laid people off without reason, they wouldn’t need to bail the banks out. If they’d focused on aspects of the real economy, helping pubs, local markets and securing jobs in local authorities then they might not have to bail out the banks. Had the government looked after the real economy the banks could look after themselves.
For some reason the present government hasn’t done that. It rewards the bankers with tax payers money, while it will let Mr and Mrs Smith lose their house.
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