Sunday, February 15, 2009

Should the Federal Government consider setting up a new version of the "Commonwealth Bank"?

It seems to me that the Federal Government might do well to consider setting up a brand new Commonwealth Bank.

As I understand it the present Commonwealth Bank arose from the need, following the Great Depression,to stimulate lending to the business sector. That was because the existing banks at that stage were so cautious with their funds that the economy was languishing.
This is happening again.

Although the Government has given the Australian banks one helluva kick-along by guaranteeing their deposits and has bolstered their capacities to borrow overseas the banking sector seems confused.

The Government is talking about 'jobs, jobs,jobs' but unless it wants to end up with dole queues from here to China, or employing everyone themselves, it is going to have to support small businesses and large businesses to employ people.

This is no easy task when you have mining companies shedding thousands. But it can help to support builders in Victoria, who will be flat out shortly because of the re-building necessary after the bush-fires,to find the labour they need and re-locate them.Theses builders are going to need to gear up to face the challenge ahead. They will need working capital and plant. But in this environment the banks will be crapping themselves about backing anybody who does not have bricks and mortar security flowing out their ears.

Kevin Rudd is talking about 'social capitalism' (a contradiction in terms if ever there was one).
So here is the perfect example of 'social capitalism'---- a bank owned by the taxpayer to provide some competition for the presently very-cautious capitalists in the banking sector.

Then in about 50 years they will be able to privatise it and sell it off to the taxpayers again to fill in a budget deficit.

Its such a good idea really!The more I think about it the better it gets.

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