Tuesday, October 04, 2011

"Credit easing" explained...

... by The Daily Mash.
Osborne's offer of credit to thousands of small businesses will make Britain the first conservative-led communist state when the loans are inevitably defaulted and the government ends up owning and running everything.

Here's a tip, business peeps: if you absolutely need a loan, then you aren't a viable business.

4 comments:

Grumpy old Man said...

Does working capital, to cover the period between selling your product and receiving payment, count as a loan or as credit? As I understand it, it is the reluctance of banks to extend this form of credit to otherwise viable enterprises which is the problem the Govt. is trying to solve.

Carl said...

Sounds like we need a campaign to send a copy of Henry Hazlitt's Economics in One Lesson to every MP to sit alongside that copy of 1984.

Quote
"There is a strange idea abroad, held by all monetary cranks, that
credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan. The banker is not giving something for nothing. He feels assured of repayment. He is merely exchanging a more liquid form of asset or credit for a less liquid form. Sometimes he makes a mistake, and
then it is not only the banker who suffers, but the whole community;
for values which were supposed to be produced by the lender are not
produced and resources are wasted."

The entire book can be found at:

http://mises.org/books/economics_in_one_lesson_hazlitt.pdf

Suboptimal Planet said...

Sounds like a great idea to me, and I look forward to the successors, Champagne easing, caviar easing, and Ferrari easing.

Think of all those deserving peasants who will finally be able to eat, drink, and drive well (not at the same time, naturally).

And think of the boost to GDP!

Truly we live in wonderful times.

Sean O'Hare said...

@Carl 10:23

Are you not confusing "credit" with the term "credit worthiness"?