SMEs and the banks
By Primal Sneeze ~ November 24th, 2008. Filed under: Banks, Business, Economy, Politicians.
It is no wonder that when the Irish pound spilt from sterling in 1979 it was renamed the Punt – it rhymes with bank manager.
The currency may have changed but the managers are the same – a shower of punts and bankers. In fact, they are worse now than they ever were.
All commentators (not you – you’re a commenter – I mean the analysts who get paid to comment) are predicting a wave of mergers and acquisitions within the banking sector, possibly with only the big two, AIB and BoI, remaining in Ireland.
Now if I were about to accquire something (like a pint) and you were to hit me up for a few quid I wouldn’t entertain you. No, because I’d be holding onto my money to make that purchase. Likewise, if I were about to be acquired by or merged with (say, with the hot chick over the road), I would want to appear solvent, if not wealthy – a good catch.
Either way, I’m not giving you a penny.
The Labour party will this week move a motion (that phrase always make me giggle) that the government take action to force the banks to ensure credit streams (that makes me giggle too, but not as much) be made available to small businesses. Of course it will be voted down – Cowen and co. are working on their own deal with the banks behind closed doors. The banks are saying “let’s get this merger and acquistion business out of the way before we dish out any credit” and Cowen is saying “well okay so, as long as you keep the big boys going – the builders have houses to sell”. “Grand. We’ll do a few mortgages then”.
Eugene Sheehy, madra mór in the AIB, said as much last week: The banks are “open for business” and trying to “get the housing market moving”, but that “funds are not available for working capital”.
He also said “it is not in anyone’s interest – either customers or banks – to lend money to people who cannot repay it”. Now that really makes me laugh – for fuck sake isn’t that just what he and the rest of the punts were doing these last ten years?
Small businesses are folding by the minute. Their customers can’t pay them. They, in turn, can’t pay their suppliers and they too fold.
Small businesses which have a viable market can’t raise the cash to buy the raw materials they need or pay the wages. And they fold. [See the case study below]
A special fund managed by the Europrean Investment Bank is available to the banks to support these customers specifically. But the banks are not availing of it. Why? Because then they would have loans on their books that they owe and loans that they are owed. They would not appear attractive to a suitor, nor, as the suitor, would they appear an attractive bedfellow to the object of their advances.
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Case Study
Jack and Mary have worked for the same small company for some five years now. One day, Mary suspects something is up when she notices the boss staring at her through the window of his office.
He calls her in.
“Mary”, he says, “I don’t know any other way to put this. The situation is killing me. I can’t go on like this any longer.
I going to have to lay you or Jack off”.
“Is that all?”, replies Mary. “I thought for minute I was sacked. Here, take one of my tissues. I’ll wait outside”.
Dána, ach greannmhar (an scéal ag an deireadh).
As for the merchant bankers…..
Excellent! You did the entire post to set up the end. Just how many grandchildren has Myles na gCopaleen got running around the place?
@aonghus – It was regurgitated from the 80s. I’m sure you’ve heard it before. And don’t get me started …
@Eolaí gan Fhéile – Thank you! Yes. And thousands you would think?
Great lead up – better than foreplay
It is no wonder that when the Irish pound spilt from sterling in 1979 it was renamed the Punt – it rhymes with bank manager.
That right there is classic. Thanks for the laugh.
@Quickroute – Foreplay? As in “brace yerself, Bridget”?
@Ann – ‘Tis indeed. It’s great being able to use all the 80s gags again. That’s something to thank the recession for.
I’m still shocked at the thought that one can get paid to comment. How do I arrange this?
Brilliant. Just feckin hilarious.
Ju know what makes me vomit Mr. Sneeze? It’s the haste, the mad panic and emergency, it’s the rush by Lenihan and Cowan and the other talking heads to fix this financial crisis and to help the banks. To guarantee and gift the nation’s taxes to these money launderers, sorry, money lenders. ( and Bertie is back in the picture again, dear God )
But for a substantive plan to address the HSE or other public service departments, for a root and branch review to address the headcount and budget.
Absolutely fucking nothing.
This government is a disgrace.
Nice posting Mr Sneeze ( and thanks for facilitating the rant)
Aren’t you the terror, altogether. Tell us more about “the hot chick over the road”, is she a bit of a pullet?
My limited understanding of this whole mess is based on the idea that building sites – speculative, prospective, partially built or completed are all hugely overvalued. As is all the property on which mortgages have been given between 2004 and 2008. The banks lent against the notional value of all of this property despite all the voices who have been shouting ‘negative equity!’ for the last four years.
Meantime, because of prices, local authorities have been unable to acquire land on which to build social housing. There are people waiting 10 years for social housing around the country. The ‘affordable’ housing scheme was rendered toothless at the developers’ behest and with Noel Ahern’s bumbling incompetence.
I see an opportunity for a solution here. One that houses people who need housing, and will put houses into public ownership at a reasonable cost and without creating poverty ghettos.
However, I do not see this government forcing banks and speculators to bite this bullet, even though they are responsible for the mess we are in. Cowen and Lenihan would rather protect those interests at considerable negative cost and risk to the Irish Exchequer.
@Conortje – You just need to send me your bank details. PayPal account information and credit card numbers as well … just in case.
@Caro – Really? I wouldn’t know. I never read my own posts.
@Sniffle&Cry – Haste is needed. But not toward where Cowen & co. are rushing.
The HSE is at the bottom of the priority list. As is education. As are other other services that can regenerate the economy in ‘real’ ways, not the ‘pretend’ economy of inflated property prices and bank-gambling*.
And no worries – rant away.
* Shorts; longs; derivatives; hedging; gambling-with-other-people’s-money etc.
@Conan Drumm – I’d let her pullet any day.
‘Affordable’ houses are now dearer than those on the open market. I mean, huh! How’d that happen? Developers overpricing and banks turning a blind eye to get back loans from the developers and more interest from buyers, that’s how.
This government keep telling us we do not understand how severe the situation is. Well, we do. Better than they. We are the ones affected. This time last year I knew no one unemployed. Now I know many. Too many. And will know more.
In Turkish we have a saying that translates as: You have a house? You have problems… I never really understood this, why having a house would ever present any problems.
The incredible greed of the banks encouraged by the greedy other financial instituations and even greedier governments, seems you have the perfect concoction for trouble.
It doesn’t only affect the homeowners or homeowner wannabes but it affects, very adversely, those who just want to rent….
@Gayé – That saying is a wise one. Houses are a drain. They just bleed you dry.