"The paradox is that the Government wants to make more credit available to reduce the severity of a recession that was caused by a decade-long, crazy lending binge."How right he is.
My first job before starting university was as a summer temp with one of the big high-street banks. One part of that job was helping with the credit scoring system that decided whether or not a customer was allowed to have a loan.
And the lending department were jolly strict about it. If there was the slightest chance the loan might not be repaid - it wasn't given.
So what went wrong?
One question is, why was money lent to people who couldn't pay it back?
But personally, I don't think that the banks are 100% to blame.
Why did people borrow money if they couldn't pay it back? Is it not irresponsible to borrow if you can't repay?
This morning on Richard Murphy's blog, I found an article in which he quotes John Sentamu, the Archbishop of York, who points out that one factor which caused the credit crunch was - greed.
Credit was so easily available, people were wheedled into borrowing what they couldn't repay, because they wanted more than they could afford.
So I don't think more credit is the answer.
I think that people should be taught not to borrow what they can't repay.
And the banks shouldn't encourage them to do so.
There's fault on both sides.
M
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