Why Bank Collapses are Good for Small Business and Social Enterprise

Twenty Four Billion English Pounds was the reported loss made by one UK bank last year. That’s twenty four thousand million pounds (£24,000,000,000). It seems like the government or taxpayer is going to once again “bail them out.” Simple logic might suggest the government is actually buying some significant shares in the bank outright and will no doubt sell it back to the same bankers at a much reduced price later on. We’re used to this level of corruption and the lame explanations that accompany such a decision. However, things have moved on. This time the government will simply purchase all the uncollectable debts or “toxic” assets as they have been called, indemnify the bank against further significant losses, and leave them to re-start the process once again. If you add to this mix the huge bonuses being paid to bankers and it can only lead to one logical question, “Are they really going to keep chasing me for the £1,500 I owe on my credit card?” I’m sure even a couple of million here or there won’t bother most taxpayers.

So why are banks in fact bad for small business owners? The fact is that banks stifle real business. In the most obvious case it’s simply that by offering savers interest it means that in one fell swoop a significant number of potential investors in new businesses are taken out of the equation. They go for a guaranteed 5% interest payment rather than a “risky” 20%. So now the entrepreneur is pretty much forced to borrow at interest rather than share the risk with an investor. Not to mention the collapse of the futures market and other such “financial instruments’ that also sucked up a lot of potential investment. 

It’s also the impact on big business that will be significant. Big business has been able to leverage the banks and thus borrow £100 million in order to make a £100,000 profit, and to do this time and time again. This is a luxury not afforded to small business. Small business is not able to make 75p on a coat because it will sell 10,000 of them. Big business might even use this as a “loss leader” in order to corner the market and kill off smaller competition before then hiking the price up again, way beyond the original selling price.

The decline of the bank marks the beginning of the reinstatement of the significance of the real trader along with commercial and social entrepreneurs. It marks an opportunity for real guilds to replace trade unions, and it marks the opportunity to change the dying shopping centres into free and open marketplaces. Yes! i really do mean free to the trader, no rent for selling space. I know it’s confusing to some of you to accept the logic of free trading space for all,”but we’ll discuss it further at a later date. For free and open markets, accessible to all is the key to a revitalised and just economy.



Leave a Reply