It's not about their jobs it's about ours.
If liquidity dries up - ie no one can get hold of any money - then business can't borrow to expand, or borrow to fund growth, or simply deal with cashflow issues. This means companies could become uncompetitive and go bust - lots of companies, all over the world.
This then creates a cycle - people losing jobs can't spend, more businesses who were teetering on the edge fold, more redundancies etc etc
The big cash injection wasn't to bail out the banks, it was to underwrite the mortgages - in other words safeguard US home owners (and by default a lot of UK home owners). Without that "insurance" for the existing debt, the banks that don't go bust will just shut up shop. Look at mortgages - Where there were 1000 mortgages last year, this year there are 15. I'm not saying that's a good or bad thing but it's a clear sign that banks are just going to shut up shop.
It's called liquidity because it keeps things moving - circulating. Without liquidity acting as "oil" in the machinery of business, the whole thing grinds quickly and noisily to a halt.
One last point - businesses do not borrow recklessly, they borrow to survive. 70% of businesses that go bust do so because of problems with cashflow. They grow but they can't fund the growth because they can't get the money in quickly enough. Imagine now if those businesses can't go to the bank and say "here's my order book - can I get an overdraft, loan, factor the debt". It will kill REAL businesses like mine, like yours, like the ones you work for. I don't give a toss about greedy bankers - I care about my job, my family and my staff's jobs.
Last edited by a moderator:
