Smaller banks could not borrow any more money unless they put money out to businesses in an effort to stimulate the economy.
It was a pleasure seeing Hans and his family today and having a chance to chat. Of course our conversation almost immediately went to the economy. I shared with him how things are here in regards to small businesses and their struggles. Unemployment as high as it is due to businesses not hiring or simply closing their doors. We talked about the banking situation and I was surprised to find that they were having almost the very same problems in Europe as we are here, well they were.
I remember reading in the paper and on line a couple of months ago how the economy in Europe was well on the rebound and things were looking much better. Hans confirmed that bit of news for me today. Yes, things are much better in Europe. He told me how small businesses are encouraged to expand and hire. How the banks and the government would actually send support people to meet with you and help you figure out ways to increase your business all with the hopes of you hiring more employees. Instead of dumping large sums of money into their big banks they are encouraging real growth through earnings. This is not a bad idea and it hasn’t happened in this country in a while.
Not only is this happening in Denmark but also in Germany and other European countries. How did this all happen I asked. Hans explained that their central bank told all the smaller banks that they could not borrow any more money unless they put money out to businesses in an effort to stimulate the economy. There are stipulations and guidelines on any money that is borrowed by banks, these guidelines must be met, and it’s working well. We have talked about this very same scenario in the past. Our Fed chairman has the authority to do the very same thing in this country, why then do we not implement a policy that encourages banks here to do the same? It would seem to me we could learn from our neighbors across the ocean. If it is working for them, then it should work for us.
Until we get a handle on the true meaning of a real economy, we are never going to see a solid rebound. We can’t continue doing what we did yesterday and expecting a better tomorrow. That is the definition of insanity. Perhaps one day, and I hope it is sooner then later, those in charge will wake up in this country and see what really needs to be done. At any rate, it was good seeing my old friend Hans and I take my hat off to the rebounding economy they are enjoying.