There is a strong possibility that the ECB will increase interest rates soon, due to inflationary pressures caused by rises in oil prices and other commodities.
This will have an impact on the depressed property market, which is struggling due to lack for mortgage funds from the Banks and the reduced incomes suffered by people in general due to the economic downturn and the government cutbacks.
There is no indication yet that the property market has reached the bottom, with some estimates that property prices have fallen by up to sixty per cent from the boom in 2007, in certain areas.
This in itself has been the main reason for the Banking collapse, with developers and property speculators unable to service their loans and consequently the Banks needing the government to come to their rescue and put in tax payers money into the Banks. Otherwise, the Banks would have gone into liquidation and people with money in deposits with the Banks would have lost their savings.
Most people are not happy with the Government having to put tax payers money into the Banks in order to save them from going bust, but what were the options open to the Minister for Finance at the time. The way capitalism works is that people take a risk when they invest in order to try and make a return, but if the venture fails then people loose the money they put into the venture.
But the Banks were not allowed to go bust, they were seen as central to the survival of the economy and so the government stepped in with a government guarantee to allow the Banks to continue in operation.
This turns capitalism on its head. If a small business is allowed to go bust, but Banks are seen as ‘too big to fail’ where is the fairness in all this.
On top of this the Banks are now increasing their fees and charges on their customers, who are the very tax payers who helped bail them out in the first place.
So much for the idea of protecting the small man from big business.
