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.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.

Now why are banks in fact bad for real business? 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 business are taken out of the equation. They go for a guaranteed 5% interest payment rather than a “risky” 25%. Now the entrepreneur is 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 in fact borrow £100 million in order to make £100,000 and to do this time and time again, 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 and use this as a “loss leader” to corner the market and kill off smaller competition before hiking the price up again and way beyond the original selling price.

The decline of the bank marks the beginning of the reinstatement of the significant of the real trader and the 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.


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About (Hajj) Amal Abdalhakim-Douglas

Amal Douglas is Senior Consultant at the DMC Consultancy specialising in fundraising and business support and is a long-standing member of both the UK Institute of Fundraising (InF) and Institute of Enterprise & Entrepreneurs (MIoEE). He has authored a number of books and other publications including, Seven Secrets of Successful Fundraising, For the Coming Woman, An Interview with Ralston X, and Zakat - Raising a Fallen Pillar (with Shaykh Abdalhaqq Bewley)

Posted on March 4, 2009, in Business Services, Business Solutions, Fair Trade. Bookmark the permalink. 18 Comments.

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  2. Here at Seymours we have been working hard to establish free open markets. We want to work with other traders and find good spaces where there is footfall and the traders are not charged for the space.

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