During the last few days, politicians accused banks of being bad guys because they allegedly no longer grant loans. The phrase “shortage of bank loans” became a “loan dilemma”.
Banks, so politicians say, have plenty of money but grant no loans, which allegedly has a detrimental effect on our economy. We need a law that forces banks to give a loan, is what they demand.
That is a good example for our new dishonesty. You lament about something that is allegedly not as it should be, the mountain goes into labour and out comes a mouse. But you only ever get to know half the truth.
For the medium-sized enterprises, bank loans always depended on the security and guarantee you offered in return. The machine you were going to buy or the famous house of your grandmother or claims you had against a top customer are typical examples. That has always been so and is still so today.
Speaking of these loans, we are not talking really huge loans. It is more like “just” a few thousand or ten thousands, or maybe once in a while one or a few million Euros or formerly Deutsche Marks were being negotiated.
However, banks are now more cautious when a “private equity enterprise” looks for a banking partner in order to buy an enterprise and finance it from future profit of this same enterprise. That model used to be quite common in many sectors (pharmaceutical, automotive,…) and sometimes acquisitions worked according to this pattern (sometimes not).
Very clever. You get something that pays for itself and later on you can make a profit out of it. That sounds like an excellent bargain. And since we are talking several billion Euros, there was quite some profit involved. For the banks, too.
Now, these “perpetua mobile” no longer work (surprise, surprise!). So nowadays the banks are more hesitant with this sort of business. Who can blame them?
But is that what can be politically lamented as “loan dilemma”? Or is it maybe a consolation to know that maybe it is not all that easy to become rich without doing anything at all?
RMD
(Translated by EG)
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