Jayson Funke Graduate School of Geography Clark University 950 Main Street Worcester, MA 01610 ------------------ guardian letter as excellent primer to finance (by "rogerjthornton" quoted below) in response to the original article at: http://business.guardian.co.uk/useconomy/story/0,,2156601,00.html
"I think I am begining to understand commerce and banking. lets see if I have it right? Lots of quite poor people lend their small amounts of hard earned money to a bank fora paultry rate of interest. The bank then lends all this money to a rich person at a favourable rate of interest. The rich person then lends the same money out to some even poorer people at a crippling interest rate. So far so good. The quite poor people gain pennies (cents) The banks make shillings (dimes) (but lots of them) The rich make pounds (dollars)(lots of them) So then a problem comes along and the very poor people at the end of the chain cannot keep up the interest and repayment charges. So the poorest loose everything including their houses. The rich cry 'Foul! We must not loose money or the economy will collapse.' So the banks have to give them some money to make up for their losses. The banks then appeal to the treasury for reimbursement of their losses and so tax money is used to repay the banks for their losses. So then taxes go up so that the quite poor pay more in taxes than they got in interest from their savings. Net result, The very poor loose everything The quite poor loose a bit The banks break even, or make a modest profit The rich have to buy more wheelbarrows to carry away their profits."
