Another credit crunch looms

The threads holding up the balance sheets of the banks are growing perilously thin.

The finance sector is signalling alarm, and our politicians are once again asleep at the wheel. Another "credit crunch" may be looming. The most significant evidence emerged from the ECB's second Long Term Refinancing Operation (LTRO) on Thursday last week.

The LTRO is simply language intended to disguise the "printing of money" by the ECB for lending to private European banks at a very low rate of interest - 1 per cent. (In fact, the money is not even printed: it is created by entering digits into an ECB computer, and then transferring hundreds of billions of euros as 'bank money' to private banks.)

The fact that British banks rushed to drink from this punch bowl, tells you something about the state of their balance sheets.

For reasons that I suspect are largely ideological, the British government and HM Opposition refuse to face the reality that our private banking system and large parts of the corporate and household sectors are effectively bankrupt. Given this context - and the grave threat posed by an insolvent private finance sector - the joint and somewhat myopic focus by all political parties on the public debt is surely irrational.

Many households, firms and banks in the private sector are only kept from liquidation by a) "forbearance" - bankers hanging on in the hope that e.g. defaulting mortgage debtors will eventually repay; and b) injections of 'liquidity' by publicly-backed central banks.

But the threads of forbearance and liquidity holding up the balance sheets of the private banking system are growing perilously thin.

The ECB is by law (the Lisbon Treaty) prevented from making low-cost finance directly available to sovereign governments of the Eurozone. Whereas the Bank of England has effectively financed the government's deficit by buying government bonds at very low rates of interest from private banks, Greece and Portugal cannot rely on the ECB to purchase their bonds at low rates. Instead they have to turn to private bankers/financiers - who charge much higher rates of interest. (Readers are free to speculate as to who may have had a hand in drafting the Lisbon Treaty and the ECB's mandate.)

To avert Armageddon in the global financial system last December, the ECB turned the cheap money spigot on - in the vain hope that private banks would lend on low-cost ECB loans to governments. And that they would do so at a rate of interest a little nearer to the 1 per cent the ECB had charged them.

So much for wishful thinking.

This onlending - borrowing cheap and lending dear - is called 'the carry trade', and extremely profitable it is too. Take Portuguese 10-year bonds: private banks are using their 1 per cenr ECB loans to buy these at 14 per cent - a nice, effortless little earner. The case of Greece is of course, worse: the rate of interest the 'carry trade' extracts from Greece for short-term loans is frankly, criminal. Indeed the ECB's easy, cheap money can be said to be helping bankrupt the very governments it purports to help in its roundabout way.

But I digress. Last week big banks as well as many small banks, rushed to suck on the teat of cheap central bank funding. Our very own Lloyds Bank, already largely government-owned, borrowed €13.6bn from the ECB while Barclays, which claims it never relied on public funds, borrowed €8.2bn; RBS borrowed €18bn. In total 800 European banks rushed for help from the ECB.

This is a worrying development.

But even more disturbing are signs that banks no longer lend to each other. Just as the credit crunch of August, 2007 was heralded by a freezing up of inter-bank-lending, so history appears to be repeating itself. According to the FT, banks deposited a record €777bn overnight with the ECB last week, up nearly two thirds from the previous day.

In other words, banks were borrowing from the ECB at 1 per cent and then re-depositing funds with the ECB for less - 25 per cent.

Banks could earn a great deal more in the inter-bank market - but that market scares the hell out of them. They know a lot more about their fellow bankers' solvency than our politicians do. Which is why they are parking their (our) money with a bank that cannot go bust: the taxpayer-backed ECB.

Given that our politicians are looking the other way, this should scare us too.

Ann Pettifor is director of PRIME - Policy Research in Macroeconomics.

Photo: Getty
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Leaving the cleaning to someone else makes you happier? Men have known that for centuries

Research says avoiding housework is good for wellbeing, but women have rarely had the option.

If you want to be happy, there is apparently a trick: offload the shitwork onto somebody else. Hire cleaner. Get your groceries delivered. Have someone else launder your sheets. These are the findings published by the Proceedings of the National Academy of Sciences, but it’s also been the foundation of our economy since before we had economics. Who does the offloading? Men. Who does the shitwork? Women.

Over the last 40 years, female employment has risen to almost match the male rate, but inside the home, labour sticks stubbornly to old patterns: men self-report doing eight hours of housework a week, while women slog away for 13. When it comes to caring for family members, the difference is even more stark: men do ten hours, and women 23.

For your average heterosexual couple with kids, that means women spend 18 extra hours every week going to the shops, doing the laundry, laying out uniform, doing the school run, loading dishwashers, organising doctors' appointments, going to baby groups, picking things up, cooking meals, applying for tax credits, checking in on elderly parents, scrubbing pots, washing floors, combing out nits, dusting, folding laundry, etcetera etcetera et-tedious-cetera.

Split down the middle, that’s nine hours of unpaid work that men just sit back and let women take on. It’s not that men don’t need to eat, or that they don’t feel the cold cringe of horror when bare foot meets dropped food on a sticky kitchen floor. As Katrine Marçal pointed out in Who Cooked Adam Smiths Dinner?, men’s participation in the labour market has always relied on a woman in the background to service his needs. As far as the majority of men are concerned, domestic work is Someone Else’s Problem.

And though one of the study authors expressed surprise at how few people spend their money on time-saving services given the substantial effect on happiness, it surely isn’t that mysterious. The male half of the population has the option to recruit a wife or girlfriend who’ll do all this for free, while the female half faces harsh judgement for bringing cover in. Got a cleaner? Shouldn’t you be doing it yourself rather than outsourcing it to another woman? The fact that men have even more definitively shrugged off the housework gets little notice. Dirt apparently belongs to girls.

From infancy up, chores are coded pink. Looking on the Toys “R” Us website, I see you can buy a Disney Princess My First Kitchen (fuchsia, of course), which is one in the eye for royal privilege. Suck it up, Snow White: you don’t get out of the housekeeping just because your prince has come. Shop the blue aisle and you’ll find the Just Like Home Workshop Deluxe Carry Case Workbench – and this, precisely, is the difference between masculine and feminine work. Masculine work is productive: it makes something, and that something is valuable. Feminine work is reproductive: a cleaned toilet doesn’t stay clean, the used plates stack up in the sink.

The worst part of this con is that women are presumed to take on the shitwork because we want to. Because our natures dictate that there is a satisfaction in wiping an arse with a woman’s hand that men could never feel and money could never match. That fiction is used to justify not only women picking up the slack at home, but also employers paying less for what is seen as traditional “women’s work” – the caring, cleaning roles.

It took a six-year legal battle to secure compensation for the women Birmingham council underpaid for care work over decades. “Don’t get me wrong, the men do work hard, but we did work hard,” said one of the women who brought the action. “And I couldn’t see a lot of them doing what we do. Would they empty a commode, wash somebody down covered in mess, go into a house full of maggots and clean it up? But I’ll tell you what, I would have gone and done a dustman’s job for the day.”

If women are paid less, they’re more financially dependent on the men they live with. If you’re financially dependent, you can’t walk out over your unfair housework burden. No wonder the settlement of shitwork has been so hard to budge. The dream, of course, is that one day men will sack up and start to look after themselves and their own children. Till then, of course women should buy happiness if they can. There’s no guilt in hiring a cleaner – housework is work, so why shouldn’t someone get paid for it? One proviso: every week, spend just a little of the time you’ve purchased plotting how you’ll overthrow patriarchy for good.

Sarah Ditum is a journalist who writes regularly for the Guardian, New Statesman and others. Her website is here.