Wrong medicine

Wrong medicine

After Kipp’s blog said it quite liked Eric Cantona’s plan to punish banks for the crisis, Arab News argues that he may be a brilliant footballer – but he knows little about economics.

December 5, 2010 2:29 by Ben Flanagan

Eric Cantona, the former Manchester United star, is a legend of the football field. He hopes in three days’ time to become a political legend.

He sees himself as a revolutionary who on Dec. 7 will overthrow the international economic order by bringing down the banking system. He hopes to do this by creating a run on the banks. He has gone on YouTube and Facebook calling on people to withdraw their money from their bank accounts in cash on the day.

His call has spawned something of a movement. In France, a Facebook group says that 50,000 people will withdraw their cash on Dec. 7. In Belgium, 15,000 apparently intend to do so as well. No doubt there are others planning to do the same elsewhere in Europe.

Cantona may be a brilliant footballer but he clearly knows little about banks. A run might have worked 20 years ago but not now. In France and other European countries there are daily limits on the amount of cash customers can withdraw. Anything over that has to be applied for in advance and approved. The change is in part the result of anti-terrorist measures to prevent cash moving in undesirable directions but also comes from the way banks and money have evolved in recent years. Money today is largely electronic and cash a very small part of banking operations. In many European banks, staff no longer handle it. That is done by ATMs. If they run out, customers have to wait until they are refilled or find another ATM with cash. Given that reality, there are going to be several thousands of people on Dec. 7 rushing from one empty ATM to another. They will be the ones with the problem, not the banks — plus all those people who need cash for more normal reasons that day.

Of course, these politicized customers can close their accounts next Tuesday. But what are they going to do with the money? Under the bed? In any event, the proceeds could be payable only by bank check or by transfer. Either way, the money would end up in another bank — which is not exactly what Cantona or the anti-bank movement wants.

Whether Cantona, a very rich ex-footballer, fully understands the anti-bank movement to which he has attached himself is open to question. Its messianic language and vision are those of European communism a century ago — grandiloquent but fatuous and proved by its collapse under its own dead weight 20 years ago to be wholly worthless. It promises a brave new world, in which there is no war, pollution, poverty, hunger, unemployment or market forces. It is just waiting to be built as soon as the world gets rid of the existing system.

Across Europe and in the US, there is deep public resentment that during the financial crisis billions of dollars of public funds were pumped into propping up banks that in certain cases should have been allowed to face the consequences of their own incompetence and go to the wall.

Many in Ireland certainly feel that they are paying for that now. But replacing the entire system with one that has been proved to be totally catastrophic is no answer.

- Arab News