Bank crisis for prostitutes
Credit is still tight despite the low Libor rates and other signs that market stress has died down. Case and point is an item I ran across on the Norwegian site E24. Apparently, Amsterdam is losing revenue as its prostitutes in the red light district cannot get credit. Here is my translation of the story:
The City Council in Amsterdam is turning its attention to a pressing problem. One of the city’s key industries is struggling to obtain credit and banking. And it will now take elected officials to clear things up, reports Reuters.
The city’s red light district is known for women which lure customers through tiny windows with even tinier clothing. But despite the activities being completely legal, many banks do not want these women as customers.
The City Council will put an end to this. As part of a facelift for the De Wallen neighborhood, which also includes the red light district, the City Council has been asked to help bordello owners and employees to make banking connections more accessible.
Over the course of two months, a solution will be put in place that can help the industry. But the City Council will not establish or sponsor a separate sex bank, as reported by a local newspaper.
It’s a somewhat amusing little story, but the overall point is clear. Credit is still restrictive the world over and that means deleveraging is still continuing apace.
wait, why the hell do prostitutes need credit?
It was a moralist decision of the dutch banks to no longer provide credit. It wasn’t a financial decision. The referred to ‘facelift’ of the red light district is another megalomane plan of the municipality (that has already shown its incompetence by letting the costs for the construction of an underground subway double and subsequently balloon to EUR 3.1 bln) to basically shut down the marijuana selling coffeeshops and move prostitution to the edge of town. Added to the mix is a little corruption. One politician once proudly blogged she got such a nice new apartment in the red light district. She had insider knowledge of the aforementioned facelift, but didn’t see a problem to use that knowledge.
I will refrain from further remarks about the moralist christian dutch government and the really shamelessly incompetent Amsterdam municipality.
I’ll just add that the banks did the same with the coffeeshops. They can’t even have a current account anymore from the dutch banks.
https://www.hln.be/hln/nl/960/Buitenland/article/detail/548771/2008/12/13/Nederlandse-Postbank-zegt-bankrekeningen-coffeeshops-op.dhtml
Those poor women. Happily, there is a solution, as there always is for “working people” – just have someone lend to them on an asset-backed basis, securitize the loan, pay a rating agency for a AAA rating, and sell the securities to the Fed. Bernanke will buy them for .95/$ at least, and they will likely perform a whole lot better than the other crap he’s buying in this excellent cash flow business. And if it doesn’t work out the Fed can always take the assets – they’ll be right at home with all the other whores in DC, and will find good work there.