Confusion Over Banks

I'm no economist and no expert about anything but this article from Ann Pettifor seems to be completely ridiculous.

First she says:

But government deficits cannot be managed like that. The UK Treasury cannot cut the deficit, only government expenditure. Whether or not the budget deficit comes down depends entirely on how the rest of the economy reacts.

This is probably true, but then she goes on to say:

Only by the public sector stimulating the private sector can we reduce the deficit.

But if she recognises that the government cannot force the reaction it wants by cutting surely the same applies to spending. So her earlier dismissal of cuts applies just as much to spending.

The banking system exists to serve the real economy

Since banks are (or were) privately owned companies with shareholders they actually exist, like all private companies, to make money for their owners.

As a result of liberalisation (including the 1971 Competition and Credit Control Act), the system as a whole has been burdened by bad debts and is effectively bankrupted.

So nothing to do with government interference at all then.

In a truly bizarre twist, the banking system has become a borrowing machine, not a lending machine. 

Banks have always been borrowing machines and lending machines, haven't they? They borrow money from people and lend it to others.

in terms of balance sheets, the UK private sector is repaying more to the banks than the banks are lending.

Well that makes sense, doesn't it? The banks have already lent lots of money, some of it to people who probably won't pay it back. So in order to be able to pay back its own debts it must gather in some cash.

How can Ms Pettifor declare:

It is the banks that are broken, not government.

when all evidence is that the banks are doing exactly what you'd expect them to do?

She concludes that:

Pensioners, depositors and savers will continue lending their precious savings to bankers earning bonuses, in return for derisory rates of interest.

If they're continuing to lend to the banks then these depositors have surely calculated that it is in their best interests to do so rather than keeping the cash under their mattresses. Or are all savers also idiots?

If my understanding is completely off please let me know in the comments