Bank lending
How badly wrong can the Government get it?
OK, admittedly the Banks were the authors of their own destruction with over-valued assets, grotesque bonuses, fat dividends and politicians falling over themselves to say just how good it all was.
Until the roundabout stopped, and they all fell off.
Northern Rock has had to slash lending to fund the debt repayment to the Bank of England, and has raised interest rates to borrowers to dissuade new custom. The end result? The good customers go elsewhere; the bad risks (the poorest!) can't move and are penalised; credit available from one of the biggest lenders dries up; and liquidity suffers.
Now they realise that lack of liquidity is the problem.
After the first bail-out was used by banks to repay debts to each other, and then sit on their cash.
Sometime at the end of this, there has to be a long hard look at whether the banks were actually ever solvent, and whether the profits were real or illusory.
Now the Bank of England is to buy £50bn worth of assets from companies. Yes, but which assets?
The removal of any financial responsibility for their actions will be hugely pleasing for directors and shareholders, no matter how low a price they get for the assets, whilst we - the taxpayers - will still be paying the pensions made fat on false profits until well after I retire.
Of course, as the blame goes right to the top of the tree, the shutters will come down and we will never find the truth until the guilty are retired, dead or, in an amalgam of the two, in the House of Lords.
OK, admittedly the Banks were the authors of their own destruction with over-valued assets, grotesque bonuses, fat dividends and politicians falling over themselves to say just how good it all was.
Until the roundabout stopped, and they all fell off.
Northern Rock has had to slash lending to fund the debt repayment to the Bank of England, and has raised interest rates to borrowers to dissuade new custom. The end result? The good customers go elsewhere; the bad risks (the poorest!) can't move and are penalised; credit available from one of the biggest lenders dries up; and liquidity suffers.
Now they realise that lack of liquidity is the problem.
After the first bail-out was used by banks to repay debts to each other, and then sit on their cash.
Sometime at the end of this, there has to be a long hard look at whether the banks were actually ever solvent, and whether the profits were real or illusory.
Now the Bank of England is to buy £50bn worth of assets from companies. Yes, but which assets?
The removal of any financial responsibility for their actions will be hugely pleasing for directors and shareholders, no matter how low a price they get for the assets, whilst we - the taxpayers - will still be paying the pensions made fat on false profits until well after I retire.
Of course, as the blame goes right to the top of the tree, the shutters will come down and we will never find the truth until the guilty are retired, dead or, in an amalgam of the two, in the House of Lords.
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