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Hair of the dog!


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If the banks can borrow cheaply from the BoE, that makes them more profitable and helps support their share price. That in turn helps them to borrow on the global capital markets and gives them more access to capital to lend out. It's not the interest rate at which people and companies can borrow which is causing the bottleneck, it's finding a lender with anything to lend.

 

The Government didn't "give" the banks they've supported any money at all, they took an equity stake on behalf of the tax payer. Effectively, the Treasury now owns the mortgages on a substantial percentage of the properties in this country. Some of these mortgages may well default, but on the whole we haven't seen irresponsible lending in the UK on the scale of the US sub-prime market so the Treasury has got a reasonably sound investment.

 

When the time comes for the Treasury to sell its stake in the banks back to the open market there's no reason the tax payer shouldn't see a very tidy profit.

 

...and I'm willing to bet that if Her Majesty's Loyal Opposition are in power when that happens, they'll claim that bonus as being down to their policies!!

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The more one begins to think about this mess; the more one begins to wonder at the crazy state of capitalist economics: the Gov are encouraging folk to spend (and borrow) in order to stimulate demand, which in turn stimulates production, which in turn provides jobs, which provide wages, which allows spending. :shock: Just to ensure this cycle continues; most goods have built in obsolecence, meaning they don't last a life time, so you'll throw them on the waste tip and buy another one. :roll: Meanwhile, the gradual accruement of profit to the top, due to these continual transactions, gradually leaves the lower paid with less wealth, thus less to spend, thus requiring more borrowing to keep up. :shock: So in effect, we have a cycle of production/consumption for it's own sake, the bi-product being mountains of waste and consumption of enourmous amounts of energy. :? Perhaps, instead of buildind cars etc; some lasting civil engineering projects such as hydro-electric schemes, new sewers, flood prevention, tidal power barriers; would provide the required employment and energy without the built in waste. :?:wink:

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