Reply: Such drastic action would also punish the people. Bankers are people too.

Obviously this is fraud, since it is not theirs to lend out and they do not have the reserves to do this.
They are able to get away with this so long as too many people do not come back asking where their money is, IE in a Bank run.

Credit is Obviously thin air and Paper money only costs Pennies to Print.

Lowering interest rates ensnare Borrowers to take out loans, the banks then raise interest rates hauling in the assets of those who have over exposed themselves.

Nothing to do with the economy, it is all decided by how many people they have ensnared.

This is how they have accumulated Vast wealth, the coming tsunami is the final one, it is designed to bring us to our Knees and accept the New World Order with them at the top and use Proles squabbling amongst ourselves at the Bottom.

This is what Brown ( Not Darling you note ) was discussing with the Bankers in the US.
http://www.youtube.com/watch?v=OnwLgrSJZKs

Note Rockefellars Involvement here :-
http://www.brusselsjournal.com/node/865

and here
http://www.youtube.com/watch?v=0gk9sABtJxM&eu…

http://www.bnp.org.uk/?p=191

The exuberance, vast profits(at the expense of the consumer and pensioner) and greedy bonuses was fabricated on a house of cards and was the inevitable conclusion to this chapter. For the downside to now be covered by the BoI and allow continued risk taking with financial instruments globally is not capitalism. I do not know what it is but it smacks of spoiled kids. The club members of the elite have seen their fortunes contract and are now pushing thier political mates, slaves, school chums to induce national arguements for unfair support that they do not deserve.

If I take a risk with my business and step over my banking covenants through greedy/foolish profit extraction I will be called in and asked to redress my capital position by the banks or put into recievership. The BoI know this but do not force the banks to face their greed in the same way that the banks force their customers to face upto their own actions.

This money, and there will be much more to come, should be reserved for uk customers and kept away from everything appart form the morgage business.

Its shocking that excessive profits are owned by the shareholder and the rckless greed of spending these profits is rewarded by the BoI.

David Jensen

Reply: It is important that this money is advanced on commercial terms, with no taxpayer subsidy. Without this money there will be less for banks to lend, which means fewer jobs and less business all round.

A lot of them are annoucing good profits this year, but it's not their profit and loss accounts people seem to be worried about. From what I'm reading (and I'm no economist either, I just try to keep up as best I can) it's their balance sheets that are the problem from what I can make out.

I think there are definately good arguments to be made for letting the weeker banks sink and be swallowed by their more prudent competitors a la Bear Stearns. If the government had let Lloyds TSB grab Northern Rock the taxpayer would arguably be exposed to less risk.

One thing I do know about economics is that it is not an exact science. There is no crystal ball that can predict without fail the day to day decisions of the consumers, investors and businesses that make up the world economy. This swap is an attempt to manipulate those decisions in some respects by trying to get banks lending to each other and closer to target rate and tackling what politicans believe is irrational behaviour in the debt and credit markets.

Before this all started I had never heard of LIBOR, I had presumed that mortgage rates tracked B of E base rates. I can't help thinking that given the price inflation most consumers are feeling, and the amount of risky debt around, that this is not just interest rates correcting themselves. I've heard it call a 're-pricing of risk on this blog before, but I've been thinking for a while the decoupling of the LIBOR is basically an interest rate correction. I also think that 'credit boom and bust' is a better description than 'credit crunch' to describe what is actually happening.

But that's just my opinion.

Meanwhile, back on the farm, an attempt to tax rich people (non doms) failed.
At the moment, an attempt to tax poor people is failing too.

Do you remember Necker?

Reply: The cost of the Rock will not be £100 billion – it will be the losses we have to pay for which have not yet been incurred. The £50 bn should be safe, as they are planning to take plenty of cover for the loans. But, yes the government has borrowed and spent too much.

I watched you on Sky News today, you provided a clear set of opinions that gave those like myself with no understanding of economics, some insight into the workings of public finances.

Am I right in thinking that many banks have made record profits in recent years? If so, have they taken a leaf out of our government's book and not set aside anything for a rainy day during the days of sunshine and plenty?

Is the BOE, for all intents and purposes, acting like a factoring company for the banking sector by effectively putting up cash against the debtors ledger of the banks?

REPLY;The Bank of England is lending to the banks, as they need more cash and near cash, in rerturn for taking claims over their other assets.
Yes the banks have made good profits in recent years, but now are having to show they in practise lost a lot of money on poor loans which now have to be written down or off.

This would mean an end to the immediant banking crisis , a more effective anti inflation policy , measures to boost the Square Mile & property market ( at a time when we need them to do well so that a recession can be averted ) and a less risky , more prudent fiscal policy . That would give economic confidence a shot in the arm when the PSBR , inflation & unemployment may start rising and share prices, banking sector and housing market are looking shaky . I think that to revive our dodgy 1970′s style economy that Brown has created we need the kind of policy agenda that I suggest – i.e. the response to the Labour created mess needs to be bolder than was announced earlier .

From my observations our markets seem to react much more to events in the USA than they do to events and annoucements regarding the UK economy. I don't think we have enough leeway to borrow and spend our way out of a US slump like we did after dotcom without creating serious problems for the future.

If problems in the US keep freezing up our interbank lending I question the extent to which we can avoid a recession by continuing to throw money at the problem.

I will just leave this quote from my blog entry:
Just about every Central Banker in the world realized sometime ago the exigency of the moment, while the Bank of England lacking leadership from the Prime Minister and the Exchequer, seemed more intent on riding their moral high horse (moral hazard). The refusal of the Mervyn King to pump much needed liquidity into the markets as early as last August was an incongruous decision.