What has the government’s largesse in splashing out £1.4 trillion to bail out and guarantee the banks actually achieved?
Last week the Bank of England warned that banks were “reluctant” to lend money to businesses and that credit will be restricted for some time.
Gordon Brown’s policy of “quantitative easing” relies on the government using our cash to both buy and sell government gilt bonds.
Britain’s banks, including the state-owned ones, take part in the auctions where these bonds are traded. Typically they act to push up the bond prices and then act to drive them down prior to the government selling them at auction.
So the banks make money out of both buying and selling the bonds.
The government’s losses then feeds the growing public budget deficit meaning more cuts in welfare spending, extra taxes and other austerity measures. Meanwhile banks and corporations are not investing cash because they cannot make enough profits.
Brown defends all this because he claims Britain needs a strong banking system. But the government should be spending money on jobs and services, not on bailing out the banks.
Bosses unleash misery on ordinary people