tag:blogger.com,1999:blog-2948538160252327076.post4327730764244303107..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: The interbank crisis - this picture says it allAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2948538160252327076.post-73189556658257347912008-10-11T10:15:00.000+01:002008-10-11T10:15:00.000+01:00Maybe the market IS working after all? Banks are m...Maybe the market IS working after all? Banks are merely unwilling to lend at the official rate because the official rate is too low!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-17426342204102953312008-10-10T19:47:00.000+01:002008-10-10T19:47:00.000+01:00It's hardly surprising banks are reluctant to lend...It's hardly surprising banks are reluctant to lend. In addition to the increased risk, there's also the fact that with even the fudged CPI showing 4.7%, banks will 'officially' lose money if they lend at rates close to bank base.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-56162751233629825372008-10-10T17:51:00.000+01:002008-10-10T17:51:00.000+01:00The problem has all along been one of insolvency r...The problem has all along been one of insolvency rather than lack of liquidity; it is exacerbated by collapsing confidence, not created by it.<BR/><BR/>Banks A knows its own balance sheet is shot; it therefore naturally suspects Bank B is insolvent too, and vice versa. Neither lends to the other.<BR/><BR/>All banks limp along deliberately insisting on a big interbank spread as a way of rebuilding balance sheets. Central banks supply liquidity at artificially low rates in a taxpayer funded assist in this attempted rejuvenation.<BR/><BR/>In the UK Brown and Darling in practice guarantee every retail deposit. Were they not to do this, there would be an instant run on all the banks, and the show would be over.<BR/><BR/>Yes, nationalisation is the only option. But what a pity that the UK government may actually pay to take over bust institutions! Who pays to become responsible for another's debts? The saintly British taxpayer, it seems!<BR/><BR/>I hope the government does not hinder the necessary job losses in the vastly bloated banking sector.<BR/><BR/>Perhaps the government will also have the courage to reduce bankers' pay. After all, there is now rather reduced demand for these 'brightest and best.' <BR/><BR/>B. in C.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-78013402935825317272008-10-10T16:53:00.000+01:002008-10-10T16:53:00.000+01:00Desperate? Terminal more like.Desperate? Terminal more like.Anonymousnoreply@blogger.com