Wednesday, Dec 10, 2008
Darling considers underwrtiting ALL commercial loans - Pure desperation!
Bloomberg: Darling Said to Consider Credit Guarantees to Spur U.K. Lending
'The measures would mark an unprecedented step by U.K. authorities to underwrite commercial loans after a rescue that gave the government stakes in HBOS Plc, Lloyds TSB Group Plc and Royal Bank of Scotland Plc failed to restart bank lending. The economy is sinking into its first recession since 1991.'
Holy c*ap what's going to happen to Sterling now?
Posted by tyrellcorporation @ 09:11 AM (697 views) Add Comment
5 Comments
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1. matt_the_hat said...
Wasn't this the whole problem in the first place - a dislocation between those encouraged to issuing the loans (aka US mortgages) and those who bore the risk (now the UK tax payer). To me the equilibrium position for banks now is to maximize loans without respect for risk - sound familiar
2. mark wadsworth said...
Didn't some economics giant point out recently that we can't bail out everybody? Ah ... that was Jeremy Clarkson. It's a funny old world where Clarkson understands these things better than the gummint.
3. jackas said...
Change the date to 2008, and the country to the UK, and this is where we are:
"The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid. Loan Officers and Investment staff had a hard time finding anything to invest in that would return a profit. They would sometimes resort to depositing their block of investment cash, as ordinary deposits, in a competing bank, which would bring howls of complaint from that bank's Loan Officers and Investment staff. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses, creating many so-called "zombie businesses". Eventually a carry trade developed in which money was borrowed from Japan, invested for returns elsewhere and then the Japanese were paid back, with a nice profit for the trader."
except worse, because Japan's credit bubble was backed by savings, and not by artificial credit conditions.
4. crashpad4me said...
Another day, another policy. I take "commercial loans" to mean loans by commercial bodies, so good news then for second home owners and buy to letters. It's socialism, Jim, but not as we know it.
5. alan said...
Yes, Mark Wadsworth.
"It's a funny old world where Clarkson understands these things better than the gummint".
I believe this move will sink the country and make our financial services industry a laughing stock.