Sunday, July 20, 2008

Darling may borrow to save banking system from collapse

Golden rule changes 'designed to save banks'

The Treasury may be planning to raise the limit on public borrowing in an effort to give it "room for manoeuvre" for a potential rescue operation for the banking system, a leading expert has suggested. It comes amid growing disquiet about the funding position of Britain's biggest mortgage lenders, with banking groups urging the Treasury or Bank of England to extend its mortgage support scheme to cover home loans issued since the start of the year. Spencer warned Darling may have to increase the debt limit to 50 per cent of GDP or beyond if he intends to accommodate a possible support scheme for embattled lenders. "The Treasury knows the situation facing the mortgage lenders is pretty dire. I suspect that they may now be considering looking at gilt-edged funded long-term lending."

Posted by who stole my pension? @ 05:59 AM (983 views)
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7 thoughts on “Darling may borrow to save banking system from collapse

  • last_days_of_disco says:

    The pound collapsing will be no joke. So much of everything we use is imported.

    Reply
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  • last_days_of_disco says:

    ” Meanwhile the influential Item Club is also set to warn in its summer report that the number of people out of work will hit the politically embarrassing 2m figure next year as Britain faces a real chance of a recession.

    The forecaster will tomorrow issue its starkest forecast yet, warning that Britain will struggle to avoid recession in 2009, with growth predicted to stay at just 1 per cent. The news is a further blow for the Government, undermining its optimistic growth forecasts for both this year and next.”

    As usual the “experts” will be the last to know we are utterly stuffed. They will be “cautiously optimistic” until the day they aren’t any more because some economic indicator comes out showing its too late to do anything. Pathetic.

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  • accelerating wealth extraction

    when they create the debt they don’t create the interest

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  • So the government will change the borrowing Golden Rule for purely altruistic reasons, to save those poor bankers who need taxpayer’s cash.

    I suggest we get MPs to scrap their newly-negotiated allowances and let a few banks go to the wall. Further socializing the losses form the collapsing bamking sector will generate further resentment and isolate the establishment even further.

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  • Looks like when this mess has run it’s course we will be left with a handfull of taxpayer funded superbanks feeding off the carcass of what used to be the UK economy.

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  • advanced duplicate of a comment I sent earlier without the password by mistake

    So Darling says we are taxed enough!

    but also stupid enough to think increasing public borrowing isn’t taxation!

    This whole thing is a massive wealth extraction exercise over and above the daily one that’s been going on for hundreds of years.

    or words similar

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  • malct,

    ‘when they create the debt they don’t create the interest’

    That only matters if they collect from everybody at the same time. When they take cash they clear the debt – but then they need some services so they have to give the cash back again to the debtor to get the debtor to do something for them. Then the debtor can use the same cash again to pay the interest.

    It´s only a problem if they call in all the debts at the same time and withhold the cash for services so that everybody is desperate and will provide the services for any price.

    For those of us without debts this is a great state of affairs – and if you´ve got savings in a bank account and your bank doesn´t go under then the bank has a debt to you and you get to share in everybody else having to do anything at any price to get some of your cash.

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