Wednesday, November 11, 2009
Much of money is being earned on the back of super cheap central and government funding. Neither Barclays nor HSBC have taken money directly from the UK Government, but both have availed themselves generously of government funding support through the the Special Liquidity Scheme and Credit Guarantee Scheme. Theyâ€™ve borrowed the money cheaply and lent it more expensively. In investment banking the story is much the same. The spread between what the bank pays and what it sells to the client at has been hugely increased. Itâ€™s like a tax on savers, grudgingly tolerated by the Government because the alternative would be financial system collapse.