Monday 6 October 2008

Billions to banks so why is the market still falling

God it makes me mad. I'm having a little scan through the BBC website again and see that the BoE is going to make billions more available to the UK banks. This on top of the billions that they have already had in an attempt to create a market for inter bank lending. A scheme which is patently failing.
The problem is that the banks cannot trust each other enough to know that they are worth doing business with. The result is stagnation in the financial markets.
This is a problem of their own making and yet they want all of us to pitch in and bail them out.
Here's an idea. Tell them to go hang. If they want to save their asses they are going to have to be honest with each other, put all their cards on the table and say this is my exposure, who will do business with me. If nobody will tough. The bank goes to the wall. The sooner some more banks fold the rest will soon learn a lesson and regulate themselves. They will realise that at some stage they will have to deal with each other again, and then the market will start to move again. Proper capitalisim at work!
What do you guys think. You with me or agin me.

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