Friday, 27 February 2009

Nationalised Banks do the Government's Bidding

Never say a nationalised bank isn't handy for a government to have ...

I was struck by King's assertion that banks should take a higher buffer of high-quality liquid assets: ie, it's time for RBS, HBOS etc to start to buy all that UK government IOU notes just in case the Chinese and Arabs lose their appetite for it. It is entirely possible that the nationalised banks are directed to fund Brown's misbehaviour - thus saving him from the IMF. The below graph, courtesy of Citi, shows just how UK banks appetite for UK debt has been increasing already:

The ludicrosity* of this approach boggles the mind: the government owns most of some banks, but not all of these banks. So they can direct the banks to buy up T-bills to fund their spending, and it doesn't damage their credit rating. So they can go more berserk and their tame banks will just buy it all up. At what point does the whole house of cards implode?

*Could be a made up word.


Bill d'Sarse said...

You are perfectly correct.

Ludicrosity is a made up word.

WV - mingna which is not a made up word. I should know, Ive been out with a couple.

Oldrightie said...

At what point does the whole house of cards implode?

Just after they get kicked out. All part of the scorched earth policy. Labour gets back in to re-ignite any parts of the UK salvaged by The next Government, then rule for ever in a Utopian cess pit.
30% of the electorate deserve it for supporting Labour but 70% of us don't.

AntiCitizenOne said...

PLUS the fact that raising reserve requirements into a debt deflationary environment means that many more times that in good loans have to be called in.

This government are doing the opposite of what they should have done and now should do!

Faux Cu said...

Brown is unarguably mad and should be sectioned.

We are going to disappear up our own arse in unimaginable debt.