Let's assume that City AM has explained the rules correctly:
Q What is the Funding for Lending scheme?
A It is a government scheme to offer banks cheap loans with incentives to lend more to households and businesses. Banks can borrow funds worth up to five per cent of their loan book as of 30 June, at 0.25 per cent. If they increase lending, they get offered more funding; if they lower lending, the interest rate goes up. The loans last for up to four years, and the scheme is open for 18 months.
Q Why was it launched?
A It opened on 1 August as politicians and officials feared the funding markets would seize up again, hitting banks hard and cutting the supply of credit. This is a way to guarantee banks cheap funds.
That first bit does not make sense; if a bank declines to take part, then the outrageously low interest rate on the taxpayer funded loans can't be increased. It's like threatening devout Quakers with a hike in alcohol duty. And if it 'works', then what we are looking at is a reinflation of the credit bubble.
The second bit does not make sense either, businesses are being asked to hand over nearly £400 billion a year in VAT, PAYE, corporation tax etc, what's the point in taking their hard earned money and then lending it to banks at a discount in the vague hope that some of it will be recycled back to the businesses which provided the money in the first place?
Wednesday 26 September 2012
Putting the "fun" into Funding For Lending
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6 comments:
L, it would appear so.
"hitting banks hard"
Oh dear, we can't have that. What, bonuses might only be seven figures instead of eight?
What's the point in taking their hard earned money and then lending it to banks at a discount in teh vague hope that some of it will be recycled back to the businesses which provided the money in the first place?
Easier to massage the figures and lose a few zeroes?
B, interestingly, bank bonuses last year were just as high as before the 'financial crisis'.
JH, with an electorate this gullible, you don't need to massage figures, you can rub their noses in it and they won't notice - THEY ARE LENDING YOUR HARD EARNED MONEY TO BANKS AT 0.25%.
The powers that realised long ago how stupid the average British voter is and they are openly taking the piss.
Well, MW, The Voter isn't actually that stupid, but he has been educated in the State Education system. Or more accurately the State Indoctrination Centres...
L, they must be. Everybody hates paying tax; everybody hates the banks and bankers; and the government is taking all that tax off us and lending it to banks for 0.25%. And who's out in the streets rioting? Nobody. Sod all this "make the banks pay more tax" stuff, how about not giving them free money in the first place?
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