Provided by BBC’s Robert Peston, whom I was amused to discover is being blamed for some of the world’s economic woes (since everything is fine n dandy with the banks and anyone who says otherwise is a terrorist).
Since [the bank of England’s rate cut], the LIBOR interest rate charged by banks for lending to each other over three months has barely moved.
And that matters, because banks set their prices for credit provided to households and businesses off that so-called interbank rate.
Or to put it another way, banks aren’t passing on to us the full cut in the interest rate which the Bank of England thinks is necessary to prevent a deflationary recession.
This fits a pattern, that I haven’t had time to fully blog yet, of actions being taken by banks and shareholders to reinforce their positions at our expense. See, for example, the complaints about non-payment of share dividends.
In this case, an action (with an implicit cost to the public) made for a purpose, to “unbung” the apparently-vital system of lending between banks, is instead being used to shore up the security of individual banks. Public funds, selfish use.
Any actions taken in this direction will face the same problem: the banks and their shareholders do not care about the public good, like measures to prevent job losses. They want their dividends, bonuses and expense accounts back, the rest of us can go hang.
What if we took action that bypassed the banks. Let them go to hell. They aren’t the economy, we are. If people need money to access what they need, then let us get it from elsewhere, an institution that we control and that we can trust. (No, the government doesn’t fit the bill either…)