Friday 15 June 2012

"Osborne unveils £140bn scheme to kick-start bank bonus season"

From The Telegraph:

George Osborne unveiled a £140 billion emergency scheme to try to avoid a second year of low bonuses in the City of London.

The Bank of England is to offer money to high-street banks to also try and prop up houses prices. Loans are currently being rationed for many families as the bankers have either lost all the money or just taken it all, the Chancellor announced. It comes after sharp rises in the costs of mortgages and other loans in recent months as banks struggle to raise money now that nobody trusts them any more.

Sir Mervyn King, the Bank of England Governor, said that the “corrupt governments in the industrialised world have thrown everything bar the kitchen sink” at the global meltdown in financial services sector salaries but that even “bolder action” was now required.

In the annual Mansion House speech in the City, the Chancellor said he was no longer prepared to “stand on the sidelines” and that the radical new “bank bonus funding scheme” will be launched within weeks.

"We are not powerless in the face of the euro-zone debt storm which they caused," Mr Osborne said. "We can deploy new firepower to defend the most important parts of our economy - banking and house prices - from the crisis on their doorstep. Funding for lending to the banker's family aspiring to own an even larger mansion and the business that wants to expand its directors' pension scheme The Government - with the help of the Bank of England – will not stand on the sidelines and do nothing as the storm gathers."

16 comments:

Barnacle Bill said...

I fear Mark that once again our money will be used to prop up our bankrupt banks.

As well as your suggestion of course!

Sarton Bander said...

>The Bank of England is to offer money to high-street banks to also try and prop up houses prices.

I Prefer
"The Bank of England is to offer money to high-street banks to also try and keep house affordability low."

Bayard said...

I can't believe that are politicians and bankers are so stupid as to think you can borrow your way out of debt, which is essentially what this "economic recovery" is all about, therefore they must be corrupt.

Bayard said...

Perhaps it's a coincidence that this announcement comes two days after this: http://www.economy-news.co.uk/other-financial-shares/1571-lloyds-banking-group-to-reclaim-bonus-payments . I can feel a certain "Hoi, that's not supposed to happen" feeling amoungst the banksters.

Lola said...

You should read the bile and derision being thrown at this on the Torygraph article....!

James Higham said...

Kickstart the debt more like.

QP said...

"I can't believe that are politicians and bankers are so stupid as to think you can borrow your way out of debt, which is essentially what this "economic recovery" is all about, therefore they must be corrupt."

And yet the government mantra has been to say precisely this! "you can't solve a debt crisis with more debt"

Apparently young home owners and small businesses going further into debt is ok but public investment to build new infrastructure or social housing would be "wreckless".

QP said...

"reckless" sorry!

Mark Wadsworth said...

Ta for input, but let one thing be absolutely clear, bank lending to small or even medium sized businesses is, and always has been, more or less non-existent.

What the banks call "business lending" is actually 99% mortgage lending secured on land and buildings. I only have one single audit client out of hundreds with any significant level of bank lending not secured on land and buildings.

James James said...

Do banks not invest in new businesses which don't own land? Really?

Mark Wadsworth said...

JJ, it's never happened to my personal knowledge, the banks are happy to lend a director money secured on the director's house for him to invest in his business, and that's about it.

And very large businesses hardly borrow from banks, because they can issue their own bonds.

Lola said...

MW - Exactly. This is just more mortgage money. Banks do not take risks, yet they price as if they do. And it is another reason for tax cuts rather than central bank, i.e. government, sending taxpayers money to the banks.

Bayard said...

"And very large businesses hardly borrow from banks, because they can issue their own bonds."

How difficult is it to issue bonds? I remember buying some years ago issued by the West Somerset Railway (not a very large business) and it seemed to me to be a good deal on both sides; they borrowed money at about 1% over the savings rate at the time. Of course, in those days, the entire spare cash of the nation hadn't been subsumed into mortgage payments.

Mark Wadsworth said...

L, others at the Telegraph pointed out that if Osborne wanted to get money to small businesses, then tax cuts is the way forward.

B, issuing bonds is a right old faff. The costs of getting all the approvals is £100,000 or something (I'm guessing), so you have to issuing/raising at least £10 million to make it worth while.

Bayard said...

Yeah, I'd sort of guessed that the banksters would have put a stop to people going behind their backs in that way by now. All by way of "regulation to protect the small investor", of course.

Bayard said...

Here's another bank bypass that will be in line for regulating out of existence if it gets much bigger: http://www.bbc.co.uk/news/business-18370777