So please, how are taxpayers paying for this again? Is this government funding going into this? You do know that the BoE is not the government don't you. You make it soundalike they are cutting back on nurses just to hand money over to banks, and no, before you even dream of quoting me on that in some ill thought out response, THEY ARE NOT.
I'll try to explain. The bank of england is not a private enterprise. It is only independent from the government in an organisational sense. But it is as much an asset of the UK taxpayer as any other publicly-owned institution. Nobody else owns it.
The scheme is funded by treasury bills, and the lending is guaranteed by the UK treasury (at least in part). The UK government is a net borrower, and borrows at a market rate. The BofE and Treasury is lending to banks (effectively) at a lower rate than it borrows. Subsequently this is a cost to the tax payer. The government is trying reduce it's spending. Any increase in costs affects the government's budget. Budget cutting results in less money to spend on public services.
So that is why it sounds like cutting nurses to give money to banks. It's obviously not as direct and simple as that, but that might be the ultimate consequence. The money has to come from somewhere. Extra borrowing doesn't help, because that adds to the costs too.
One posts talks about wealthy landowners getting all the benefit but I think you are about 200 years too late. The vast, vast, vast majority of mortgages are now taken out by the rank and file of society....... There is not some elitist class that control all the land anymore. Sure, some people are more fortunate than others in that they may be able to buy there own place, but (I would say thankfully) many more people are able to do this now.
True. But the majority buy average properties at relatively low cost. The wealthy have a proportionately far larger amount of their worth tied up in property, and because of this, they stand to benefit more from asset price inflation. In addition, the wealthy are far less likely to be borrowing in order to own their property - so they are not paying any bank interest. They are just riding the asset price inflation, and getting richer, by doing nothing. Wealth inequality today is far higher than it has been for a very long time in history. Asset price inflation will increase inequality still further. We are not far aware from an elitist class controlling all the land - or rather the wealth.
So I ask again, how are we paying for this? And please don't mention inflation again, we have been through that once already and even some of the biggest supporters of that theory conceded that the banks hoarding money could not push up prices.
I don't think I conceded that. I conceded it takes years to filter through into the economy.
These measures are put in place to specifically target the areas that the banks are not lending enough to. I have talked elsewhere about the very real problems we are facing in the banking markets about lack of liquidity (and by that I am talking about liquidity, as in liquidity, as in what banks talk about when they talk about liquidity, being the availability of cash throughout the markets) and this scheme is proof positive of what anybody who knows even the remotest bit about what is actually going on already knows, we have to try and get the banks lending again.
I think you are getting carried away saying nobody knows anything about anything except you. I disagree. The banks can already borrow at historically low rates. Why do we need to make it even cheaper?
We have been through all this. The banks are recapitalising, which is the main reason they are not lending.
You are right that the scheme is intended to encourage them to lend more to consumers and small business. Nobody is disputing that.
Yes, with more control than previously, and yes, we need to take as many lessons from it as borrowers as they should as lenders. And am sorry, but no matter what has happened I will never subscribe to a notion that a housing price bubble is desired by anyone and also that the risk of a bubble should mean that we stop people from attempting to enjoy all the benefits of home ownership. One post above implies that we should stop lending to stop a bubble forming, but I feel sorry for people with such a view.
No need to feel sorry for me. As I see it, we are already in a housing bubble. House prices are many multiples more than average salaries compared with the what they were in the past. Cheap lending will just exacerbate that, and bubbles tend to burst eventually.
And as for the accusation that they can just fiddle the books, call it one thing and pocket the difference, is just beyond the absurd. The systems are not infallible, and the LIBOR scandal has shown that, but it is another thing completely to think there are not incredible levels of procedure and oversight around such schemes. Do you think the BoE is just going to hand out £80bn and just say "we want you to do this with it but we won't check up properly..........."..
The banks are notoriously opaque, and unregulated. We know this as a fact (just look at the Vickers findings). I hope there are safeguards to prevent it happening, but I certainly don't have any confidence that there are.
Yes, there is a real risk that the banks will not pass on all of the base rate savings they will be getting, and in not doing so will create bigger profits ( then again as bank owning taxpayers that is at least partly to our benefit), but that is not the big picture here, which is to get them lending again at all.
Bank margins have consistently increased for decades. There's no reason to suspect it won't continue as long as banks remain behemoths.