Squeezing the poor until the pips squeak

TomTom

Why do banks have to pay the Treasury 12% on Prefs post-tax and raise the cost of equity capital by halting dividends ?

Just why is the Treasury intent on restricting credit so sharply by forcing banks into "the corset" of Supplementary Special Deposits through penal interest rates on reserve capital ?

Rhoda Klapp

Contrarian time again. The main trouble with our economy is liquidity. As well as previous modest proposals to restore liquidity, let's turn one universal assumption on its head. That interest rate thing. The banks aren't lending money. Interest rates are low, but people can't borrow because there is no supply of credit for them. Until people and businesses can borrow, we can only go backwards, slowly retrenching until nobody owes anything any more. It'll take years. To get some liquidity, how about raising interest rates? Then banks will drag in money from less profitable places to lend it here, where the return is greater. Savers win too. Debtors in general will be worse off, but if they are over-borrowed is it not they who should take the flak, rather than the prudent? Given all of the above (and IF it worked) the NR problem would not need to be solved.

Lance Grundy

Some more ammunition for your appearance on 'Any Questions' this evening.
Stick it to 'em real good Fraser!

George Laird

Dear Nelson

Well done on that piece of reporting, I think a story like this has more resonance when the writer can write from the view point of being involved.

As to squeezing the poor, did you seriously expect New Labour to help anyone?

200,000 hard working families and single people in effect punished by New Labour for the crime of being poor.

New Labour each day pump out the lie that they want to help people, smoke and mirrors.

Other political parties haven’t tackled hard enough this issue, statements are not enough; targeted campaigns are needed.

This is another own goal which the Tories will no doubt kick the ball over the bar again.

Yours sincerely

George Laird
The Campaign for Human Rights at Glasgow University

MikeB

Northern Rock is owned by the State. Northern Rock is also the bank which has carried out the most repossessions. Can't anyone, someone ask Gordon/Beckett/Darling why this is the case (& if the policy has now changed why was that policy in place?). There have been various press articles about the activities of NR related repossessions. But the mud does not seem to stick with those holding the purse strings. Instead they are allowed to say we will not go back to the 80s the 90s etc etc.

Alex R

This isn't a commercial business operation, but liqiuidation. Perhaps appropriate when there was an active lending market. But there isn't, so the government should stop this now.

As you say, they are charging those least able to pay. They will more likely default and as we know, Northern Rock is more likely to repossess than other banks.

NR's repossessed properties are going for a fraction of book value (http://www.dailymail.co.uk/news/article-1092547/Victims-repo-hunter-Northern-Rock-accused-selling-1-100-repossessed-homes-bargain-prices.html) leaving people with no homes and further debts to pay.

It would be one thing if Brown had warned people about debt and housing cycles. But he didn't. These people will have looked up to him. He has failed them.

Elephant_In_The_Room

In order not to be told off and fined by the EU, NR must quickly repay what would otherwise qualify as state aid*. If you want to be in the EU, you must play by the state-aid rules. Me? No, I'd rather not be in it.

* Google "neelie kroes northern rock state aid" (sans inverted commas) to find out who runs this place.

Puncheon

This just shows that my instinct is correct: Brown always does the exact opposite of what he should do. The way out of this mess is to lower taxes, particularly for the lower paid, and raise interest rates. This will increase liquidity in the economy, which (as Rhoda Klapp above points out) is the real problem for most people at the moment. But the authoritarian lefties who run things will never trust people to know how best to use their own money. After all, politicians and their civil servants always know best, don't they?

TrevorsDen

Alex R is right -- this is a liquidation.

Eventually all the remaining bits will be sold off.

hadrian

Of course taxes are at exorbitant rates. Of course our debt ridden, borrowing dependent society needs to be weaned from its habit. So what does Brown do? Continue taxing and hammer banks to get lending and clamour for people to go on spending binges. As with a state engineered schemes- sheer madness. Fraser when are you going to appear on This Week with Messrs Neil, Portillo and Lady Abbot? It's high time you were running a similar show.

richard bond

Whats really frightening is that the exact losses by British banks on dirivatives based on American sub-prime mortgages still remains a complete mystery. Some estimates indicate 2 trillion dollars of losses. Nationalisation of all the British banks is the next firewall. Its inevitable if America continues its long-march into a brick-wall known as Wall Street.