Last October, the Bank of England presumably at the behest of the Government made secret emergency loans to the Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS). These totalled some £61.6 billion pounds and prevented them going under. What this amounts to is that banks that the general public thought were on the verge of going under had already effectively done so. Details of this ‘Emergency Liquidity Assistance’ have just been released.
Bear in mind the banks were loaned almost twice the defence budget to do this. At a time when troops were dying for lack of equipment. Criminal!
This also paints the picture of how serious this situation was and how close we came to a total banking collapse.
What annoys me though is that it is labelled ‘the crisis’, is put down to ‘global’ issues and that ‘no-one saw it coming’. There are many commentators who wrote of the dangers as well as some politicians who kept pointing out the perils of the way credit was fuelling the boom. The Internet is full of sites where bloggers and forum users were discussing a potential meltdown. I well remember reading them.
What we have suffered from is a Chancellor made PM together with a BoE boss, FSA regulators and senior banking officials all who were out of their depth. They were swimming in an ocean when they should have been paddling in a pool.
And now we have Gordon talking about a ‘New World Order’ that he is part architect of. Where do we think that is all going to lead? Eldorado?
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Tags: Bank Of England, economics, hbos, News, Politics, RBS, secret loans
Jeff,
Whilst I accept the accuracy of your analogy of the amount involved being “twice the defence budget”, please remain objective. There is no other relationship and the act was not “criminal”. We only lost a few troops and there are plenty more where they came from. If we’d lost the banking system it would have been a real disaster for the whole country.
The Bank of England has always been the lender of last resort in Britain and that is precicely what they did on this occassion. We were vaguely aware that it was happening but not how much or who to. Probably just as well but shareholders of Lloyds should have been made aware before being asked to vote on the HBOS takeover.
Hi Brian,
I disagree. Go and talk to the troop’s families and see what this has done to them. Ask them where the money should have been spent. Troops die, bankers don’t.
And as to be being kept in the dark, this is a democracy and we’re all grown up. Or do you advocate that our ‘betters’ should just rule over us while we toil in the fields.
What other dark deeds are we unaware of? Bail outs of other banks and building societies?
If we can afford future taxes to do this then we can afford future taxes to pay for troops’ equipment.
If our banks are so important then bringing one to the point of collapse either by accident or design should be a criminal offence.
One thing this banking debac shares with our lads laying their lives on the line is the fog of war. It will be many years yet before the whole truth emerges about the incompetence of Gordo and his cohorts.
As for this comment. ‘ We only lost a few troops and there are plenty more where they came from.’ This is the attitude that got us into this mess in the first place greedy bankers with impoverished tables of values!
If anyone saw This Week last night, Michael Portillo said of the BoE action “Well, you have to recognise that the banking system very nearly crashed completely and if it had crashed we have no idea what the scale of that disaster might have been. So I’m afraid I think almost any action was justified in those circumstances”.
I agree with that atatement.
However, I fear that saving the system as a whole got taxpayers into a position that will end up with a huge drain of wealth from UK taxpayers to overseas investors who should have been the losers in lending to the likes of RBS who borrowed far too much money. As it is, shareholders in RBS have taken a big hit and will suffer more and it will be taxpayers who suffer even more. We are not done bailing out this bankrupt institution.
The BoE did what it should, but once the Government lifted the lid and saw the state of the bank there should have been a different course of action to allow a managed liquidation.
Returning to the more controversial side of Jeff’s attempted conflation and my flippant response, which has nothing to do with the Bank of England or Business and Finance stories generally…
Traditionally, the Right of politics likes to have a big military as a deterrent which ideally it never has to deploy. The Left believe there are better ways to spend the money and choose to have a slim military but since it’s there and the Left tend to be interventionists, they deploy willingly but in a less committed way than the military would like or advise.
In 1982 Argentina invaded the Falklands. Thatcher threw the kitchen sink at them to liberate the British subjects who live there. We lost troops and ships and aircraft and took more Argentineans than we lost Brits. You can argue the toss as to whether South Atlantic islands should be British but they are and we were clearly entitled to evict the invaders.
In 1990 Saddam Hussein of Iraq sent his army into Kuwait. John Major sent British troops as part of an American led UN force to liberate Kuwait but we stopped short of a full retaliatory invasion into Iraq to inflict regime change.
In 2001 some mad Arabs hijacked aeroplanes in America and crashed them into buildings as an act of terrorism causing mass loss of life. This act was apparently sponsored by Osama Bin Laden (whether there is any truth in the rumour that he was sponsored from the US we will probably never know but I don’t dismiss it as impossible). President Bush sent an invasion force to Afghanistan to kill or capture Bin Laden and disable his Al-Qaeda organisation. Tony Blair was generally supported in standing shoulder to shoulder with Bush as a number of Brits were lost on nine eleven. Bin Laden apparently escaped.
Attention then turned back to Iraq with the excuse that Saddam had either helped or supported Al-Qaeda and was on Bush’s list of states supporting terrorism. The message moved to Iraq not complying with weapons inspectors from the UN and was ratcheted up with the “dodgy dossier” claiming that Saddam had weapons of mass destruction which could be deployed within 45 minutes.
Personally I thought both arguments were pretty thin and a war on terror, meaningless. Bush talked of regime change but we had no business doing that. We should have allowed the UN to decide what happened next but instead Blair again deployed the military. I still don’t understand what the British interest was in doing so and without one, why the British taxpayer should be expected to pay for it. We should have laid claim to the oil but I don’t believe that was the motivation or reward. All the criticisms around lack of exit strategy and winning the war but not the peace were absolutely justified.
Why we are still in Afghanistan I have no idea. There is the claim that being there keeps the British streets safer. The seven seven attack had Afghan links despite the terrorists being British bred. They only got 54 people that day and I use the word “only” deliberately. We have lost 230 troops in Afghanistan since then; and for what???
Joining the army is a career decision. I assume that every British soldier deployed to Iraq and Afghanistan goes with trepidation but in the knowledge that it’s what they’re trained for and that they fight for queen and country in the fear that they could pay the ultimate price. The question of what level of equipment they’re supplied with is a debate I struggle with. My grandfather went to war with a tin hat, a gas mask and a rifle. The tin hat saved his life but he lost an eye. Today’s troops expect Kevlar body armour lots of electronics and helicopters to ferry them around. Their adversary is much more poorly equipped and trained so I’m a bit squeamish that it’s not a fair fight.
I respect our troops and I recognise that each death is a tragedy for their relatives. However, the best way to avoid further deaths is to retreat and bring them home, not throw more money at it in the form of helicopters and Kevlar. We’re nearly bankrupt but still spending money fighting a war. It’s madness.
Last night Michael Portillo said “We cannot win and we cannot leave”. The first part seems obvious but I disagree with the second.
Hi Brian, well argued piece. That would look good as a stand alone article on the front page!