Thursday, 16 October 2008

Let Northern Rock (The Bank of Great Britain) lead the way

Just a one line posting today because I have a huge Freedom workload and there are already deadlines looming.

The BBC's resident financial expert Robert Peston, was asked this morning to describe in a nutshell why there was still a financial crisis after £2 trillion had been poured into the world's stock markets and here in Britain around £400 billion of taxpayers money had been used to bail out private banks based in Britain.

He said that the simple reason was that private banks were refusing to lower their interest rates so credit was still unavailable or at best ridiculously expensive.

Well, Northern Rock isn't a private bank any more, it is now Government owned because taxpayers' money was used to rescue it from collapse. It is now, in effect our bank, the country's bank - the Bank of Great Britain.

Northern Rock should lower its interest rates and start lending to UK business (except any private banks) and individuals.

Northern Rock, as such, would then have a less attractive rate for savers, but one the plus side those saving would be secure. The Government should withdraw any guarantees for savings with the higher interest private banks and this will encourage savers to transfer their money to the Bank of Great Britain in the certainty that their savings would be safe.

No comments: