5 January 2009
Published in the Daily Telegraph here.
SIR – The Government will get no more joy out of another bank bailout (report, January 3) than it did with the last, because its policies are contradictory.
It demanded that banks plug their financial holes. When they strove to do so, by curbing their lending and raising their charges, the Government complained that they were putting their own prudence over the country's needs. Then, the Government cut interest rates, trying to promote more borrowing, despite having told us two months earlier that too much borrowing was the cause of our crisis.
Now, their plan is to drive interest rates down to zero, which will completely discourage the savers on whom both the banks and the economy depend to provide the finance needed for recovery.
The Government won't rest until it has completely nationalised them and is churning out more of the easy credit that created the disastrous Brown boom in the first place. Taxpayers can't win either, because we will end up paying for it all.
Dr Eamonn Butler
Director, Adam Smith Institute