If nothing else makes this situation stand out it is that the Bank, having cut interest rates to their lowest level since 1951, appears set to reduce them this week to the lowest since 1694. This is terrible news for savers and far from unalloyed good news for borrowers, given that loans are so hard to get.
The urgent task of Alistair Darling, therefore, is to break this lending logjam. Left to themselves, banks will do nothing. The herd instinct that led them to lend too much during the good times now persuades them into what Lord Myners, a Treasury minister, describes as “reckless caution”. Bankers really do only lend you an umbrella when it is not raining.
Read the whole editorial.
(Sunday London) Times: No recovery from the crunch until the credit flows
If nothing else makes this situation stand out it is that the Bank, having cut interest rates to their lowest level since 1951, appears set to reduce them this week to the lowest since 1694. This is terrible news for savers and far from unalloyed good news for borrowers, given that loans are so hard to get.
The urgent task of Alistair Darling, therefore, is to break this lending logjam. Left to themselves, banks will do nothing. The herd instinct that led them to lend too much during the good times now persuades them into what Lord Myners, a Treasury minister, describes as “reckless caution”. Bankers really do only lend you an umbrella when it is not raining.
Read the whole editorial.