Banks will be allowed to fail
(From the Telegraph) a Moody's senior credit officer and lead analyst for a number of UK banks said the agency may cut its rating to 14 UK banking institutions and the review ".. has been initiated in response to ongoing guidance from the UK authorities (the Bank of England, the Financial Services Authority and the Treasury) that banks that fail in the future should not expect capital injections from the public purse."
This bombshell is a very radical change to policy regarding bank failures, but does not seem to rule out BoE intervention to avoid bankruptcy.
My view is that banks should not be at the heart of the money creation system, and should not have been allowed to grow as they did, nor allowed to mix household and commercial lending with speculative, market-based, own-account trading - which was (after all) made possible by cash deposits, mortgages and loans in the first place.
But, if you intervene in the fortunes of private banking companies in such a major way - as governement's did in 2007 and 2008, and continue to do today, and in the asset and credit markets - then you have to be first consistent, and second open about it.
It appears that a massive change in public policy towards our high street banks has been made without informing us. The shareholders should be livid as well.
This bombshell is a very radical change to policy regarding bank failures, but does not seem to rule out BoE intervention to avoid bankruptcy.
My view is that banks should not be at the heart of the money creation system, and should not have been allowed to grow as they did, nor allowed to mix household and commercial lending with speculative, market-based, own-account trading - which was (after all) made possible by cash deposits, mortgages and loans in the first place.
But, if you intervene in the fortunes of private banking companies in such a major way - as governement's did in 2007 and 2008, and continue to do today, and in the asset and credit markets - then you have to be first consistent, and second open about it.
It appears that a massive change in public policy towards our high street banks has been made without informing us. The shareholders should be livid as well.
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