QE - Quick Exit?

The Bank of England is going to inject £75bn into the economy through a process known as quantitative easing (QE). The Bank has already used QE before previously pumping £200bn into the economy by buying assets such as government bonds, to try to boost lending by commercial banks.

All of this money will go to the banks because supposedly that is the best way for the money to filter into the economy. But I am sure that it would be better to give everybody in the country about £4,000 to spend how they wish. For example they could spend it on upgrading their bathroom or buying a new TV, which would all help the economy in a different sort of way. This is much better than seeing the banks get it and sit on it, and still not even lending to small businesses.

In October 2008, the world’s financial system was on the brink of collapse. Even with the announcement of a multi-million pound bail-out, major British banks were about to go bust.  Gordon Brown came up with a plan which was at the time heralded as saving the European banking system. The government bailed out the faltering banks. But here we are again in the same situation.

Moody’s has just downgraded the credit rating of twelve financial firms in the UK including RBS, Lloyds TSB, Santander UK and Nationwide. The sticking plasters seem to have all fallen off and the culprits have taken all the credit and moved on, leaving an even bigger mess.

Is this the end of Capitalism?

This entry was posted on 08/10/2011 at 12:03 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.