Posts Tagged ‘lending’

Are there many more out there in the UK who are totally hacked off at this government’s treatment of savers during this financial crisis?

At a time when it’s clear to just about anyone with half a brain, that the present problems stem from excessive borrowing, this wonderful government of ours is doing all it can to promote yet more borrowing in a vain attempt to kick start the economy. In the process of course slashing interest rates which is having an exceedingly detrimental effect on those of us who rely on savings to at least keep pace with inflation.

So what’s to be done? I have this half formed plan.

The idea is that if a large enough group of us could act in concert with our savings, then we just might be able to make the government sit up and take notice. Particularly so since the UK banking industry is all but nationalised. Suppose a few thousand of us made it known to the government that unless it came up with some system for compensating savers with better interest rates, then we would take concerted action. Next month we’d all transfer our savings to Bank A, and then the month after move them all out to Bank B. Each month putting them somewhere different, going round in a complete circle if needs be. The idea being to create uncertainty about the level of deposits in any one institution at any one time. This would presumably hamper decision making and reduce the levels of lending the banks could commit to.

As I say it’s a germ of an idea I have, and I wonder if there are any readers out there who would wish to comment and suggest just how we might organise this.

Even if you just read this and don’t wish to comment, perhaps you would pass it on to other friends, colleagues and acquaintances. If I detect a sufficiently large ground swell of opinion, I’d be prepared to move it on to the next level and see where we get to.

Over to you…..


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Over a month since I last wrote on this subject, and government and businesses are becoming increasingly desperate and concerned over the failure of banks to lend money, (which after all is what they’re in business for), and stimulate the economy. Now that the UK government (along with other countries) has guaranteed the balance sheets of banks, there is no excuse.

My suggestion to get things moving turns the normal rules of debt, saving & interest through 180 degrees. Instead of banks paying interest on money they borrow from one another, why doesn’t the government, (who owns the major share in many banks), pass an Act, perhaps with a sunshine clause that will lapse after say three years, and regulate that banks who hold money for more than a few days will be levied with an interest charge or tax on the level of their average cash balances over that period, and banks who increase their lending to companies or the mortgage market will receive interest on that part of their lending which is derived from borrowing from other banks..

This mechanism could be handled by central banks, who could no doubt make a small margin for their taxpayers on this trade.

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