More plans to help EASE the credit crisis......without these plans who knows what would happen to the credit market... Bank of England announces $100B plan to ease credit crisis LONDON (AP) ââ¬â The Bank of England announced a $100 billion plan to allow banks to swap mortgage-backed securities for Treasury bills. The bank is aiming to unblock the interbank lending market, where rates have soared in recent weeks as banks have become increasingly reluctant to lend to rivals without knowing the extent of their exposure to the U.S. subprime crisis. The central bank said Monday that it is offering the asset swaps for one year, and they will be renewable for up to three years. The swaps are available only for assets that existed at the end of last year, and the Bank of England says the commercial banks will still keep the risk of losses on the loans.
This whole thing is a disgrace , do people actually think these swaps will not be extended ad infinitum. These swaps will juts end up being a permanent direct monetisation of the toxic waste these banks want to off load from their balance sheets at the expense of the ordinary UK tax payer. The direct result of swapping a worthless asset for one that has worth is a direct increase in the supply of money and hence is highly inflationary. This is going to really light a fire under domestic inflation in he UK which is already running somewhere near 5% despite what the doctored CPI may suggest. Shame on this government and the bank of England. I implore you to stop killing our currency to protect the greedy bankers and people who overleveraged in housing.