Banks are lending to private sector at below the interest rate

after i picked myself up of the floor with tears streaming down my face and hours of agonised laughter i sat down and seriously thought of the madness of this and the implications of it.

what the hell are the central banks playing at.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/01/cnbanks01.xml

 

Very bullish IMO. More $$$ for PE firms to engage in M&A activity creating an invisible bid under the market.

 

this effectively is an interest rate cut of anywhere between 25bp to 50 bp.

no point having interest rates if people just ignore them.

 

It appears banks are lowering their rates as they see the supply of capital is endless and the risk of lending money is basically nil. It's a new era

 

anything goes in a world full of greed!!!!

 

Its free money, keep the game rolling along.

 

Its obvious CB's have created a monetary and credit monster. Only thing that is going to keep it going is continous explosive credit growth.

 

It is in the UK only.
I think this is completely legal, since they can loan at any interest rate.

 

The scary thing is that if this private equity boom blows up and at the same time hedge funds also tank, will the goverment be able to bail everybody????

Because if not, THE BIGGEST PARTY IN MODERN HISTORY WOULD TURN INTO WORST HANG OVER.

 

I see the private equity as pretty stable. They own the businesses they buy, they sit on the boards. They pay their debt with free cash flow, they do not rely exclusively on capital gains.

Hedge funds, that's another story.