After a month of appearing sensible, the Bank of England appears to have caved in and bailed out not just one bank’s depositors, but the banking system as a whole. More proof – if it were ever needed – that the prudence years are long gone. We’ll inflate our way out of letting the city bankers – and indeed multiple-home-owners – face the consequences of their gambling.
Whether or not this could be fixed using interest rates is now immaterial. They’re not even going to try. Expect some smoke-and-mirrors over the coming months, to pre-empt and limit the damage to headline rates.
Worst, pumping more money in will only prolong our housing bubble. The major cause of it was oversupply of mortgage money, aided by smaller amounts of public money.
Poor old prudence. And poor taxpayer.