Let's get this right. Tell me if I've got it base over apex.
HMG give the banks big wodges of dosh in exchange for preference shares (with a high rate of interest) or lend the dosh and get interest.
The BoE then slash interest rates.
But the banks don't slash their rates to borrowers by anywhere near as much. Some haven't cut rates at all. "We are not charities" they say.
The money the banks are making by not cutting rates is being used to pay back HMG as quickly as possible, so that the banks can get back with all haste to the traditional dodgy asset valuation, inflated profits (due to dodgy asset valuation) and related bonuses.
In the meantime the banks nail the punters and pass the cash on to Gordo, who needs all the income he can get. Competition is long forgotten (the head of the 'independent' Competition Commission is the dog that doesn't bark), and by some osmotic agreement the few well-capitalised banks graciously refrain from lowering rates to lure customers from their weaker brethren - don't want another Northern Rock, do we now ?
The beauty is that the banks get nearly all the blame and Gordo gets nearly all the money.
OK, what's wrong with this picture ?
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