The Bank of England finally decided to inject liquidity into the money markets today, releasing £4.4bn at base. This comes weeks after the European Central Bank and the US Federal Reserve started doing the same thing and after repeated lectures from the Bank of England about how there would be no bailout and from the government about a 'return to old-fashioned banking'. Well in practice 'old-fashioned banking' has meant people queueing around the block in desperation to get their money back, and not providing bailouts has meant not providing bailouts to ordinary people who did not chose to punt their life savings on the money markets. That the Bank of England could have thought that they unique among western central banks had it right and the others were wrong smacks of an arrogance that has faced its comeuppance as they caved when the ghastly reality of their Victorian approach graced our TV screens. So, they have damaged confidence in the Banking sector and hence the wider economy when they could have averted it by doing what they are doing today two weeks ago. The government's supine 'trust me I'm Alastair Darling' strategy hasn't worked too well either.
We should all heave a sigh of relief that the short term crisis has abated, but how can we be confident for the future with these clowns at the helm?