LA News Release, No Bail-Out for the British Financial System: Let Failed Banks Fail, 19th January 2009
NEWS RELEASE FROM THE LIBERTARIAN ALLIANCE
In Association with the Libertarian International
Release Date: Monday 19th January 2009
Release Time: Immediate
Dr Sean Gabb on 07956 472 199 or via firstname.lastname@example.org
"NO BAIL OUT OF THE BRITISH FINANCIAL SYSTEM" SAYS LIBERTARIAN ALLIANCE: "LET FAILED BANKS FAIL"
The British Government's latest proposed rescue of the financial system is a fraud on the taxpayers and will fail, says the Libertarian Alliance, Britain's most radical free market and civil liberties policy institute.
[The British Government proposes to spend up to £200 billion of the taxpayers' money on lending to the commercial banks in an effort to end the alleged liquidity crisis. This is in addition to the £600 billion already handed over.Full story at http://news.bbc.co.uk/1/hi/business/7836259.stm.]
According to Sean Gabb, Director of the LA:
"Final responsibility for this crisis rests with the authorities. For at least ten years, the Bank of England - and the central banks in most other countries - has kept interest rates below the market equilibrium. The result has been an frenzy of credit creation by the commercial banks. This led to an asset price bubble that has now burst.
"The recession we now face cannot be avoided by pseudo-scientific manipulations of 'aggregate demand' It is the natural result of malinvestment and general speculation. A return to prosperity is best achieved not by trying to reflate the speculative bubble, but by allowing the liquidation of bad investments to proceed as quickly as possible.
"We agree that this will be painful to those who lose money or livelihoods. But there is no avoiding the aftereffects of an inflationary boom.
"Governments can stand back and let weak institutions fail. This will bring on the worst financial collapse since 1931, and be followed by a nasty recession. Or they can spray vast amounts of our tax money into the financial markets, which might briefly delay the worst financial collapse since 1931 and a nasty recession to follow.
"The only real beneficiaries of this rescue will be those working in the financial markets. They have spent the past decade stuffing our savings up their noses while telling us they were invested. Now their friends in government have come up with a scheme to use our tax money to pay next year's bonuses.
"The Libertarian Alliance denounces this proposed rescue and predicts bad times for years to come."
END OF COPY