Squaring the circle

Going to be interesting seeing how they manage this:

greater capital and liquidity requirements.


The proposals will “not be cheap” for the industry, which will have to accept “lower returns on equity in the future”, according to Mr Tucker.

Whether or not that\’s a good or a bad idea is one thing.

But how do you square greater capital requirements, lower returns on equity (two sides of the same coin) with the need to increase lending?

Well, you can\’t. It\’s impossible. So, according to all of those telling us about how to avoid further recession and even depression by expanding lending we, umm, given the choice between snarling at the bankers and accepting further recession or leaving them be and getting growth going again we\’ll…..umm, we\’ll snarl at the bankers.


1 thought on “Squaring the circle”

  1. Well yeah, obviously, but the neatest trick the UK government pulled recently was to completely muddle up ‘assets’ and ‘liabilities/capital’ sides of the balance sheet and to insist that banks buy more ‘good quality’ assets, like, er, government bonds.

    So the gummint is using taxpayer’s finest to prop up banks who in turn prop up the value of government bonds, so that the government can borrow more cheaply to prop up banks (etc ad infinitum).

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