Britannia Radio

This shows that the Governor of the Bnk of England has no idea 
whatsoever about what he's doing.  To reduce interest rates any more 
will achieve absolutely nothing because it isn't the cost of loans 
that is the stumbling block it is confidence and willingness to lend.

Similarly to raise interest rates slightly and give savers a chance 
would fractionally put up the cost of loans but it would be the first 
step in rebuilding confidence and, as savers came back, there would 
be once again money to lend.

It is utterly despocable the callous way the Governor picks on the 
most virtuous and blameless section of the whole population and HE 
decides that they are to be sacrificed to the greed of others, be 
they bankers, or house price speculators or credit card debtors.

xxxxxxxxxx cs
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TELEGRAPH     12.2.09
Mervyn King suggests savers will be sacrificed as rates fall
Savers are going to bear the brunt of the Bank of England's attempts 
to revive the economy, the Bank of England Governor Mervyn King has 
warned.

By Myra Butterworth and Edmund Conway

Mr King expressed sympathy for savers, but indicated that they will 
be sacrificed as interest rates are cut further in a bid to revive 
the economy.
He said: "I have every sympathy with savers - they are certainly not 
responsible for the current difficulties - but suppose we were to put 
up interest rates?
"That might benefit savers in the short run, but is anyone seriously 
suggesting that would help the British economy get through the 
recession? No.  [YES - see above -cs]  We have to take action to 
increase the supply of money in the economy, to increase spending in 
the short run, in order to dampen the strength of the recession."

The Bank of England is widely expected to reduce rates to zero per 
cent at its next meetings in March or April.

Mr King explained: "Given that we are in such a deep recession in the 
short run, I think that if we were not to take measures to stimulate 
the economy, then savers would find they are actually much worse off 
- there would be even higher unemployment and even more of a downturn 
in the economy. That is the paradox of policy."   [Since all this 
stimulus merely makes everyone nervous and reluctant to spend at all 
it is self-defeating. - cs]

The Bank of England has cut the Bank Rate from 5 per cent to just 1 
per cent in the past five months - and high street banks have 
responded by reducing the rates they offer savers.

Savings rates are now at their lowest ever level, according to the 
Bank of England's own records, with notice accounts offering an 
average of just 0.29 per cent and cash individual savings accounts 
(Isas) paying an average rate of 1.38 per cent.

Financial experts and charities warned lower rates will bring further 
misery to savers this year.

Sean Gardner, of the personal finance website MoneyExpert.com, said: 
"The Bank of England has tried to jump start the economy by slashing 
interest rates to previously unheard of lows. But these efforts come 
at a price and it's savers who have been sacrificed.
"Savers outnumber borrowers seven to one and it's the returns on 
their hard earned cash that will be crushed every day that the base 
rate stays so low."  [If they are sacrificed they can't spend.  It's 
crazy isn't it? -cs]

Rebecca Ward, of the poverty charity Elizabeth Finn Care, said: "The 
latest interest rate reduction is a further kick in the teeth for 
people on low incomes who are struggling to eke out from their 
savings a life beyond mere subsistence survival."

Mr King's comments come as The Daily Telegraph calls for pensioners 
to be given a tax cut on the income earned from their savings and 
investments through its Justice for Pensioners campaign.

The Chancellor, Alistair Darling, has said he will look at measures 
to help these savers in the Budget, due in March or April.  [22/4/09 
now! -cs]

Phil Jones, personal finance campaigner at consumer group Which?, 
said: "We've seen some very worrying data and savers will be very 
concerned. Banks cannot have their cake and eat it: if banks are not 
passing on cuts to borrowers they should not be passing on cuts to 
savers."