The majority of the population had no real sense of the enormity of the events that were occurring around them in October 2008. The news that RBS, HBOS, Lloyds TSB and Northern Rock had been taken over by the government was just another news story. Even the fact that we are now in recession and have been for the last 4 years; yes, they notice that they have not had pay rises and that prices in the shops are rising but these things have happened before. In my working life there have been 4 recessions, this is nothing new.
What most have never understood is that if these banks HBOS, RBS and Lloyds had gone bankrupt the very foundation of our financial systems would have come crashing down. What does this really mean? It means your bank account would be frozen; your credit card would not work; and you would have no access to money. Without money you cannot buy food, fuel or anything else that you need every day. Business would stop and there would be mass unemployment.
The maintenance of the financial systems go to the heart of our survival. How many people would know where to find food if the shops closed?
At the Liberal conference in 2010, Vince Cable said the country was in a situation that was the equivalent of war. One of the first casualties in war is truth. It is an unfortunate necessity but difficult to understand, or accept in a democratic society. Those in power who did understand had some big decisions to make. How do you avoid financial collapse and the years of human misery that would follow?
One of the things that they must achieve is financial stability. The role of the Bank of England, as the lender of last resort, is to maintain financial stability, and maintain it at any cost.
An analogy would be to compare the situation in October 2008 with a General faced with having to take a potentially impregnable enemy position. He will, with regret, sacrifice some soldiers, to give his army a reasonable chance of winning the battle. The Bank of England may have sacrificed some principles for the greater good, but would we really have chosen the alternative?
Those who are now challenging their behaviour should reflect that if these sacrifices had not been made they would now be walking through the ruins of the City of London. Dramatic? Maybe, but it has happened before many times in many countries and in very recent times. We were not immune to financial meltdown.
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