Yesterday, I noted the ironical plight of savers, who are totally blameless concerning the credit crunch, and not responsible for the borrowing that caused the current financial mess, yet they are being punished by having their interest payments severely slashed.
Thus, the prudent are paying for the ways of the naughty debtors.
And of course, government encouraging debt by lowering interest rates hardly seems the way to get out of a mess created by too much debt in the first place.
Anyway, here's another ironical contradition.
The banks are moaning that they cannot get finance. It seems the UK may need another government bailout to keep them afloat.
But perhaps the reason they cannot get finance is because of the pitiful interest rates they are now offering.
I have a tidy sum in Barclays that used to pay 5% or so a year ago, but this is now down to 0.8%!!
Thus, I am now in the process of taking the money out and putting it into other accounts still paying 4%. Though interest rates are set to fall yet again this week.
What with all the talk of business failure, an extra million unemployed by the year end in Britain as a tenth of the workforce are laid off, I bet there is more than a few per cent of risk in lending money nowadays to anyone. So no wonder the banks cannot get the money they need.
In such cases, with the greater risk involved, then you might expect interest rates to actually increase, even if that would deepen recession further.
But can you see the contradiction here? In pushing interest rates down to problematical levels where banks cannot obtain funds, governments have now created a new problem for themselves and their central banks. Thus, we need yet more bailouts and the spiral of doom continues.
We are in one helluva mess and I see no easy way out. Is there one?