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Have the money markets stalled again?

The government has given the definite impression that the £500 million Jaguar loan, which is currently being considered from taxpayers funds, is a last resort due to problems in the money markets. However, this perception also prompts an array of other questions relating to the banking rescue package and the billions of pounds which have been thrown at the money markets over the last few months. If the markets have frozen again, or at worst slowed, then the initial rescue package for the economy may well have been wasted.

The government has attempted to offset any potential slowdown in the money markets with an ongoing reduction of UK interest rates which has seen rates fall to 2% with the suggestion they will fall further in the short term. Indeed there is even a contemplation that rates will fall to around 0% as they have done in the US as a blunt and straightforward method of trying to refloat economy in the UK.

Taxpayers are now starting to ask questions about the reasoning behind the multibillion pound rescue package for the banks, which has yet to yield any particular benefit for taxpayers, as well as the hundreds of billions of pounds poured into the money markets. If these are not working - what next?

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