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Where have the billions gone from the banking sector?

The slump in banking sector shares on the London stock exchange this week has prompted many taxpayers and many experts in banking to question where the billions of pounds from the earlier rescue package has gone. There is no doubt that liquidity is still very thin on the ground even though the UK government has ploughed in literally hundreds of billions of pounds into the system, with very little to show for this. So where has it all gone?

This is a question which needs to be answered before we see the bank rescue package part two which many expect to be announced over the next couple of weeks. The UK government is being very coy on the subject even though various leaks have "softened" the market for the eventual outcome, but when and how much money this new rescue package will involve remains to be seen.

It is bizarre to think that while banking sector is the recipient of hundreds of billions of pounds of rescue finance we are seeing areas of industry such as the car manufacturing sector and the brewery sector fall to their knees. Despite all of the hustle and bustle from the UK government there is very little financial assistance being pointed anywhere but the banking system. Even the recently announced small business insurance scheme is nothing more than an insurance policy for UK banking sector.

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