August 14, 2007 (LPAC)- While Central bankers worldwide, led by the European Central Bank, have poured hundreds of billions worth of paper at the widening hole of economic collapse, the BoE has, to this date, contributed the grand sum of: Zero dollars. As noted in today's Washington Post Business section, Mervyn King, the head of the BoE since 2003, has developed a "hawkish" reputation for "fighting inflation," or, in King's own words, "interest rates are not a tool to protect unwise investors from the consequences of their unwise decisions." Indications are that the bank has no immediate intentions to either lower rates, or to add any liquidity to the current bailout pool in the near future.

While LPAC certainly has no sympathy for the banks caught in the whirlwind of the current collapse, the actions of the BoE, by withholding any ameliorating funds, could be considered highly hypocritical. One of the most offending institutions in recent years of financial excess, has been the hedge fund, relying on the loose international credit pool known as the Yen "carry trade." Funds have been able to borrow Yen, at low rates, then "leverage" this money into high yield speculative investments elsewhere, whether it be corporate buyouts or mortgage backed securities. The difference on the interest between the loan, and the high-yield investment, has been pure speculative profiteering. The grand majority of the world's hedge funds are operated under the protection of the British Crown, from their Carribean protectorate called the Cayman Islands.

The (non)action by the BoE, at this point of crisis then, is akin to withholding any water to fight a fire for which they supplied most of the fuel.