Mervyn leads the resistance

Mervyn King, the BoE governor, is resisting the flood of flakey housing bailout ideas coming from the government. Yesterday, he gave a strong performance before the treasury committee, where he ruled out any role for the BoE in providing long term funding for the housing market.

"It is not the purpose of central bank liquidity insurance to provide a source of long-term funding to the financial system – indeed it cannot do that. Only private savers or taxpayers via the government can provide such funds. So I hope everyone will understand that the proposals to be published next week, important though they are, will not and cannot solve the shortage of funding to finance bank lending."

Absolutely spot on. The central bank is not a commercial bank.