Paul Lewis
speaker
150 appearances
6 recordings
1 series
first heard Apr 2011
last heard Jan 2015
Paul Lewis’s voice in public audio — every appearance, attributed to the second.
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Appearances
But when the number 1 appeared, six weeks or so ago, it began to look as if the banks had stopped trusting each other.
To explain, at any time the banks hold billions of pounds.
OK, it's our money, but they hold it for us.
And instead of just keeping it in a vault marked Other People's Money, they lend it out to each other as if it was their own.
What they charge for borrowing our money is called BBA LIBOR.
That's short for British Bankers Association London Interbank Offered Rate.
And the three-month LIBOR is what they charge for lending money to be paid back in three months' time.
Normally this LIBOR is within a gnat's whisker of the official bank rate, currently half of 1%, and it started 2011 at 0.75% and stayed pretty flat.
But then in August it began to rise steadily, and on 10th November it crossed one, double the bank rate, and this week it's around 1.07% and still rising.
That rate is a measure of the risk that the money lent will not be paid back in three months' time.
And by rising more than a third in four months, it shows trust among banks is falling.
And yes, the last time the banks stopped trusting each other was the crisis of 2008.
Paul Lewis.
The way Five Live explained the difference between the two measures of inflation is the way most journalists have since the government decided that two price indices meant double the fun.
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But the difference between the consumer prices index and the retail prices index is not mainly due to the fact that CPI excludes housing costs.
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At the heart of the difference is mathematics.
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Each month, 300 agents record 180,000 prices in 20,000 shops.
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and they are turned into an average for the price of, say, bananas.
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But just what is an average?
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The RPI uses the simple arithmetic mean.
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Showing 121–140 of 150 · page 7 of 8
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