With the continued problems there has been more Governmental and Central Bank intervention. The Bank of England and European Central Bank have already decreased interest rates. The UK Government is currently increasing its foray into the banking system in an attempt to influence the money markets.



Time will tell as to whether this additional combination of injection and guarantee will finally get things moving but it must be admitted that merely making money available does not appear to be the real problem.

Consumers are in danger of becoming an endangered species as fear stalks the workplace every time a senior manager walks in. Unemployment lines are growing and it would be a foolish family which did not put down as much cash as possible in case of the worst occurring.

In light of this, the concentration of ministers ?trying to get the banks to lend more? may appear, on the face of it, to be slightly misplaced.

And it is here that we start to argue about the chicken and the egg. Do we need to loosen up lending before the economy turns around? That would risk ever more debt in a deteriorating credit environment. Or do we wait for the ?green shoots? before increasing lending? That would risk a downward spiral of ever lower economic activity.

Unfortunately we live in a particularly weak democratic environment where politicians will do almost anything to achieve a ?quick fix?.

Recessions are tough and will always be tough. The current administrations? ever increasing monetary injections over the last 11 years have meant that the dismal days have been put back time and time again. They have simply been sacrificing the future on the alter of the next election.

As Simon Denham of recently said, ?I fear that the struggles of the Government to avoid the worst will take the banks down with them. If companies are already in dire straits and now require more funds then what on earth will their position be like in 12 months??

In times past, the banks effectively did the nations work for them by weeding out the weak leaving the economy better placed for the next up-swing. This time there appears to be a denial of the theory of survival of the fittest. The longer this goes on the worse the final outcome may become.

Gordon Brown recently spoke to journalists about the State's banking intervention. It sounds like shareholders are not a high priority for the Government. In the current political environment good banks may be swept up with bad banks as the spectre of total nationalisation gets ever greater.

, the UK based spread betting company, released a statement at the end of 2008 showing that their clients were mostly putting money on an improving banking sector in 2009.

You can understand their reasoning; the stock at these low levels may be worth a punt with money you can afford to just blow away. Just do not expect any favours from the State.

Note that spread betting carries a high level of risk to your funds. You can lose more than you initially invest. It may not suit all investors. Only speculate with funds that you can afford to lose. Ensure you understand the risks and seek independent financial advice if and when necessary.