‘Capitalism is suspended’ – Rothschild

False Economy have published the Rothschild review with a commentary from me. What’s contained therein underpinned my evidence to the BIS Select Committee yesterday.

The transcription of the Rothschild feasibility study into the sale of loans was a team effort, so I only saw this passage this morning.

Conventionally capitalism requires that a real return on capital should exist i.e. in other words that RPI should be below interest rates. However, right now:

• Capitalism is suspended,

• Base Rate is an issue of national policy, and

• RPI and Base Rates are currently Inverted

In such circumstances, Rothschild is recommending that the government or, indeed, universities should pick up the risks that investors cannot tolerate.  Risk is ‘socialised’, private returns protected.