Low-government borrowing rates? Hah!

Sir, Martin Wolf cheerfully quotes Jonathan Portes of the National Institute of Economics and Social Research saying “with long-term government borrowing as cheap as in living memory, with unemployed workers… this is the time for government to borrow and invest”, “Cameron is consigning the UK to stagnation” May 18.

Not necessarily so! Government lending is not viewed by the markets as an attractive cruise boat, but more as a floating piece of driftwood they need to hang on to so as not to drown… and, if to the low rates nominal rates, we add the opportunity cost of all those who are being squeezed out from lending because their borrowings generate capital requirements for the banks while the “infallible sovereign” does not, then the real rates on government borrowing could be historically the highest.

Why do they not for instance half the current capital requirements for banks when lending to small businesses and entrepreneurs, so to allow these to lend a helping hand? Or has the whole debate and regulations been monopolized by the “we-trust-only-governments” crowd?