Some thoughts on money that matters. First up is a report that the UK high street bank, Lloyds-TSB, has been penalised by the US banking authorities for illegal financial tranactions. The bank will pay £230m to the US as a consequence.

Lloyds is being rescued by the UK government and merging with HBOS in a part nationalisation. It says that it had put aside £180m last year as contingency. Which means it would have been declared on the balance sheet - and thus presumably scrutinised by the UK Treasury before the bail-out? So will the directors and shareholders pay this fine out of their own pockets, or will it come out of the UK tax-payers pocket?

Secondly, it looks like both politicians and learned commentators are at a loss as to what to do about the deepening crisis. It is claimed that the Government wants to get help to people.

Remember, it started in October with £50bn going directly to banks and £200bn being made available as loans, then there was the December VAT cut of 2.5%. By Christmas the, so far published, total bank bailout had reached £500bn (and counting).

However, borrowing money and giving it to banks to pass on is not working and reducing VAT so that business can pass it on is not working either. Let's try something else. Rather than borrowing more money to lend to others to make available to people, why not simply stop taking so much!

For instance, in 2006/7 the total UK Local Government receipts for Council Tax were £23.6 billion. This amount is tiny in comparison to the hundreds of billions of pounds being shovelled towards the banks.

It would be simpler, cheaper and more effective if the Government simply gave the £23bn to the Local Authorities instead. That would provide immediate relief to many of the hardest hit, it would ensure local services were maintained by guaranteeing local revenue and it would be very popular. 

The only losers would be the banks and the international money markets.