When a business goes bust, it is taken over by an administrator who becomes a receiver and then a liquidator if the business cannot be saved. The liquidator's first job it collect all the debts and when he has done so he pays the creditors an agreed proportion of their debt. So let us for one moment assume that LLoyds TSB, which I think owns Halifax Building Society calls in the Administrator. In your scenario, he must collect all the debts which means mortgage payers need to find a new mortgage provider or their home is forfeited. But there is a banking crisis and no bank is lending money. Indeed, many of Lloyds TSB creditors are other banks and the other banks do not know if they will get any money from the Lloyds TSB administrator or how long it will take to come. The crisis at one bank rapidly becomes the crisis at all banks and the economic system fall apart. Supporting the banking system was the only option available, and indeed the Bank of England has always been the lender of last resort.
So you agree that supporting the banking system was the source of the debt not any governments economic profligacy? Like I said, why not transfer the debts and assets to the BoE then?
Does it matter how the debt arose or whose fault it is. Time has moved on and the debt is still there. When I die, and this conversation seems to be bringing that eventuality ever closer, some other poor sod will have to pay the interest on said debt via their taxes, and that seems wrong to me. If you think that it is right, then there is nothing to discuss.
This sums up what we should have done... (If I can get the link to work) http://www.irishtimes.com/opinion/martyn-turner-1.2816375
This is your best post. Except for the penultimate sentence (the one before BOOM) which I don't understand. (Oh btw I don't understand BOOM either)