[economics 101] what's wrong with this picture?

What's wrong with this picture? Don't answer if you understand economics:

The Bank of England will next week unveil a plan to swap £50bn of government bonds for British banks' mortgages, the BBC has learned.

The government bonds would have a maturity of up to a year, but would be rolled over for up to three years.

These would meet banks' demands for longer term loans, while escaping being accounted for in the national debt.

The Bank of England hopes the scheme will encourage banks to lend to each other again and also to homeowners.

The banks have been asking for longer term finance from the Bank of England to fill their funding gap following the collapse of the market for mortgage-backed securities last August.

The disappearance of this market deprived banks of tens of billions of pounds of finance for mortgage lending and is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate.

We start with a hugely overinflated price for a house, out of all proportion to income, fuelled by the banks' willingness [greed?] to lend at all costs, even to sub-primes. By this massive influx of funds to the banks now, the process will continue.

Shakespeare wrote:

Feeding on that which longer nurseth the disease ...

But there's no such thing as a free lunch and the big slug is on the government itself, i.e. in its bonds. How far can they be trusted, especially considering the slump of the pound sterling and the jittery markets?

Maybe it's the turnaround everyone was hoping for, especially those involved in the game but it looks very much to me a game of double or quits here with quits the more likely outcome.