I have not posted about the economicrecession for a while now. It has been a deliberate attempt tocontrol my blood pressure. Every newscast brings fresh news of ourpoliticians doing headless chicken acts. They are grimly Newtonian;to every action there is an equal and opposite reaction. Of coursethe media hasn’t helped. Words like disaster, meltdown, cataclysmicto describe a 2% drop on the Stock Exchange do overdo the drama. Neither group seem to have any grasp of reality.
The facts are quite simple. Personalgreed led some banks to take excessive risks. Shareholders anddirectors were not really worried because banks rarely fail and therewards were far too tempting. Then the bubble bursts. Governmentseverywhere go mad and bail them out. Let it be noted that nogovernment can actually match the total debts of the combined worldbanks so at best their action is a sticking plaster on a shrapnelwound. This is the equivalent of the local council bailing out acorner shop that goes bust. In fact that scenario would have agreater chance of a happy ending.
If the toxic banks had been allowed togo bust, the unintended consequences would not have materialised.Royal Bank of Scotland would have gone under leaving some innocentprofitable bits to be snapped up at bargain basement prices by moresensible banks. The pieces of HBOS of any value would have gone toLloyds for a few hundred million instead of billions of pounds. Furthermore there would be no problem about bonuses or pensions, atleast not for the taxpayer, because there would not be any. And mostimportantly shareholders would have learnt a valuable lesson. Bestof all the taxpayer would not be about to pay for this unmitigatedpolitical tomfoolery for the next forty years.
So having saved the country about atrillion pounds, the government could have let Royal Mail have a nicefat cheque to help all the worthwhile businesses which are short of afew thousand pounds to keep them afloat while the economy adjustsdownwards. This would also have saved Peter Mandelson the trouble oftrying to privatise it. There would have been plenty of room formanoeuvre to apply loans and grants all over the real economy to keepmore people in work. What is more the hundred or so buildingprojects in the further education sector would not have had to behalted and it would have been possible to give more money to councilshit by the failure of their investments in Icelandic banks. I knowthat sounds like bailing out the undeserving bureaucrats but it wouldalso keep a lot of people in work. Those two examples representactual job cuts by the government. There would have still been a fewbillion left over to start new work, like creating first-worldschool buildings and investing heavily in energy related researchboth in universities and industry so that as the economy stabiliseswe are in a more competitive position. We might even have bought thearmy some proper gear.
As it is this government in particularis ranting about the greed and having a totally new banking regimewhile do its best to return to to the previous status quo. Actuallythe banks are being realistic in not lending as much as thegovernment are exhorting them to do. Somebody somewhere in thebanking system obviously realises that there is need for morecaution.
And now my blood pressure is throughthe roof!