Categories: uncategorized
Date: 13 October 2008 20:13:38
Today is year zero in the banking industry following the part nationalisation of RBS and Lloyds TSB/HBOS. HSBC and Barclays have decided not to partake of the government's rescue plan.
We now have 3 banks (soon to be 2) that have either a majority or large minority government holding - 60% for RBS and 40% for the combined Lloyds TSB/HBOS. I don't think that anyone would have expected this turn of events when the crisis began 12 months ago.
Yet what else could the government do? If the banks had collapsed then the taxpayer would hae been left with the fallout and the bill. It is hoped that this will help to shore-up confidence in our banking sector and that other countries will follow our lead.
Our government has had to borrow this additional money in order to pump it into the financial sector. No one knows if this will enough. If it isn't where do we go next? How much more of our future national income can we mortgage?
We're promised that our "investment" in the 3 banks will later be sold as a profit when the markets recover. Yet we know that government's don't usually sell holdings for as much as they're worth. We may find that the people who get richer will be those on the banks' boards and the city advisors. The government tell us that they will run things at arms length; that the "professionals" will still make the decisions, under their supervsion.
We all have to hope and pray that things will begin to turn around.