Mervyn King famously regarded £30 billion as a great deal of money in those dear, dead days when New Labour's bank, Northern Rock, inflicted the indignity of a retail bank run on the United Kingdom and its benighted Chancellor of the Exchequer. But he was constrained to accept £30 billion and then some as Northern Rock swallowed down more and more of taxpayers' money only to look quite abstemious as Royal Bank of Scotland, HBOS, and their sundry, formerly solvent victims quantitively eased their way into the public purse. It turned out that £30 billion isn't much after all. And as for the 29 trillion dollars President Obama rarely mentions.....
Obama is banging on and on about Spain, the IMF in Washington is rushing out reports, the English language media is sucking its breath in between its teeth as if Spain had been caught in flagrante delicto.
All this for just one kiss?
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2 comments:
People seem to have given up pointing out that the case for rescuing banks is exceedingly feeble: better, on the whole, to wipe out the equity holders and give as big a haircut to the bondholders as is necessary to let a good bank/bad bank solution work.
A 'bank insolvency led crisis' is a major part of the misery many are suffering. But the banks have been so successful at resisting the policies of letting them take their medicine and fail that it comes as a pleasant surprise that Spanish banks seek so little.
You state the correct response so succinctly it makes very plain that the permitting of banks to act as they have done and continue to do is rooted in a widespread and profound ethical, political and ideological corruption masquerading as valid economic theory and practice.
As you say, Dearieme, the case for rescuing banks is extremely feeble. But banks are not all or even the main object of the rescue, are they.
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