Here is the Labour point of view (culled from the Spectator Coffee House blog and Labour List between Fraser Nelson and Derek Draper):
Fraser Nelson spelled out the entire list of the country’s liabilities. He did this fairly and thoroughly, although he did not put a price on it, you can see that they amount to a lot of money. The liabilities will be familiar to readers of this blog.
Derek Draper’s reply is interesting.
He suggests that this is simply party politics. He is convinced that the debt in GB is actually smaller proportionally than that of the USA. It is, therefore nothing to worry about.
The banks, he considers, are money spinners, not liabilities. They are there to provide money, not take it away. Already, Northern Rock is pouring out money. The government is on to a winner here.
(He doesn’t say this, but more banks nationalised would, presumably, mean more money pouring into the State’s coffers. He also does not say this, but presumably the amount pouring out of the banks is so huge that the price of shares and other details are simply too small to be considered.)
In other words, all this talk of crisis is simply Tory lies and exaggeration. The world crisis will very soon pass and things will go back to being how they always was.

your first loss is your best loss

if you lose more than 10% cut it, no matter what

it takes much experience to accept this

I can only assume the FSA and Treasury have an agenda to wipe out bank shareholders.

It is bizarre to tell us this is a 100 Year Flood and not to take dramatic action by suspending bank shares on grounds of national security. There is a clause in the Banking Act passed for this bailout which – until February 2009 – permits the Government to reorganise, re-name, de-list Banks. It is in the Lloyds Prospectus but no newspaper picked up on this clause. It seems the Government intends to action this clause

Labour is nationalising banks without compensation and this shows how stupid and arrogant Lloyds directors were to deliver a relatively healthy bank to the State and sideline shareholders. It makes long term savings too risky nowadays so the yield curve will be very steep upwards as everyone deposits short

To me, the governments latest bailout said they were going all in. What cards have we got in our hand if we lose this almighty gamble?

1) Political capital – we are an important member of NATO, the EU, have a UN Security Council seat and are an important US ally.

2) We’re ‘too big to fail’ – if the banks we’ve taken on would go insolvent left to themselves then allowing them to go into administration, sending the staff home and switching all the computers off whilst the accountants try to work out what to do would probably start a chain reaction taking down other countries, companies and rich individuals.

3) A peaceful population – let’s face it, we don’t riot like the French and hardly any of us bear arms. If unemployment reaches dizzy new heights it is unlikely that it will result in any demonstrations the police cannot handle. We should avoid having to resort to the army.

4) Good defence – strong and well equiped military by international standards, peace with our neighbours and a good bond with the USA. If the world breaks down we should manager not to have to fight too dangerous a war.

5) Strong companies / individuals – many British people have money even if the government don’t and our strongest companies (BP/Vodafone/BHP etc) accrue most of their sales overseas, but will they bail out of a sinking ship?

Another thing that I can’t help wondering is if when the USA stepped in to bail out AIG in the wake of Lehmans they did so on terms with other nations such as the UK, Germany etc? I can’t imagine that Bush would have bailed out the world economy without expecting reciprocacy.

I have 3 theories on whagt’s happening now:

1) It’s like many suspect our foreign policy is, we’re really just doing what the USA tells us to do and the politicans are playing politics.

2) The government have decided that the consequences of allowing NR/RBS/HBOS and Lloyds to fail are so great they have decided to nationalise them, then devalue sterling to deleverage the banks, reduce the trade deficit, begin quantitive easing by swapping printed money for the banks foreign currency denominated asets, increase the money supply through bank lending, kick-start inflation, thus kick-starting consumer spending and arrest negative growth.

3) No-one knows what they are doing and I’m both over-reacting to the latest bailout and turning into one of the conspiracy nuts for entertaining the thought there is some semblence of a plan.

Can you please let us know if the BoE uses its newly printed money to buy new Govt debt? Mervyn stated in a speech this week that he would do so:

—–
Excerpt from speech:

The conventional approach to such unconventional measures is to buy assets, such as
government securities or gilts, which are traded in liquid markets to boost the supply of
money. Provided the additional reserves are not simply hoarded by banks, as happened
to some extent in Japan earlier in this decade, such asset purchases can increase the
supply of broad money and credit and the liquidity of private sector portfolios, raising
spending. The effectiveness of this approach is likely to be enhanced by the clear
commitment by the MPC to take the measures necessary to meet the inflation target in
the medium term.

I saw you on Jeff Randall. You certainly laid into Labour’s record.

I would suggest that the government has no notion of risk and will not grasp it. Neither will they grasp unintended consequences. Rather they are lost in the belief that if you get across the message correctly, show compassion and appear to do all you can (no matter what) then everything will be all right. To New Labour, it is the public’s perception revealed in the opinion polls that is the realilty that they know. IThe real world of risks and unintended consequences is alien to them.