Wednesday, 8 October 2008

Taxpayers bail out banks

Alistair Darling, the Chancellor of the Exchequer, has this morning launched a plan to spend £50bn of your money to keep British banks afloat for a bit longer. (See Treasury statement.)

Did you, the British taxpayer, want to own some banks? Or even all the banks? Well, in the past you have involuntarily owned many businesses to stop them going bust: car manufacturing, shipbuilding, coal mining, railways - these all used to be private before being nationalised to avoid bankruptcy and save jobs and were then later re-privatised, mostly by Margaret Thatcher. This New Labour government has of course already re-nationalised the railways (the tracks that is, not the trains themselves.) So taking tranches of British industry into pubic ownership is not a new phenomenon. However it is generally unsuccessful. The government is simply not very good at running a business. (They are not very good at running a country either but they don't have any competition for that.)

It's far too early to say if AD's £50bn bail-out will return us to normality (not that I'd personally want to return to normality; I'd prefer a more restrained, less debt-ridden future) but I'll sign off with just one thought...

You, the taxpayer, will be giving a shed-load of money to the banks, and then when you take out a loan or mortgage they will be charging you interest on the money you lent to them in the first place! That's nice, isn't it?

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