Financial support to the banking industry - Darling Plan
Here we have it. Der Plan. We the people are providing the banks (I notice that the Co-operative and Triodos do not figure in the list, and hope this is a good sign) with a facility to replenish their capital base with £25 billion now and £25 billion should they need it later. Also we are lending them £200 billion to keep their squids swimming about in the sea of fiscal liquidity. Add in the bits and bobs and we have a grand total of £500 billion.
Hopefully we will get our money back if all goes well. IF.
Note that Darling does not have to go through the tedious process of asking Parliament's permission to put this amount of money at risk. Not like GWB, who had to bend the knee to Congress before they would cough up the $700 billion.
I think Darling's plan is basically acceptable, although it does not seem to come with any regulatory strings. In particular, there is no reference to CEOs bonuses.
Nevertheless, if Darling can avert a bank crash, this is good for the people.
This does all raise a few questions about where the Government is finding all this money. Northern Rock 110, 500 for this one, grand total £610 billion squids. That is money paid out and money put at risk. Not sure how much capital has actually gone to the institutions, and how much is just put at risk.
Our national debt now stands at £652 billion, which is about 41% of GDP.
What foxes me is where the Govt is getting all this money. Probably not from behind the sofa cushions. Presumably it is borrowing it. If so - who from? I thought the banks were not lending to each other nor to punters. I thought they were under-capitalised. Has Mr Darling borrowed it from flush banks in the East? Or is it from the very banks that we are bailing out? Surely not. No. Nonononononono - well, maybe yes! Nothing would surprise me in the Alice in Wonderland world of high finance.
I will ask around, and if I find out, I will let you know.
Bailing out the banks is one thing, but (as regular readers may have noticed) I think the Green Party should take a position against trying to fill the black hole of debt that is swirling around the money markets.
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Unfortunately it seems to be the case that that the Green Party is not able to comment on most political events in any meaningful way, since although the Manifesto for Sustainable Society that Conference has created over the last 30 years is voluminous, it does not cover specific unfolding political situations in real time. We have no procedure for responding to events not covered in the MfSS.
Which seems to me to be a bit of a problem for a political party.
Maybe we deserve to be parked in the political sidelines.