Quite how a government "working harder" could persuade a private company to take over another private company that was bankrupt with a massive debt hanging around its neck is beyond me. And it strikes me as odd that the party that claims the private sector always knows best in business matters actually thinks that a state intervention (in the form of busy "hard working" ministers) can persuade businessmen to disregard the dire nature of a bankrupt company and happily buy it, lock, stock and barrel. Perhaps Mr Cameron has incredible faith in what he thinks as his gifts of persuasion, talking round hard headed businessmen to take on billions of pounds of someone else's debts. Just which form of voodoo economics do Cameron and Osborne sign up to?
Nationalisation should be a last resort. The last resort has now been reach. And as with so many UK resorts, it is stormy and troubled. I do feel an element of discomfort about the BB nationalisation. Effectively what is happening is that the profitable bits of the operation - the savings and retail activities - are being sold to Santander and therefore will almost immediately be back in the private sector. That leaves the taxpayer carrying the burden of the bad mortgages. Short of seeing the full details, if the sale of the profitable bits reduces the burden on the taxpayer, that is just about acceptable as a reason for breaking up the business. The drawback is that once the business is ready to go back to the private sector, it will not be much of a going concern and not viable as a banking operation as it has been stripped of its retail functions.
Back to Cameron and his voodoo economics. One new policy proposal for getting over the economic crisis is to allow the Bank of England to "intervene at an earlier stage" to "take on failing banks without any cost to the taxpayer." Quite how the state owned national bank can take over a multi-billion failing bank without any risk is not explained. So if taking over a failing bank does not mean taking over its bad debts, then who does take them on? Are they simply forgotten about? Are other bankers asked to come to breakfast with Mr Cameron so he can use his persuasive charms to get them to take over billions of pounds of debts before the croissants are served? This is not voodoo economics, it's alchemy economics. Instead of turning lead into gold, Mr Cameron claims he can turn bad debts and bankruptcy into profit and no risk, all by waving his magic wand.
And as for his proposal to set up an office to decide the level of debt a government can clock up, I suspect the last Conservative government would have had a few problems with such a policy. After all, in the early nineties, the Conservative government was knocking up record debts. And wasn't a certain David Cameron special adviser to the Chancellor at that time?
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