'The scheme, which has echoes of a similar operation by the Swedish government in the early 1990s, would be available to all banks. In exchange for the capital injection, taxpayers might be protected through preferred shares or warrants, giving them generous dividends in future.'
Of particular interest is an Op-Ed in the paper endorsing this kind of thinking by the Tory leader, David Cameron. It concludes by explaining that he is today discussing the crisis with 'Carl Bildt, the Swedish prime minister who 15 years ago showed how a centre-right government can intervene decisively in a financial crisis while protecting the taxpayer.'
Obviously, and understandably, Cameron is covering his back against claims that he is abandoning pure free market principles. Equally obviously, however, that is what he is doing.
claims that he is abandoning pure free market principles. Equally obviously, however, that is what he is doing.
We said last week that this Government needs a clear plan of action, not piecemeal fire-fighting. We argued that it should include a government guarantee of all bank deposits to restore trust. Last night's decision by the German government to take such action places immense pressure on Mr Darling to follow suit. It may also require banks being re-capitalised, if necessary through a government-backed rights issue, to restore confidence.
Given the scale of doubts about the prospects for the solvency of some financial institutions in the context of falling house prices, once one guarantees deposits the logic points heavily towards a much more interventionist stand, with the state deciding which institutions it is prepared to back and which have to be liquidated in an orderly manner.
So I think this is an attempt to out-Cable the Lib Dems by immediately endorsing the Swedish model which Cable has himself only mildly advocated.
Fact is, I'll believe Brown/Darling will do a sweden only after they've done it cos I am convinced they're too anglo-disease fundamentalist to even do what Paulson has done. keep to the Fen Causeway
available to
Hm. "Optional" sounds rather--Paulsonish.
taxpayers might be protected through preferred shares or warrants, giving them generous dividends in future.
Waerrants give you squat--till exercised. Yup. More Paulson. Capitalism searches out the darkest corners of human potential, and mainlines them.
