Why won't the Tories say they favour the creation of a bad bank?
James Forsyth 6:10pmIn his speech earlier today, George Osborne said:
‘we must deal with the toxic debts of the banks we now own.
They will be zombies until we do. Neither dead nor fully alive.’
The clear implication of this statement, and several others that Conservative spokesmen have made in the last few months, is that a bad bank is needed. But the Tories always stop short of saying that they actually favour the creation of one. I can’t see any reason—political or economic—why the Tories shouldn’t say openly that a bad bank is a necessary step for ending this crisis. It seems to be another instance where the Tories would benefit from being less cautious.
The rest of Osborne’s speech was typically politically astute. He inveighed against the 50p rate, declaring it to mark the death of New Labour. But he chose to make clear that stopping the increase in National Insurance Contributions is the party’s top priority. The leadership’s 50p straddle—disagree with it, mock it but don’t pledge its instant repeal—is keeping the party united for the moment and has neutralised the political danger the move posed to them. These are not small achievements. But in government, they will have to decide whether or not to scrap it in their first Budget. After all, to govern is to choose.
The biggest applause Osborne got was for the line, ‘it wouldn’t be a bad thing if Britain started making things again.’ Although, Osborne’s attempt to cast his family as part of the small business manufacturing base of the country risks bringing up Labour’s favourite subject, Cameron and Osborne’s privileged backgrounds.
On the Tory argument of the day—how much the Tories should say about what they would do—Osborne cast himself as one of those who believe in the importance of a mandate.
“the public looks to us, now, for answers to the problems our country faces.
And we must provide them.
Because we want and we will need a democratic mandate for the changes we need to bring about.”
Watching a Tory audience listen to an Osborne speech is always interesting. The party doesn’t automatically love him in the way it does Cameron. But he is able to hit the party’s buttons so that by the end of the speech he has won them over enough to receive a far warmer standing ovation than one would have predicted he’d get at the beginning.
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David
April 26th, 2009 6:35pm Report this comment"We will create a bad bank"
One day later
"We, the Labour government, will create a bad bank".
QED.
TomTom
April 26th, 2009 7:02pm Report this commentA bad Bank would require banks to write down assets to realisable value and wipe out their equity.
The IMF has pointed out that Western banks have zero equity when set against their potential bad debts.
Derivatives are huge and exceed global GDP - who will fund a bank for toxic assrts if RBS alone has a balance sheet bigger than the United Kingdom ?
George Laird
April 26th, 2009 7:26pm Report this commentDear James
The reason the Tories can't commit is COWARDICE!
Let's make no mistake they are paraylsed with fear.
The Tories are more than just 'do nothing', they are 'think nothing' as well.
My statement some time ago that Osbourne is a loser is getting fleshed out by his and the Tories deeds.
Finally, the reason I suspect that the Tory audience doesn't love Osbourne is that they sense what I do, the wrong man in the wrong job at the wrong time.
Here is why from your own words
"The rest of Osborne’s speech was typically politically astute".
Being good at being a schemer is hardly anything to be proud of; I see a young Gordon Brown there.
And we all know how he ended up, don't we?
Yours sincerely
George Laird
The Campaign for Human Rights at Glasgow University
Obnoxio The Clown
April 26th, 2009 7:40pm Report this commentMaybe because a bad bank is NOT necessary to deal with the situation. A "good" bank would be a much better idea. Then let the current crop of useless banks stand or fall on their own two feet.
mark
April 26th, 2009 7:52pm Report this commentThe problem is the scale of the problem is unknown. It's very unlikely that a Sweden like low cost resolution of the banking problem is possible at this stage given how for almost 2years the government has only taken half measures to deal with the bank problem.
The UK banks having massive international lending - well over a trillion to the US alone - means the UK taxpayer is on the hook for potentially stratospheric losses.
This is the elephant in the room for the UK economy and the next Government - the Iceland risks are very real at this stage.
TGF UKIP
April 26th, 2009 11:00pm Report this commentOn and on it goes - the Speccie's unceasing, but entirely pointless, promotion of Osborne.
YouGov poll this week following the Budget - Cable 22%, Darling 15%, Osborne 15%. Poll of the marginals a couple of months back - who do you want as Tory Chancellor? Clarke 39% Osborne 15%.
When, James, are you guys going to get it? Osborne is a very dead political parrot. Defunct, deceased, no more. The voting public were never impressed with Osborne from the start and the more they've seen of him over the past few years the less they've approved of him to the point where they've now simply tuned him out.
Unfortunately for him, whereas TV can mask some politicians tue character in his case it just amplifies it so the public have well and truly got his number as the nasty, arrogant shit he is (just ask THX 1138.)
If ever there was an election that's going to be "It's the economy stoopid" it's the forthcoming one and with the Tories rarely having anything more than a slender lead over Labour on the economy question, it says everything not only about the hitting power of the Tory's principal economic spokesman but about Cameron's generalship in keeping him in such a vital position
But who's surprised, with Dave it's always the clique way ahead of party or country.
No wonder Gordon, even now, still has everything to fight for.
TrevorsDen
April 26th, 2009 11:38pm Report this commentUKIP is again letting the slip of his tory hatred show. He needs to hate tories and undermine them because there is no way his UKIP can thrive otherwise. Indeed he needs labour to survive.
Promoting a bad bank is somewhat dubious since nobody knows what the level mof debts are.
Good bank / bad bank ? Who cares ? Will this miraculously make the debts disappear or be cheaper to pay off?
Osborne spiked Browns clever plan over a year ago. Tory haters have never forgiven him since.
David K
April 26th, 2009 11:43pm Report this commentEurope and the rest of the World will have to follow the US, which quietly abandoned mark-to-market rules http://www.newsweek.com/id/192562 on the same day as the G20 was meeting in London. The Europeans just can't wait : http://www.bloomberg.com/apps/news?pid=20601087&sid=aElymhLgAaK4&refer=home . What it means is that the banks themselves will be able to place a value of their own choosing on their toxic assets. So assets worth zilch can be made to be worth more than zilch, which they may or may not be. Abracadabra! We must be crazy to put up with this.
Craig Strachan
April 27th, 2009 12:43am Report this commentWe've got plenty bad banks already. Why can't we create a good bank?
Verity
April 27th, 2009 2:01am Report this commentTGI UPIK But who's surprised, with Dave it's always the clique way ahead of party or country.
Correct.
Them.
They'll manage us.
No wonder Gordon, even now, still has everything to fight for.
Correct.
They have not been vanquished.
Britain seems to have lost its taste for vanquishment. This is unutterably sad ... and why, when I first detected it, I got out. There is no way back without something major and I don't know what could save us. Certainly, HM won't. She's been looking after her own all along.
And what comes after HM?
And after him, William.
It's a long way to the intuively named Harry, but I believe, as his mother apparently did, having insisted on the name Harry, not Harold, will lead us to freedom.
And TGI UKIP, yes, the Labourites still have everything to fight for.
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