A second bailout?

So there we have it.  The first substantial rumblings that Alistair Darling’s going to sanction a second banking bailout, after the first one didn’t free up credit as intended.  According to the Times, the Chancellor will “decide within weeks” whether to pump £billions more into the sector.  One option being considered is the creation of a “bad bank”; by which the state would take over bad loans from the banks, thereby detoxifying the main banking system.  It was an attractive idea when Hank Paulson first suggested it in the US, but would practice match the theory with Brown at the helm?

Should a second bailout be necessary, the Government will spin it as proof that they’re doing “everything it takes”.  While the Tories will – not without reason – say that Brown’s policies just aren’t working.  This to-ing and fro-ing will most likely form the overarching political narrative of 2009.  But even with Mandelson and Campbell back on board, it will be increasingly difficult for Labour to counter the Tory