Brown’s bank job

It is a shame that Gordon Brown said in parliament that he ‘saved the world’ when he meant to say ‘saved the banks’, because the latter proposition is the more preposterous.

It is a shame that Gordon Brown said in parliament that he ‘saved the world’ when he meant to say ‘saved the banks’, because the latter proposition is the more preposterous. After more than a year of throwing our money at the banks, the Prime Minister has fixed nothing. He simply stopped a run on the banks by putting the British taxpayer on the hook for all of their losses. Since then, banks like RBS and Lloyds have used taxpayers’ money to fill the holes they blew in their balance sheets — with the latest bill, the latest bailout, coming to a staggering £31 billion.

This is a strange form of nationalisation. We were told that the government had taken over the banks, but it seems the banks have now taken over the government. RBS, Northern Rock and Lloyds can simply use the UK tax system to recharge their balance sheets with people’s taxable income.

It will not be fixed until there is a damage report, saying just how bad the bank losses are. Gordon Brown understandably does not want to admit the extent of the debt he has lumbered us all with. But as the Japanese found, lack of transparency means never-ending bailouts and economic stagnation. Private investors are wary of pouring money into a black hole, so the government sends taxpayers’ money instead.

To be clear: this banking crisis (induced by government’s failure to control the supply of money or regulate) is ongoing. The zombie banks — RBS, Northern Rock, Bradford & Bingley, etc — will come back for more of our money.