The editorial page of The Wall Street Journal Europe rips into the Asset Protection Scheme the government announced yesterday:
“It's little surprise that U.K. financials rallied yesterday on the news that the British state will guarantee more than £500 billion of the banks' toxic assets. It's like getting car insurance after having crashed the vehicle into a wall.
The "Asset Protection Scheme" is a great relief for everyone around -- shareholders, managements, creditors -- except for the people who share no responsibility for the mess: taxpayers. In a sign of how bad markets believe this deal will be for taxpayers, prices for U.K. government bond futures initially slid more than a full point on Thursday. If and when the losses on those poisonous assets materialize, the government will have to issue a lot of debt.” A bad bank would be a far better idea than all these schemes that the government keeps pushing through. A bad bank is in many ways an unpalatable idea, but it would get credit moving again. The government seems to have forgotten that ‘If it must be done, 'tis best it were done quickly.’