Palau

..got a counterfeit dollar in his hand, too.

In reply to Larry Elliot’s new daily column on the economic crisis a commenter points out the utter pointlessness of UK Chancellor Alistair Darling’s belated bank rescue ‘plan’ :

cojock

Oct 07 08, 3:05am

What is being missed here is that even if banks do start lending again to other banks, against their better judgment, it doesn’t solve the problem, which is that bank capital was only part of the capital which supported the bubble of credit now deflating increasingly rapidly.

Banks outsourced huge amounts of credit risk to investors through the mechanisms of securitisation; credit derivatives (essentially a time limited guarantee); credit insurance and toxic cocktails of all three.

Even if banks’ balance sheets were restored – which they won’t be – and even if they lend at the same daft levels of “gearing” – which they won’t – there is still a vast capital hole which can only be filled by governments.

This deficit-based system of monetisation of credit is finished – and we must thank Mr Greenspan for bringing forward its inevitable demise several years.

The alternative to credit is a new approach to”equity”, using non-toxic alternatives to the Corporation as legal frameworks for investment in assets of all types, Public and Private; commecial, social or charitable in aims, and whatever the legal form.

Not only are such alternatives now possible: they are emerging in the UK and elsewhere, simply because such “unitisation” actually works better than conventional “equity”…..

I agree: the corporate model must die. Mutualisation is going to be a word we’ll be hearing a lot more of and believe it or not the Conservatives are ahead of the curve on it. Strange days indeed.

But wonky discussion of possible future economic models doesn’t answer today’s essential question – ‘Is my money safe right now‘?

Martin is sensible and banks with a Dutch bank – he’s safe, they were nationalised over a week ago. I bank with RBS, which has teetered on the cliff-edge of insolvency while Darling dithered. The answer to that question for me, as for many other British people, is ‘Who knows?’

Now finally, after a over a week of cowardice and indecision, at 5am today Darling came up with a plan; it’s a plan that’s that’s neither fish nor fowl, neither nationalisation nor a full guarantee of British banks, but a half-assed waste of 50 billion pounds that will give a thousand pounds for every woman, man and child in the country to incompetent and greedy billionaires, with few guarantees for the taxpayer.

Darling was aided in this by his Economic War Cabinet – these people:

Lord Mandy… one of the world’s foremost authorities on dodgy self-cert mortgage financing
Lord Drayson… a man well known to BOM readers for his keen understanding of markets, and the price of everything
Lord Myners… a man who is fully versed in the dark arts of short selling British bank stocks and who has produced a veritable shedload of official reports
Lord Helpus… a man who has always fancied a peerage

OMG. Mandy, two of those notorious Labour donors, and Lord Helpus. It’s a re-run of the National Economic Development Council, an entirely useless talking shop finally abolished by John Major in 1992.

So New Labour ‘s blinded by the bankers again, giving away taxpayers’ money even as those taxpayers lose their jobs and homes. For many this winter it’s heat or eat.

But can anyone protest at this government stupidity, profligacy and incompetence? No, they’re doing it whether we want them to or not. Our opinion is irrelevant.

At least the Americans got to protest a bit about the theft of their money before it was stolen. Parliament has had precisely nothing to say, let alone the voters. If this is a democracy I’m a banana.