Originally posted @ 2:35 am, Tue 14th Oct 2008
So on the day that the British Government takes a massive public stake in some of our banks, the stock market sees a massive increase in the value of shares. And a spokesperson for British banks, a former Tory Derbyshire MP, is reduced to pleading for nothing too extreme. (All on Margaret Thatcher's birthday.)
Mark Todd MP has written extensively and well on the reasons for the current problems and his blog is well worth a visit. http://www.marktodd.org.uk/
There is actually a significant feeling amongst the public that bailing out failed bankers (who were no doubt part of the move for de-regulation in the eighties) is wrong and that they should be hoisted on the petard they raised.
But the Government’s focus is on avoiding a crash, minimising the damage done now, in the expectation that the financial markets do in time recover what has been lost. Indeed, it’s expected that the Government will in the long-term make a profit out of the shares it’s bought today.
Dramatic too to see Gordon Brown’s ideas leading the world on the way to avoid a crash. There was a false start just over a week ago when European leaders agreed one way forward on Sunday, only for Germany to appear to break ranks the following day. Now there’s greater coherence and an understanding that we both need stronger regulation and that such regulation will only work if a global approach can be agreed.
Regarding the Icelandic banks, joint action has increased the chances of not losing money through a crash and offers a better way forward for individual savers and British councils & charities who’d placed money there. Deposits by councils often have to be checked against ratings by credit rating agencies and there is some expectation that they will have to improve their assessments.
I'd thought that the weirdest of the TV coverage on the Icelandic banks has been the shots of plastic bags full of shopping as people left Iceland. My Mum lives in Oswestry, and she can tell you - Iceland started in Oswestry.
However, it transpires that over time, Icelandic business did take a controlling interest in the supermarket chain.
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