Government to Spend £50 Billion to Part-Nationalise UK’s Banks
October 8th, 2008Via: Guardian:
The government has confirmed that it will spend £50bn to part-nationalise Britain’s biggest banks, in a dramatic attempt to stop the country’s financial system melting down.
Today’s momentous decision to pump £50bn of taxpayers’ money into the troubled banking sector came after government ministers and bank officials thrashed out the details of the plan into the early hours of the morning.
The £50bn bail-out is equivalent to £2,000 for every taxpayer in the UK, and analysts warned today that the public will “foot the bill” for the plan. The government is also now offering to lend £200bn to the sector – much bigger than previously thought – as short-term loans in an attempt to thaw the frozen interbank lending markets, plus a further £250bn to guarantee bank debts.
Eight banks and building societies will take part in the scheme – Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered.
Related: People Line Up to Buy Gold in Britain
This is the sort of thing that needs to be done when banks are in serious trouble. Such moves certainly don’t mean there won’t be serious economic pain, but it can have a containing effect on the extent of the catastrophe. Problem in the USA is, the corporations pretty much own the government and are like prodigal sons who don’t want to be made to “move back home” despite being days away from begging for spare change on the streets. I won’t even call it “free-market” ideology, because as we have seen, Paulson and his bunch certainly aren’t adverse to a little bit of plutocratic socialism!
Mike Whitney writing at Counterpunch.org provides some valuable insight here.
So if the government owns the banks, and the banks own the homes of people who defaulted on their mortgages, then… I don’t like where this is going.