Vir Cantium

I'm right, you know …

We Are Saved

John Redwood, speaking at a Freedom Zone event at Party Conference last week, estimated that, were it to use the same accounting standards that are required of the private sector, the government would be £1.5 trillion in debt.

Well, looks like we can add another £50bn to that this morning and potentially another £450bn which, at the very least, would warrant a “note to the financial statements”.

The best bit, though, is the idea being touted that the taxpayer might make a profit on the deal when the shares pick up again. Clearly, this is such a good deal that all the other potential private investors are just being altruistic and community spirited in allowing the government to take advantage of the situation.

How is it, at the same time that so many are bemoaning how irresponsible lending and investment decisions ought now to come back to bite the decision-makers in the backsides, the government is helping out so many of the culprits? (Or at least, accessories to the “crime”, since nobody forced mortgage borrowers to load up with excessive debt.) What? Let a bank go down? Think about the effects! Yes, think about it, and use a fraction of that £500bn, instead, to mitigate those effects on people and businesses on the ground.

Darling was, of course, stunned into “action” by continuing falls in banking shares and confidence in the system.

There is a growing school of thought, though, that rather than blow another £50-500bn on panic measures rescue plans bail-outs, a much cheaper solution would be to deal with Robert Peston, the BBC’s Business Affairs Editor, who, not for the first time (ahem – Northern Rock), has proven himself the epitomy of irresponsible journalism. Does he actually understand the financial world? Does he appreciate the concept of the effect of the observer on events – an idea widely accepted elsewhere, from the world of finance to that of physics?

Oh, and at the time of posting the FTSE is down 6%. A thumbs up for Alistair there, then.

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