Tim Congdon has a good piece in the Times, to the effect that the Bank of England's job is lender of last resort and it as no business taking equity stakes in banks.
The trouble is, the people, and the bureaucrats, rather like nationalisation. They like the idea of the government banning the bonuses of the traders, of sacking the management, of making the banks serve the people. Derek Simpson, joint general secretary of the Unite Union, said after the rescue plan was announed: "The measures announced today must be bound to undertakings by the banks of no job losses, no repossessions and an end to the bonus culture." So the government will be actively managing the banks, with social rather than profit goals?
And the people liked the line that was spun that the government would make a profit out of owning the banks' shares. Don't hold your breath, if Mr Simpson has anything to do with it.
As a libertarian I am against the government nationalising banks in this way. Its role is to keep the markets open by supplying enough liquidity. As to making a profit, just suppose they did what conservatives and libertarians want and gave the money to the people: how many of us would have invested in bank shares? Damn few, as the Scots say. And that is because we don't think they are a very good investment. So lets have no more pretence on that score.
Incidentally Darling's first idea was that the government would take special preference shares. No mention of how they were to be sold for the prospective profit (if the government were the only owner of preference shares there would be no market to sell them into, they would have to wait for them to be redeemed by the bank, at par and without profit). Then it transpired that the banks' statutes prevented such a thing anyway.
This aspect of the rescue will be a fiasco, I am thinking. Cameron should promise to get the government out of the banking sector as soon as may be possible.
No comments:
Post a Comment