Bank bailout: will Labour voters get it?

Peter Kenyon Sun Oct 12, 2008 at 11:44:26 PM GMT Print-friendly version Facebook

Mind-boggling sums of money summoned to recapitalise Britain's banks take some explaining. There are inevitably calls for total nationalisation from the left. Tomorrow morning's papers are reporting at least two more UK banks, RBS and HBOS will be taken into majority public ownership.



The full extent of government intervention and control is still being thrashed out before the London Stock Exchange opens tomorrow morning. Our political culture is riddled with greed, fear and touching confidence in the private sector and market forces. Calls for the revolutionary overthrow of capitalism seem unlikely to appeal to the electorate. The measured and comprehensive approach led by British Prime Minister Gordon Brown offers the private sector and the City of London, in particular, an opportunity to reflect on remuneration policies for top executives, fees for services rendered and differentials between support staff and contractors and their goodselves.

In the meantime, there is a big political education challenge facing the Labour Party to explain to both its core vote and middle Britain how money has been found so readily to save the blushes of the rich. Let's not forget income tax kicks in if you earn just over £6K a year, that's little over half the minimum national wage level and a quarter of average earnings. That's not fair. Nor is a wait until 2012 for the state pension to be relinked to earnings.

There's going to have to be some pretty radical thinking in the Pre-Budget Report to persuade Labour voters to return in sufficient numbers to ensure the Party enjoys the political dividend for leading a global bank bailout that might just stave off a deep recession. That still depends on the US authorities getting their act together to ensure bank recapitalisation on the other side of the pond.



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Bank bailout: will Labour voters get it? | 17 comments (17 topical)

Re: Bank bailout: will Labour voters get it? (#1)

by jdc on Mon Oct 13, 2008 at 11:31:29 AM GMT

They might. Although every time Gordon and Alistair stand up and announce billions more of taxpayers money is being used on their mission to "do everything we can to help homeowners", I hear fifteen million non-homeowning voters slip a little further away.

The maddest part of this morning's announcement (much of which was OK) was that the banks are going to be forced to raise mortgage lending back to 2007 levels. It was too much mortgage lending that was the problem in the first place, and that was during an economic boom!


Re: Bank bailout: will Labour voters get it? (#3)

by adwilliams134 on Mon Oct 13, 2008 at 12:18:10 PM GMT

There are several issues that will surface over the next few days.

1.  Where is this money coming from exactly?  How come it wasn't there for pensioners, council housing etc etc , then when the fat cats need it it magically appears. Where exactly did it come from?

2.  Why is it in dollars?  If it's UK money for UK banks why is it in a foreign currency?  What if the exchange rates alter dramatically?  What did we use to buy this foreign currency?

3.  Is the taxpayer gurenteed to at least break-even over this even after inflation is accounted for?  How long will it be before the money is back in the governments banks?

4.  Why are these banks being 'forced' to lend at 2007 levels?  Surley that will re-inflate the housing bubble and lead to more unsustainable unsecured consumer debt which was the major cause of this to start with?

5.  If the banks/lending houses off-sheet borrowing is to be brought onto the books,  will the Government be doing likewise (ie leading by example).

6.  Can we plough more cash in if this isn't enough? If so how much, for how long and from where.  Already in the US, of the $700BN plan they launched a couple of weeks back they have already put in nearly $800BN and it is widely believed they will reach $1TN by the end of this month.  There must be a theoretical limit to all of this otherwise money will cease to have any value in the real world once culminating point is passed.


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Re: Bank bailout: will Labour voters get it? (#4)

by rwendland on Mon Oct 13, 2008 at 01:12:47 PM GMT

No dividends until the govt preference shares have been repaid is a nice touch though. I guess that is why Barclays still hopes to raise private money instead.


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Re: Bank bailout: will Labour voters get it? (#5)

by adwilliams134 on Mon Oct 13, 2008 at 01:54:56 PM GMT

And can someone explain why a Labour government has done virtually nothing over FarePak - who's customers remember are by and large traditional Labour core - whilst it has done the exact opposite for the banks?

Can't we force the banks to cover the losses that ordinary honest decent working-class individuals sustained?  Or is that to socialist.


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Re: Bank bailout: will Labour voters get it? (#6)

by rwendland on Mon Oct 13, 2008 at 02:07:44 PM GMT

A very good point - existing orders should have been fulfilled somehow. Though to be honest, the FarePak business even when it worked was pretty rubbish - essentially over-charging at a trickle rate for a hamper at christmas. But the big banks business model was pretty crap as well.


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Re: Bank bailout: will Labour voters get it? (#7)

by adwilliams134 on Mon Oct 13, 2008 at 02:16:57 PM GMT

So why do we not kill two birds with one stone.  In return for their precious recapitalisation junkie-fix,  the banks honour refunds to the FarePak victims


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Re: Bank bailout: will Labour voters get it? (#8)

by Floating voter on Mon Oct 13, 2008 at 06:30:50 PM GMT

" There are several issues that will surface over the next few days."

You missed one.

7. Tell Gordon to stop smirking at the camera when he talks about spending hundreds of billions. It makes him come over as if he is enjoying himself immensely at a time that is telling us is serious and important. It strikes a very discordant tone.


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Re: Bank bailout: will Labour voters get it? (#10)

by LabourMatters on Mon Oct 13, 2008 at 06:32:50 PM GMT

Superman smiled when he saved the World too. Killjoy!


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Re: Bank bailout: will Labour voters get it? (#12)

by Floating voter on Mon Oct 13, 2008 at 06:37:04 PM GMT

It's not my fault.... but seriously, in Paris during his press conference I honestly thought he was going to laugh out loud whilst telling us all how important it is that things do not get worse.

You can't stand and smile at the camera while telling the viewers that things are bad and risk getting worse. It gets up voters' noses because you look smug. 


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Good grief!! (#15)

by Floating voter on Mon Oct 13, 2008 at 08:00:28 PM GMT

I just came across this

http://www.spectator.co.uk/coffeehouse/2216971/turning-browns-happier-mood-against-him.thtml

I was not aware of this when I posted my comment above, but I was reading through ConHome after I'd perused LabourHome and I came across the link.

Obviously I'm not the only one who finds the "smirk" irksome. Best stop it Gordon! 


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Re: Bank bailout: will Labour voters get it? (#9)

by Floating voter on Mon Oct 13, 2008 at 06:32:44 PM GMT

"Why is it in dollars?  If it's UK money for UK banks why is it in a foreign currency?"

Eh?

Please tell me that we are not in hock to the IMF again.... If we are then Labour is finished.

 


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Re: Bank bailout: will Labour voters get it? (#11)

by LabourMatters on Mon Oct 13, 2008 at 06:33:29 PM GMT

We are not in hock to the IMF again.


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Re: Bank bailout: will Labour voters get it? (#13)

by Floating voter on Mon Oct 13, 2008 at 06:37:30 PM GMT

" We are not in hock to the IMF again."

Good 


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Re: Bank bailout: will Labour voters get it? (#14)

by adwilliams134 on Mon Oct 13, 2008 at 06:42:18 PM GMT

Apparently,  it's in dollars because most of the CDO/CDS that are due in the next few weeks are in dollars.  The dollar is expected to move against the pound in our favour, which means provided we pay in dollars,  with dollars bought in advance,  and the exchange rates move the way they are anticipated,  we will get a good deal.


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Re: Bank bailout: will Labour voters get it? (#2)

by Free Radical on Mon Oct 13, 2008 at 12:11:57 PM GMT

A popular reaction is that the banks have been greedy, why should we help them... but this hardly helps the Tories very much does it who look even closer (to many) to banks and to greed...

But people also understand, I think, that this is a global crisis of awesome proportions and therefore not the fault of our government. They also fear the approach of a recession and have some inkling that a collapse of the stock market and a global financial collapse would be a catastrophe in which there would be no winners.

I think the government comes out of this extremely well, provided it works and the tide is stemmed - which is early to say. But we are seen now to be leading the response with boldness and resolution. I don't think any politician in the house could have handled it better so far than Gordon Brown - he is easily outshining Bush, McCain and Obama who all appear to be floundering.


Re: Bank bailout: will Labour voters get it? (#16)

by MatthewStiles on Tue Oct 14, 2008 at 05:39:20 PM GMT

If you saw Newsnight last night, they had a mock trial of who was to blame - bankers, speculators, regulators or Government.  In an opinion poll for the programme, taken at the weekend, 58% blamed the banking industry and speculators, about 25% blamed the Government, and 12% blamed the regulators.


Re: Bank bailout: will Labour voters get it? (#17)

by adwilliams134 on Tue Oct 14, 2008 at 07:34:28 PM GMT

It now appears that the Government is going to have to back-track on the 'no dividends for shareholders' clause.  Apparently not only is it putting off investors, major shareholders are continuing to dump shares because they dont see the point  in holding them. 

So,  the banks get loads of money in cash that we pay for and the shareholders look like they are going to make money out of it.


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Bank bailout: will Labour voters get it? | 17 comments (17 topical)