Monday, September 29, 2008

Spoilt rich kids

Those banks are increasingly looking like a spoilt rich kid sneering at his parents' pleas for a sensible conduct. But when it all goes tits-up he sobs back to his dad begging to be bailed out.

It started with the government spending £55bn of taxpayers' money on Northern Rock. In the US, lenders Fannie Mae and Freddie Mac were rescued and investment bank Lehman Brothers filed for bankruptcy. Then there was last week's $700bn public bailout of the financial markets in America. Now, more news of state rescue plans (read: our money) come in the guise of Bradford & Bingley being nationalised.

Those banks are increasingly looking like a spoilt rich kid sneering at his parents' pleas for a more sensible conduct. As he keeps splashing his money out on stuff, gambling and speculating, his parents can do nothing more than warn him of the potential consequences. But in return he keeps telling them to sod off and mind their own business...he knows better than those boring old farts. And after all goes wrong and he's left in deep shit, he sobs back to his paternal home begging to be bailed out.

That's exactly what's happening now. For years we've had to endure trite talks of how bad it is when Governments poke their nose into the market, that nothing can create wealth and success like de-regulation, yet now the Government is "forced" to plough billions into ailing banks in order to minimise the consequences of greed.

In the words of the BBC's Robert Peston: "The conversion of building societies into banks is an instance where deregulation and the liberalisation of an industry appears to have been an unmitigated disaster".

1 comment:

American Pie said...

Well. the Congress rejected the bailout. Greedy, incompetent fat cats who have created this crisis themselves and who are now being allowed to pick the pockets of American voters to fix it? No thanks.