Financial disasters are not normally within the scope of this blog, but with RBS shares heading fast towards zero, closures and redundancies everywhere, and countless (literally) billions more being pledged by Labour to bail out the banks, it seemed churlish to ignore our present plight.
In 1999, RBS shares stood at £14. Yesterday, they fell below 12p. It seems the government is not clear quite how many additional tens of billions of pounds of our money it has pledged to the banks this time, but it should lead to some interesting discussions on the next occasion when someone is told the NHS can’t “afford” a drug costing a few thousand, or that public transport fares have to rise above the rate of inflation, or that people have to be bullied off benefits, or.....you get the idea.
Last week the Economist ran an interesting, and disturbing analysis of some research from a couple of American academics. They found that recessions spawned by banking crises are particularly long and deep. Unemployment keeps going up for five years, house prices fall for five years, and shares lose half their value.
It would be nice to think, wouldn’t it, that while Labour was handing out all these billions to the banks, someone in the bowels of the government was drawing up a comprehensive and binding agreement for them to sign, ensuring that we never again return to the excessive salaries and bonuses, and reckless lending and investment policies that have characterised the sector in recent years. Money talks and it’s saying that banking is too important to be left to the bankers – certainly the ones that got us in this present mess. It would be nice to think, but don’t hold your breath.