Sunday, 28 September 2008
All hail the US Cavalry
Many good and sensible people in the US realise the US bailout is a terrible deal for US taxpayers. Nouriel Roubini, previously seen as a nut job and now recognised a very prescient, has a great post showing how there are many ways to tackle a systemic banking crisis.
What the US is doing is a very expensive way and one that saves shareholders over taxpayers ultimately. Our own problems with recognising what is and is not a systemic crisis (B&B, Northern Wreck) with our sporadic and random government interventions (see HBOS, see BOE massive money market operations).
However, for UK taxpayers, what a massive break! If only are stupid Government can keep itself quiet for a few minutes. The US will bail out RBS, Barclay's and HSBC - the last of our real worries (hedge funds and OE firms can go bust without too much effect on non-stock market participants).
With this maybe Robert Peston will be right and there will be no more banking failures in the UK. This is good news, as the recession we are entering and the housing market crash will be pain enough for the next few years as it is.
Sadly, my hunch is that Gordon Brown will want to 'do something' and UK taxpayers will get shafted like those in the US.