Dan is right on the money - as he often is

There are various articles in the press attacking the weak weak weak coalition government and its gutless surrender to self defeating socialist envy.

So far I like this from Dan Hannan the best ... recommended reading.

RBS should have been taken into protective administration and broken up.

I can understand that major banks can't be allowed to just close their doors and stop trading, even if depositors money is eventually returned under a guarantee scheme. A lot of companies who RBS provides banking facilities to, not to mention individuals, would suffer a cash flow heart attack under those circumstances.

However I think the option of protective administration was explored sufficiently. My guess is that the reason for that are political.

As an alternative every man woman and child ( and many children yet to be born ) will be paying for RBS long into the future.

I have the feeling of being robbed. Its a feeling that doesn't improve with RBS's plans to hose tax payers money on its staff, when many of those tax payers are lsoing their own jobs and savings as a result indirectly of that banks actions.

Also a bank under administration would not be paying bonuses, but handing out P45s, and flogging of profitable section of the business in an orderly way. In addition we would finally know they full depth of the whole that Labour's banker friends dug. Then confidence could return to the economy - or at least faith that a realistic picture now exists.

Instead we have what Labour needed to hang onto power for a few more grubby months.

PS Lib Dems notice the difference between Nationalisation and Administration. One has dumbed down civil servants ahving rings run around them and signing cheques with tax payers money, the other has profession foreseic aacountants going through the books with a fine tooth comb.

Also I find Gordon Browns crocodile tears over RBS bonuses sickening in the extreme. The man has no honour and must be removed from office as soon as possible.

Just how much is the taxpayer underwriting a foreign bank ? ( And foreign customers ! )

One of the main contributors to the downfall of RBS has been its takeover of Dutch bank ABN/Amro. Indeed the biggest headline goes to the couple of billions ABN lost to a Russian oligarch's firm.

Why isn't ABN/Amro being close down or sold off - or the Dutch tax payer joining us in Gordon Brown's slough of debt ?

Things have gone way beyond the benefit of the doubt.

Update see Alex at the The Financial Crimes for more on how much RBS owes overseas and how Brown has destroyed our economy. ( See you have to consider that all this may be deliberate. )

The victims of RBS

I have two relatives, getting on in their years, both of whom have holdings of shares in RBS - one of them a rather large holding.

One of them had taken comfort in the charity they intended to leave the money to as a legacy.

Both of them were given the shares in inheritance, and can't bring themselves to sell because of the memory of the people who help them before.

And anyway they used to be worth a lot and banks are such respectable businesses, surely its just a matter of holding on to them.

Over Christmas I tried to explain to both that share prices can go to zero, and I would just sell now.

But these people trusted RBS and its board. One even bought more shares when the company asked for support with its rights issue.

Now instead of a legacy and maybe some small inheritance to pass down the family there will be massive debt and taxes for their grand children to pay because the likes of RBS over paid for ABN/Amro and let a Russian oligarch make of with billions of pounds.

Today its apparent that some in RBS are still drawing salaries in the £700k/yr range.

People are no where near angry enough about this.

PS Don't think I'm letting Brown of the hook here. He's got a tremendous amount to answer for in the way RBS has been 'saved'. But just for now lets ask why there isn't more action, restructuring and general humility from RBS for how it has betrayed its share holders.

{ I suspect it may be a ploy from Labour to use the board of one or two banks as scape goats later on in this crisis. }

See also The DT is talking about the plight of small RBS shareholders here.

How bad is it ?

Peter Oborne lays out the down side of our current situation brutally in today's Daily Mail. The markets have just almost halved the share value of RBS again. Lloyd's TSB seem to have tried a millstone round the necks of their shareholders with the purchase of HBOS ( a lot more should be known about Gordon Brown's influence in this take over ).

Civil unrest may be only a few months away, see David Cox here. I've mentioned many times before that we should look to Argentina to see what happens when a government goes bankrupt. The executive summary version is this - the middle classes are reduced to poverty.

It seems the government have no idea of how bad things are. They are becoming at best city traders at worse desperate gamblers - and they have no encouraging form as either !

What is sure is that they continue to put their political careers ahead of the country.

1. Has anyone seen signs of cost cutting at RBS or HBOS ? Both are now ( or shortly to be when Llyods gets its next bail out ) state controlled. Surely costs should drop now ! ( But of course that would mean redundancies in Scotland - where the Brown/Darling duo are based ).
2. Has anyone seen signs of government cutting back on its expenditure. ( The only signs I've seen are Geof Hoon inviting us all to drive of the hard shoulder of motorways rather than build more and the delay in the White Elephant Aircraft Carrier programme. )

Its time for some responsibility, realism and please oh please competence.

I don't think we will get these from Brown. He is either out of control or deliberately driving us over the cliff for his own ideological reasons.

What a differenece 58% makes

The Royal Bank of Scotland the Taxpayer last week believed that in the event of a mortgage default it should seek to protect its depositors and share holder's assets by reclaiming the house.

Today, after the Labour government took a 58% stake in it it, suddenly it believes that it makes "commercial" sense to wait six months.

The result of this, if the housing market keeps falling for another year or more ( which seems indicated - but hey predictions haven't been too good so far, so who knows ? ), is that either the mortgage holder will have vastly higher debt to repay at the end ( equivalent to the asset price fall and an extra 6 months interest - which let us assume they can't pay or else what are they in arrears anyway ).

It could be that this is really a commercial decision and the bank being owned by the state, whose ministers and servants have been making menacing statements about the banks for the last few weeks. but equally that could be a flock of flying pigs heading past my shed window.

The net impact of this statement will be:

1) Good headlines for the government - or at least the reduction of bad ones.
2) Greater personal debt for those poor unfortunate people who lose their homes.
3) Greater losses for RBS, depressing the share price and making greater losses for the tax payer.

This government's political ambition has too be the most expensive in UK history.

England - Saving Scotland's banks and delaying independence

It is perhaps interesting to note what has happened and how it may impact politics.

The two remaining major independent banks in Scotland, HBOS and RBS, have been saved from ruin, mostly by the English tax payers, their children, their chidlrens children and their pensions.

I personally wonder if HBOS will need to be taken over by Lloyds TSB now these credit guarantees and sources of capital are in place.

There are now two candidates to buy HBOS - Lloyds TSB and the UK Govt ( ie mostly the English Govt ). I wonder how long it will take for that penny to drop. Once it does the pressure for the socialist government to buy with English tax payers money will become very high. Is there a by-election coming soon ? Surely not ....

But what this also does is blow a hole below the water line in the SNP's campaign for independence.

Lets be clear - if Scotland was independent now its choices would be a stark as Iceland's, ie who to sell your country to. ( The Icelandics look like going for the Russians ).

At the same time oil heads below $100/bbl and production from the North Sea continues its sharp decline.

There will also have been a body blow to confidence North of the Boarder.

All it takes is Gordon Brown and Alistair Darling to bring home a bucket load of English pork, which would very obviously not be available for an independent in the EU Scotland.

Oddly enough I suspect this will play well for the Unionist parties, and a future Conservative governemnt will reduce the pressure for political representation in England.

So will the Union be saved ? Ultimately I doubt it as by removing the external pressures our short term self intrested politicians have been prevented from coming to a positive vision of a future fair UK based on equality between nations, and that means at the next crisis the Union may break.

PS I now wonder if Labour won't win the Glenrothes by-election. If something on HBOS was pulled out of the hat - perhaps they will. English tax payers should weep...

See also A Free Scotland would still have to beg for English cash Angus McLeod
and I think Richard Thomson of the SNP is going to take another view...