The Fun Continues

Sonnet in Paris.

After dropping the kids at yoga and going for a power-walk in Richmond Park, I brace myself for Gordon Brown and Alistair Darling who describe Britain's banking bail-out. I watch them on TV and I must say that while I have been critical of Super Gee, he has the facts cold. Chancellor Darling, too, is cool-hand Luke and his unwavering eye instills confidence. Cameron would be a disaster. Their press announcement this moring follows the financial sector's sharp stock-market decline and fear of a "cataclysmic failure." As I understand it, us taxpayers will take a stake in banks seeking assistance through the purchase of their preference shares which, Gordon Brown says, could mean Joe Six Pack might make a profit eventually. You betcha. Holders of preference shares, Dear Mother, are the first in line for the payout of dividends but they do not carry voting rights nor enjoy Board representation - a huge flaw, in my opinion, given that we now own these jokers. I want to make sure my money is appropriately utilised and not going to fat-cat salaries nor 5-star spas (hello, AIG - you boneheads). The bailout is expected to be structured so that the Government receives rights to ordinary bank shares at low prices, holding out the prospect of profits if and when banks recover. Chancellor Darling also announced help from the Bank of England to ensure that the banks have enough cash to run their day-to-day activities. Thank goodness for all that.

The difference between the US and the UK bailout BTW is where the cash goes: in the states, an RTC equivalent to be formed to buy so-called "toxic assets" which presumably can be resold should there ever be value. Banks or anybody can unload its wastage and, we hope, strengthen their balance-shit with one enormous flush. In Britain, we give the same banks direct liquidity to sort out their own mess; in return we own 'em.