Wednesday, 5 August 2015
In the Bank!
George Osborne inherited a state-owned bank we don’t really want. What we do want is more dosh to spend on the ruinous welfare state, so beloved of those who don’t have to pay for it. So, he sells shares to recover some of the capital spent by the last government some years ago to shore up said bank against failure and now he’s the arch baddy ‘selling assets to his mates’. But nobody agrees RBS is an asset, most people understand that the state can’t really run financial institutions effectively and everybody knows we’re strapped for cash... and he’d still be the arch baddy if all the poor ate from gold plates while the rich had diamond knives and forks.
Most people in private enterprise know well the perilously narrow and rocky channel to navigate between profit and loss, cash flow and capital investment and the balance between staying in business and losing the lot, but it seems everybody (apart from many economics commentators) knows better what he should do. On left and right there is condemnation and disappointment that he is ‘throwing away’ £1billion, but really the loss was made on taking RBS into state ownership when the government of the day poured billions of tax-dosh into the business. They had little choice, other than to let the bank fail, but this makes them no less complicit in the current ‘loss’.
It was a gamble – ‘investing’ always is – RBS may have gone on to fail completely and the loss would have been total but instead it has survived and now the present government wants to recover at least some of what was spent. Think of it as like cashing in Premium Bonds which you bought thirty years ago and are worth far less now than if you’d left the money in a deposit account but might, yet, win a big prize... except the car really needs fixing today. Or imagine that – heaven forfend – you bought shares in Chinese solar panels at the top of the market and you are getting out before your holding loses any more value. It’s not what you wanted, but it’s what you’ve got, so...
Think like many who overstretched themselves in the cheap mortgage years and bought a crumbling pile with dodgy foundations in the northeast in the belief that property prices could only ever go up and you could easily re-finance to cover the cost of repairs. Only now, the roof is close to collapse, the windows are rotten and the east wing is parting company with the Italianate portico. And you are fearful of losing your job. You’d say no to the property developer offering to take it off our hands for less than you originally paid? (And the offer will go down every day you prevaricate.)
It's a project... just needs a bit of paint.
I’m not really defending Osborne. I’m not saying he’s any kind of genius. Neither am I mistakenly attributing our relative economic success to his policies and his alone. I’m not at all sure I'd even like the bloke if I ever met him, but I do know that I don’t know a better alternative. (I’m not saying there isn’t one, I’m admitting I don’t know of one.) But what I am saying is, it’s a bit rich that the voices on the left are berating capitalism for not making a profit on an 'investment' socialism made in a failing enterprise they knew little about. Those in glass houses...