Posted by: secretperson | September 28, 2008

Bradford and Bingley Nationalised

Despite the ban on the ‘evil’ short selling. After Northern Rock it looks like the government is going to end up having to bail out any failing bank, at the taxpayers’ expense of course, and probably to the benefit of the very people whose poor management risked the bank in the first place.

I am not convinced by this ‘end of capitalism’, whole new era of tight regulation nonsense that everyone seems to be saying. What actually seems to be happening is not the end of capitalism but bailing it out to preserve ‘the financial system’. It seems to me, and I freely admit to knowing very little about economics, that the whole point of free markets (is a free market the same as capitalism?) is that bad business models fail, thus preserving the strong. Let the banks fail! If needs be to protect savers introduce an insurance scheme (one up to £35,000 already exists I think). If unpaid mortgages are assets (i.e. just money coming in) they can be sold off, as any assets are by a bankrupt company to pay debts.

I can understand a safety net for individuals in a free market system, out of human kindness not wanting people to starve etc. But I am not convinced it is best for banks, surely they need to learn from their mistakes.

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