The Sunday Telegraph reports that the UK government is going to inject £50 billion into British banks, in particular HBOS and the Royal Bank of Scotland, to save both banks, making them both majority government owned. This adds to Northern Rock and Bradford & Bingley, giving the UK government control of four of the biggest financial institutions in the country. This is despite a deal by Lloyds TSB to buy HBOS which it reports is still on track. The government is also seeking to inject funds into other banks, like Barclays and Lloyds, making the government a shareholder of them all.
United Soviet Socialist Kingdom or what? Well this is part of a £500 billion rescue package. Yes that isn't a mistaken zero. It is more than NZ$1.4 trillion. That is ten times the GDP of New Zealand. Half of it is to underwrite debt, £200 billion injection into money markets and the rest to partially nationalise banks. Compared to the US$700 billion package from Washington, given the US has five times the population of the UK, it shows new Labour is old labour once more.
Simon Heffer in the Daily Telegraph points out that with Gordon's nationalisation while painted as saving the UK from disaster "the consequences of his having done so could be catastrophic, too, because the socialist experiment rarely ends up with people feeling happier, richer and more free until it has ended."
"The liability and risk to the taxpayer is terrifying. The political cost to Labour if all this fails will be as nothing compared with the cost to the British public.This is what socialist economics brings. The intervention, or rather interference, of the state in financial and economic matters can only lead to sclerosis, the suppression of enterprise, the raising of taxes, starvation of investment, lack of innovation, technological retardation and the rise of the power of organised labour."
Indeed some on the left in the US and UK are asking that, if the government can conjur up incredible sums of money to bail out banks, it can do so to build state hospitals, schools, businesses and there is no end to what the benevolent state can do.
What the great wish of Brown is that the financial sector will be buoyed and that there will be no need to guarantee debts, and government capital in banks will result in a significant return that can be privatised.
However the main discourse today is how "capitalism has failed" and how "Roosevelt saved the US in the 1930s". What is most important is for those of us who believe in freedom over statism, and markets over central planning, to ensure that this discourse is not dominated by the left. As PC says in an excellent article at Solopassion "When we see the destruction caused by the depression of the thirties and the means by which the Roosevelts of the world both extended it and then used it to permanently enthrone big government, it should be clear to anyone with eyes to see that what politicians do in the next few months will effect us all for good or ill for at least a generation."