How to fix banking

'Everything', well almost

I'm on the way to the bank I'm on the way to the bank
Gordon Brown tells us he will do "everything it takes" to sort out the present crisis in the UK's banks. The Mr Fixit role appeals to him as he is by nature an interventionist. Gordon Brown loves the 'big state' way of working and has personally waited years to be the Prime Minister of such a thing. Many people thought that Brown's dislike of the euro indicated a dislike of the EU. Not so I suggest. I would imagine Brown has a soft spot for the EU and looks fondly upon the interventionist policies of its élite. While we could never describe Brown as a friend of Peter Mandelson he is, to use that weasel word, a colleague. As we know Mandelson is one of the EU élite and so all is well, or is it? What about another of the élite, European Union (EU) Competition Commissioner, Neelie Kroes? For Kroes has had words with Brian Cowen the Taoiseach of Ireland about his plan to give total security to deposits in Irish banks, see HERE.

Brown has not gone as far as Cowen with deposit safety and as a result there is a suggestion that money is already flowing into Ireland from UK accounts.

So there you have it 'everything it takes' is correct only when it has the follow up line about 'providing it is approved by the EU'.

The voters of Ireland will not look happily upon another intervention from the EU, not if they are forced to queue, Northern Rock-style, outside a bank to get their money back. So Cowen was in fact doing the EU a favour with his scheme. But as we have seen with the Irish vote on the Lisbon TreatyConstitution, as far as the EU is concerned the voter does not matter, the EU has very little feel for street level public relations.

But back to the UK. While the EU can ignore the results from the voters in Ireland, the world of commerce in the UK, is different. What if the Lloyds TSB shareholders say NO to the proposed Lloyds TSB/HBOS takeover, what does Mr Fixit do then; may I suggest hold a general election? But while we are waiting perhaps it would be more honest for Brown to say he will do for the UK banks, "what I'm allowed". The difference is critical.

And now this -

Quote from the Telegraph LINK

If the French follow the Irish, (deposit safety scheme) as they are believed to be considering, bankers said it would inevitably force all governments across Europe to follow suit. Depositors would then have to decide which sovereign guarantee was safest. Credit default swaps, effectively the cost of insurance against going bust, on Ireland's government bonds almost doubled yesterday after the announcement, indicating the level of risk transfer.