Bail Out Mark II Gets Thumbs Down

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Having boasted of saving the world only a few weeks ago, “Bottler” Brown has been forced to attempt a second bail out of British banks. Sadly, this latest attempt to hose the problem with taxpayers’ money has hit the wall as the investors and banks firmly give the latest attempt to stop the slide the thumbs down.

Ever since the problems began to surface more than six years ago, the British Government has firmly ignored them in the hope that they will go away. Then, as the problems could no longer be hidden, the Government has dithered before taking faltering actions that have been shown to be too little, too late.

On paper, the latest action takes the taxpayer exposure to ONE TRILLION POUNDS GB but that is not the full potential exposure. In effect, a blank cheque has just been offered to British banks.

Sterling has suffered massive devaluation but even an immediate export boost, which normally follows a devaluation, has not been seen – quite the reverse, as exports continue to fall and imports hold steady or rise, increasing the massive trade gap.

Against this reality, Brown’s Ministers continue to try to convince Britons that everything is fine and that green shoots of recovery can be seen, with the housing market about to rise rapidly. Unfortunately these claims are not matched by real world economics.

Part of the British problem is that the Government is in a state of denial. Until it starts to admit the scale of the problem that the world can see, there is little hope that any of the floundering attempts to deal with the situation will produce any real positive effect.

When things are looking difficult economically, governments traditionally try to put a positive spin on the situation, partly to avoid talking their economies down. We have long since passed the point where that was a justifiable approach. The world knows that there is now a huge problem and that some economies, such as Britain’s, face an even more severe challenge than others. The dramatic fall of Sterling demonstrates that the world sees the problems in Britain and does not like the way the British Government is addressing them. “Bottler” Brown seems to have ignored the sage advice that, ‘when in a hole the best option is to stop digging’.

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