UK Bank Bailout: Out Of Ammo

There are a raft of initiatives out this (Monday) morning from HM Government. We looked yesterday at the Insurance idea. Pondering further overnight I see this as a great opportunity for the bankers to take the taxpayers to the cleaners. the premiums will be too low and the losses more than expected.

In effect, the Government will become like AIG (AIG) and the monoline insurers - see here for a good, if technical, description. That worked well as a business model….

However, converting preference shares into ordinary shares was a good idea for Lloyd’s (LLOY.L) and RBS (RBS.L) - but not if they end up in Government hands anyway. RBS is down to 25p a share right now so that is looking very likely as of now.

The other measures are all good ideas to get lending going again and a good fist at trying to stop a depression resulting from the credit crunch. If only they had been done a year ago…

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