Royal Bank Of Scotland Trying To Stave Off Full Nationalization

And so it was done. The Government has capitulated before the markets. Royal Bank of Scotland (RBS) has been given another £13 billion to try and stave off full nationalisation (read bankruptcy), on quite generous terms. Darling is saying taxpayers will profit, just like Northern Rock, eh?

I can see the Government’s view on wanting to keep a sliver of shares on the market, as this will let them know when to sell-out of their shareholding. But really, RBS’s end of term report today was actually worse than expected.

Massive losses, ABN acquistion not only written down but the remanants written off for sale. This is a coporate disaster worse than either Mannesman or GEC Marconi. Now that is going some.

Yet the share prices of the battered banks flew today (N.B. CU currently holds LLOY shares) and may well do tomorrow. I think the market wants good news and is not prepared to dig to view the long-term picture.

RBS is a zombie and we are following the Japanese plan for 10 years of economic stagnation at best. Now that the Government has put the debt of the banks on the national balance sheet, I can’t see what is holding them back from full nationalisation…in the US it seems momentum is behind the push to sort out Citi (C) and Bank of America (BAC).

I am still against full nationalistion in the UK; not on pure idoelogical grounds, on competence grounds. The government have already proved with Nothern Wreck that they can blow money just as well or better than the Bank executives. Plus the other key economic test as well, If Vince Cable is all for it, it is bound to be wrong.

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