Brown's Bank Bailout Lies in Tatters
Iain Dale 8:54 PM
Liam Halligan is one of the most insightful voices in the world of financial commentary. He has a very worrying ARTICLE in tomorrow's Sunday Telegraph. Be afraid. be very afraid.
Read the whole article HERE.
It's official. Government policy isn't working. As bank shares collapse amid renewed carnage on global markets, we now know the worst isn't over. This crisis just entered a whole new phase. Gordon Brown's "rescue plan" lies in tatters. Perhaps now the Prime Minister – and his counterparts across the Western world – will do what needs to be done. Regular readers know what's coming next. I've been writing the same thing for months. But I make no apologies – for this ghastly episode will only end once senior bank executives are forced, under threat of custodial sentence, to FULLY DISCLOSE to one another and the authorities, on the basis of all available evidence, the extent of their sub-prime liabilities...Apocalyptic enough for you? The Government will throw billions more taxpayers'money at the banks next week. The Conservatives should think very carefull before supporting yet another bank bailout. They should also be ready with alternative proposals. They could do worse than speak to Liam Halligan.
... Bank shares collapsed on Friday because of renewed fears that said banks have simply enormous liabilities on their books that they're still trying to hide. In the US, Citigroup, Bank of America and Merrill Lynch unveiled a $25bn combined loss for the final quarter of 2008. But what was really shocking was that $15bn was sustained at Merrill Lynch – and the Bank of America, which bought the brokerage last year, didn't even know. In a bid to save his job, Ken Lewis, Bank of America's boss, admitted he hadn't foreseen such a "significant deterioration" in Merrill's finances. But his words lifted the lid on the extent to which financial institutions are disguising the true state of their balance sheets – even to their own parent companies.
No wonder rumours then swirled of vast buried losses at Barclays and Royal Bank of Scotland. No wonder their prices collapsed. And such fears will fester and keep bursting to the surface until our banks "fess it all up" – and a credible number is put on potential losses at each of our major banks. Yes, those numbers will be horrific. Yes, bank shares will be hit once more. But until we do the maths and swallow the write-offs, the rumours will continue and trust will remain elusive – to say nothing of long-term financial stability...
... Last week, any remaining hope the eurozone had escaped the worst of this crisis was blown out of the water. Economic sentiment is now at a post-war low. Even the European Central Bank, admirably restrained until now, could resist the political pressure no longer and cut its interest rate to 2pc. This column has long questioned the eurozone's long-term survival. Now global markets are doing the same. At the start of last year, the average 10-year government bond yield among the weaker member states (Portugal, Greece, Spain, Ireland and Italy) was just 25 basis points above the comparable number in Germany. That spread is now six times bigger.
Credit default swaps (the cost of insuring against a government default) among the most feckless eurozone members have reached Latin American levels. Would French and German taxpayers bail out another eurozone member? The longer this crisis goes on, the larger that incendiary question looms.
Read the whole article HERE.
Tories Race to 13 Point Lead
Iain Dale 6:33 PM
Guido has heard a whisper that the Sunday Times/YouGov poll tomorrow shows a 13 point Tory lead. These are the figures...
If this is correct, my prediction, that by June voters would turn on Brown as they get angrier and angrier about the state of the economy, would seem to be coming true rather earlier than I thought. However, this is only the second poll to show a double digit lead, so it's best not to get too carried away.
UPDATE: PoliticalBetting confirms the figures and starts speculating about landslides. A bit farfetched IMHO.
UPDATE 7.45: ComRes is also showing an increased Tory lead of 9 points, up 2 points on their last poll. UK Polling Report says the figures are Con 41 (+2), Lab 32 (-2) and Libs 15 (-
Con : 45 +4
Lab : 32 -2
Lib : 14 -1
Lab : 32 -2
Lib : 14 -1
If this is correct, my prediction, that by June voters would turn on Brown as they get angrier and angrier about the state of the economy, would seem to be coming true rather earlier than I thought. However, this is only the second poll to show a double digit lead, so it's best not to get too carried away.
UPDATE: PoliticalBetting confirms the figures and starts speculating about landslides. A bit farfetched IMHO.
UPDATE 7.45: ComRes is also showing an increased Tory lead of 9 points, up 2 points on their last poll. UK Polling Report says the figures are Con 41 (+2), Lab 32 (-2) and Libs 15 (-
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