Britannia Radio

Well the new deputy governor of the Bank of England seems confident - 
somewhat of a rarity these days.  The FT/s rditor is cautious and, 
like others,  calls or an outline of HOW the state will repay tese 
astronomical borrowings.

xxxxxxxxxxxxxx cs
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FINANCIAL TIMES   21.1.09
1. Time to mobilise all-out warfare (Leading Article)

On Monday the UK government declared total war on the economic 
crisis, and not a moment too soon. A long phony war ended abruptly 
with the financial system's near-meltdown in October. Now, in the 
next phase of the crisis, the government is thankfully using a full 
arsenal of ammunition.

The October intervention was designed in haste but succeeded in 
staving off a collapse of the banks. What it failed to do was to 
restart lending.  [Untrue!  British banks are lending but foreign 
banks have withdrawn leaving a gaping hole! -cs] The credit crunch 
has now worsened to the point where the real economy is harming the 
banks, not just the other way around.

The government oversold its October policies, though vanity is a 
venial sin when confidence needs boosting. More important is that 
this new package is qualitatively better than the last one.

Insurance against losses on toxic assets will stop further corrosion 
of balance sheets. This is the first time the government is aiming 
its fire straight at these illiquid securities. It is also addressing 
the credit crunch directly by allowing the Bank of England to 
purchase corporate debt instruments and by formally requiring 
participating banks to increase lending. The Financial Services 
Authority has helpfully clarified that it does not expect banks to 
hoard capital. The liquidity and funding guarantees from October are 
extended or expanded.

This comprehensive plan of attack is welcome. But whether the punch 
of the package matches the magnitude of the crisis depends on details 
yet to be determined, like what it will charge for insuring assets 
the markets find unpriceable.

The government must immediately get to grips with the banks' balance 
sheets and make sure that its remedies are indeed large enough. It 
must stand ready to recapitalise banks further, even to the point of 
full public ownership of banks that turn out to be insolvent.

At the same time, it must show how much the rescue will cost, and how 
the public finances will be restored to order. The fiscal outlook for 
the UK is already dark, and sterling is under strain. The 
government's wise choice to insure, rather than outright buy, the 
banks' toxic assets will at least postpone the need for large cash 
outlays.

Even a perfect bank rescue will not by itself end the crisis; the 
problems have spread too widely. It can, however, ease the credit 
crunch and help fiscal and monetary policy revive the real economy. 
Letting the Bank of England trade corporate securities gives it a 
tool later to engage in quantitative easing if further interests rate 
cuts are not enough. In total war, full mobilisation is the only way.
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2.BoE's Tucker defends bank bail-out
By Chris Giles

The government's banking support package had a "reasonable chance" of 
success, Paul Tucker said on Wednesday, as the Treasury Select 
Committee endorsed him as the next deputy governor of the Bank of 
England.

"There are no dead certs and no silver bullets, but I think it is a 
good package," he told MPs, warning that if other advanced economies 
failed to take similar steps the economy and the banking system would 
struggle to recover.

Describing Britain as facing "very severe problems at the moment", he 
said his limited hope was to "slow the rate of decline and eventually 
turn [the economy around]".

Mr Tucker rejected calls for the immediate nationalisation of banks, 
insisting that at times of crisis the precise steps taken were not as 
important as taking sufficient action to tackle the problems.

With measures to underpin banks' capital, increase their funding for 
banks and ease strains in corporate debt markets, the package should 
be effective, he said.

Although senior Bank and Treasury officials insisted at the time of 
last October's recapitalisation package that it would get credit 
flowing again and move the economy from a bad equilibrium to a good 
equilibrium, Mr Tucker said that first package had more limited aims.
"We were perilously close to banks being unwilling to lend to each 
other, even overnight," he said.

Mr Tucker, who will be responsible for financial stability, said the 
Bank, Treasury and Financial Services Authority would have to learn 
to deal with greater overlaps between their roles, "which can be 
uncomfortable for bureaucrats".

His comments reflect criticism from some in the Bank that Mervyn 
King, governor, strove until the banking crisis to avoid overlaps 
between the Bank and the FSA - at the price of losing sight of big 
economic risks.

Mr Tucker added that in future, the Bank should have a role in 
setting capital requirements or other system-wide regulations for the 
banking sector to stop another credit bubble developing.

Although he said such action would need to be international, he has 
joined the rest of the top Bank officials in calling for this radical 
expansion in the Bank's powers. The Treasury and FSA remain to be 
convinced, however.
Mr Tucker reiterated the governor's call for the Bank to start buying 
"high quality" corporate bonds, but said this did not yet amount to 
"quantitative easing" - the creation of money to buy private or 
public sector assets. However, he did not dismiss altogether 
suggestions that this was a tool that might soon be used by the Bank.

While he supported the fiscal stimulus, saying it helped to "lean 
against the risks of a downward spiral," he reiterated the Bank's 
view that the "vital thing is that at each stage the government makes 
a credible commitment to get the public finances on a sustainable 
footing".
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ECONOMIC 'Shorts'   21.1.09

TELEGRAPH
=Fundamentalist View: 'There will be only two London-listed banks 
left by the end of 2009' - Two years ago, the suggestion that 
nationalisation could happen in the United Kingdom would have been 
laughable.
But the government is now the largest, or only, shareholder in Lloyds/
HBOS RBS and Northern Rock and it seems highly likely that HSBC and 
Standard Chartered will be the only UK-quoted bank shares by the end 
of 2009.
=BHP Billiton axes jobs
World's biggest miner cuts 6,000 jobs as global downturn hits demand.

TIMES
Sterling continues fall on public debt fears
Pound plunges to $1.37 as concerns linger over the impact of bank 
bailout on Government borrowing
Evening Standard sold to Russian oligarch
DMGT sells majority stake in the loss-making London paper to former 
KGB officer Alexander Lebedev for a 'nominal sum

FINANCIAL TIMES
=Sainsbury cuts 200 head office jobs
Supermarket group restructures trading operations
=Britannia and Co-op merge into 'super-mutual'
Deal creates bank with assets of £70bn and 9m customers
=Public finances worsen in December
UK public finances deteriorated in December, partly because the £20bn 
state recapitalisation of RBS swelled the government's net cash 
requirement to £44.2bn, as the budget deficit totalled

MAIL
Fury as Northern Rock's 4,000 workers to get £8.8million in bonuses
Northern Rock employees will pocket a whopping 10 per cent pay bonus 
this Friday, it has been revealed

BBC ONLINE
=UK unemployment hits 1.92 million
UK unemployment rose by 131,000 to 1.92 million between September and 
November, the highest total since September 1997.
That does not include the tens of thousands of jobs cut since November
.
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POLITICS HOME    21.1 09
COMMENTS
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Today, Radio 4 at 07:55
Cable: RBS in effect a nationalised bank, just govt isn't treating it 
as one

Vince Cable, Liberal Democat Treasury spokesman

Mr Cable said that RBS is in effect a nationalised bank already, and 
warned that if the government were to take full control minority 
shareholders must be "properly compensated".

He said RBS "is in effect a nationalised bank, just the government 
isn't treating it as one.

"All I want is it to accept is that we do now in effect have a 
nationalised bank."

He said that he wasn't certain it was necessary for the government to 
take a full 100% stake in RBS, but if it did in regard to the rights 
of minority shareholders, "we can't be talking about confiscation, 
they have to be properly compensated."
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Daily Politics, BBC2 at 11:52
Beckett: The last thing we want is to repeat the mistakes of the 80s 
and 90s

Margaret Beckett, Housing Minister

Ms Beckett said that there was now far greater help and support for 
the unemployed than there was in the 1980s.

Put to her that unemployment could reach levels under Margaret 
Thatcher, "now, if you become unemployed there is help and support 
available to you in a very different way from day one.

"The last thing we want is to repeat the mistakes of the 80s and 90s. 
Some of the people in long term benefits are still left from then.

"We want people to get back into employment, and encourage them to do 
so."
[She's in denial.  The earlier periods she refers to were 
recessions.  This is a collapse which threatens the existence of the 
state. If the worst happened present benefits would not be saf