So the current plan by governments around the world is to *recapitalise* the banks. What does this mean? Essentially, taxing you for the next 6 months to pay for *ordinary shares* in banks who have clearly lent too much and want some help to keep them ticking over.
This strikes me as insane for 2 reasons:
1) If this works...
The market cap of RBS is around £12bn at time of writing, so the UK taxpayer (Taxy) for this money could own 100%, not (for examples sake) 50%, for it's £15bn. So in very basic terms, I'll pay more for half the company than I would for the whole one. Darling and Prduence need new calculators.
2) If this fails....
The UK tax payer has just bought 50% shares. At what price? Current market? The rest can still be sold, costing taxy a not inconsiderable amount. And they keep getting sold. So at what point does Darling step in to go to step no. 1. Lets say he doesn't. The shares tank completely (Taxy feeling the pain), then margin call after margin call producing a 50% owned bank. Taxy now owes £15bn to the central bank. Better crack that whip Prudence
1 hour ago