FRASER NELSON SUNDAY, 15TH FEBRUARY 2009
As we wait for the next nationalisation - probably Lloyds Banking Group - a horrible thought occurs. Something has gone badly wrong. It is as if there has been a silent coup d'état - instead of the taxpayers owning the banks, the banks now seem to own the taxpayers. They have been given access to the present and future earnings of the British public, which will plug their mind-blowing losses.
In my News of the World column today, I look at how Britain became a bankocracy - the government being so dependent on banking profits that it had a clear incentive not to ask too many questions about how this money was being generated. This isn't venal, I don't think it was some mafia-style racket. The money was there, the government just took it. Bankers were almost deified, invited to do various reviews (NHS, skills, etc) and feted like the masters of the universe. Meanwhile the gulf between what they had and what they owed grew massively - until it swallowed up an entire government, as it is now in the process of doing.
The bank nationalisations are not like the postwar nationalisation or coal, railways, the NHS etc. These indusrtries were (relatively) small andmanageable. What's happening with RBS, B&B, Northern Rock and, soon, Lloyds is what the bankers call a reverse takeover. The scale is mindblowing. RBS's £2 trillion of liabilities dwarfs not only the government reserves but the entire UK economy. Brown hasn't so much nationalised the banks, he has bank-ised the nation. It really does change how we see government, and transforms the nature of the machine David Cameron will pretty soon be in charge of. It is, as John Redwood says, a massive bank with a small struggling government attached to it.
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