The Guardian has reported:
Shares in Lloyds lost half their value before ending 31% lower at 44.8p. Lloyds' stock market value is just £6bn - barely half the sum put in by the taxpayer.
RBS, soon to be almost 70% state-owned after a £20bn cash injection, has a stockmarket value of less than £4bn. In 2007 it was worth £78bn.
Barclays was also hit hard, touching 69p before ending 17% down at 72.9p, to be worth £6bn - little more than the £5.3bn of profits it expects for 2008 and down from £58bn 18 months ago.
For £16 billion 75% of UK banking can be brought under government control, stripped of its toxicity and repackaged.
We need to do that.
The yield would be enormous in seigniorage alone - reclaiming the right of the government to make our money.
Let's do it. Nationalise now.
Richard, the price of the banks looks attractive until one considers their liabilities. I have read that those run into the trillions of pounds. What options exist for the stripping of toxicity (liabilities) from the banks? Thanks.
But it needs to be a formal nationalisation – not just pouring public money in, with arms length ‘asking the banks’ to do this and that.
That’s not just because it hasn’t/doesn’t work for necessary aims, but in order to formally cut across the neoliberal model.
There is a remaining danger of trade agreements being signed up that tie us into legalised neoliberal frameworks. Certainly there are transantional capital forces that would want to see this through – and neoliberal governments prepared to sign up to it, for them,
Formal nationalisations lessen the effect of that agenda being carried through. It also gives control back to people, at least via the state.
Linda
Agreed
Stefan
It makes no difference – the state will pay anyway
Richard
State control has a well known chequered past. Nationalisation in order to sanitise these institutions appears attractive but how does that evolve? One ought not to step in to this without a clear sense of a viable future.
If there is an intention to clean up and then step out one needs to understand what regulation will work once they are let loose again.
If a regulatory regime that works can be set up doesn’t one simply put it in place and then extract sufficient debt that the banks can survive without the nationalisation? The regulatory regime will do the rest.
If we need nationalisation because no regulatory regime could work and we need the over-sight of politicians to keep banks in order then heaven help us!
A big part of the problem is the failure of CEO accountability to shareholders.
Varley’s recent sale of a large portion of Barclays for £7bn is an example of this. Existing shareholders were excluded from the sale; Varley borrowed expensively attempting to maintain his personal control (‘company independence’); and now it appears that Arab investors may gain control of the bank through a clause in the contract should Barclays be forced to borrow more while it’s share price remains low.
Part of fixing the banks will be fixing capitalism… unless we really trust generations of politicians permanent oversight.