Markets fail to show full gratitude for bank bail-out
So, where do we go from here? Down the plughole, if the market reaction to yesterday’s brace of bombshells is anything to go by.
The London stock market gave a raspberry to the Government and Bank of England’s attempt to put a floor under the financial crisis by slashing half a point off interest rates and hosing down the banks with £50 billion of taxpayers’ cash.
Those ingrates in the City of London responded by sending shares down to levels not seen since 2004.
The sell-off wiped a further £57 billion off the value of the blue chips – and our investments and pensions into the bargain.
It is not even as though Alistair Darling has actually “nationalised” the banks, as some on the wilder shores of commentary would have it.
As my colleague Nevill Boyd Maunsell points out elsewhere, yesterday’s measures stopped far short of that.
The tanks aren’t going to be out on the streets just yet. So in theory we should all be calming down now.
Will today be any better?
Don’t bank on it (and what a discredited word “bank” has now become. It’s almost a swearword of Lawrentian proportions). The Dow initially lost two per cent, but rebounded to close up as market sentiment continues to swing wildly on and almost daily basis.
So if the Asian bourses wake up with the jitters while we in the West Midlands toss and turn in our sleep dreaming of ruined retirements, today could be just as bad.
It all goes to show just how precious a commodity confidence is in our highly interconnected, fast moving world.
To be sure, it’s in far shorter supply than the greed, stupidity and short-sightedness that have dominated the banking industry for far too long.
Can confidence be restored in a hurry?
Unlikely, said Moody’s, which, incidentally, was one of those credit rating agencies that failed to spot that the banks were flogging one another toxic “assets” with the glee of drunken partygoers in a game of pass the parcel.
“These measures by themselves will not be sufficient to eliminate the pressures UK banks and global financial systems are facing,” Moody’s declared.
It might help, however, if the banks begin to pull themselves together and get a bit liquidity back into the credit markets.
At least last night there were signs that they were willing to pass on a bit of the half-point rates cut to their borrowers.
As one of the supermarkets in which we all take such pride says, “every little helps”.
But as we taxpayers are on the hook for mindboggling amounts of debt that will take generations to pay down, I think we deserve a bit more from the bankers.
An apology, maybe? A few sackings without the traditional golden handshakes?
Still, they’re not all villains. Michael Geoghan at HSBC – a bank in better shape than most and one unlikely to be supping from the public trough – says he sympathises with taxpayers. It’s not right that we should have to bail out banks.
I suppose it’s a start, but it doesn’t even begin to restore the many billions of pounds of private wealth that his less civic minded colleagues have destroyed.
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