One concern I expressed earlier this year unfortunately seems to be crystallising.
The problem is that the good businesses that should survive the recession are weighed down by the costs of bailing out the competition. The net result is that some good businesses go to the wall, whilst the bailed out (failing) businesses come through with their unfair competitive advantage.
The Nationwide BS published their results yesterday and they are weighed down by failed businesses that they have had foisted upon them and also a £241m 'bank bailout' fee. They're struggling whilst the bailed out banks now have a government guarantee to see them through the current mess. It's madness that the survivors are choked to death whilst the businesses (and people) that made the mistakes come through.
As the begging bowl goes ever wider into more industries, this will become more common. The headlines have now moved from banking to the automotive sector but the bailout problem (and moral hazard consequences) remain.
This is not the way to heal the economy. Let's help the strong companies (through incentives and tax breaks) and sod the weak ones. Much as Gordon thinks he can save the world by saving every large business, it just shouldn't happen. Harsh but it is needed...
Its interesting to watch the random headline dervish move from one hot topic to the next... The bailouts and $ failing are indeed being ignored with 3 weeks of expenses headlines.
ReplyDeleteSlightly off topic, but in the coming 18 months my prediction is the real damage as a result of the current scandals will be inflicted on the BBC...
Do you mean major cuts to the BBC's budget??
ReplyDeleteThe BBC has plenty of enemies in the rest of the media who are under severe pressure and don't like where they are going on the internet...
ReplyDeleteIn politics, there are alot of politicians who have been skewered on both sides by the BBC in this expenses debacle... and on the right alot of commentators who view some big names at the BBC as have being heavily labour biased for the last decade...
My guess is there is a very large number of BBC employees making significantly more money than the politicians - with expense accounts - being paid for with "tax payers money". The quiet release a couple of weeks ago that while Channel 4 is pleading for financial rescue 10% of their employees are on over £100k suggests there will be plenty of piggies at the BBC also...
A new administration seeking to divert attention as they make spending cuts, a few spin doctors with agendas and some "transparent" FOI releases could make a serious mess...
You are back - about bloody time - is cath blogging?
ReplyDeleteI think the BBC could see what was coming - pre-emptively publishing all their expenses was fairly smart, but perhaps knocking off a global popstar to bury the story was taking it a bit far... ;-)
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