You what?

The PCS union tries to tell us something truly amaaaazing:

As a result of the UK government’s
£1.3 trillion bailout to the financial
sector, the government still owns over
£850 billion in bank assets. This figure is
roughly equal to the total UK debt.

Excellent! Let\’s sell \’em!

Woohoo! a get out of jail free card!

Except, you know, just musing on the point, I\’m pretty sure that we don\’t in fact own such assets: at least, not unless we also have liabilities of a roughly equal amount to go with them. And I\’m not even sure of that. I have a feeling that we\’ve actually guaranteed such assets, not taken ownership of them.

So, err, sadly, what the PCS is telling us seems not to be true. And if they\’ve got that wrong then the rest of their report is likely to be similarly dodgy, isn\’t it?

3 thoughts on “You what?”

  1. You what? I just took a look at their report. Where do they say they should just sell the assets, and hang the liabilities? Straw man arguments are fun, it is true, but at the end of the day they are . . . . well, as sturdy as straw. Maybe the pcc do say that, as I havne’t read the report, but if so you should spell it out. And as for the meaning fo the word “own” well, you are quibbling methinks. But again, I haven’t read it, so perhaps they do make a mistake. Spell it out, if so.

  2. nick, why not just sell the shares…cash them in and use the proceeds to keep funding moronic trade union members?

  3. OK, so:

    1) the Asset Protection Scheme is an insurance policy, and so doesn’t provide a claim on bank assets. However, it also doesn’t add to the national debt (because payments are only triggered *if* RBS and LBG end up needing them). Currently, the APS is expected to make a profit.

    2) the Special Liquidity Scheme involved lending banks gbp200bn in money secured directly against specific assets like mortgage-backed securities (in the days when liquidity for these just didn’t exist). This is the one which added to the published national debt figures (c.10% of GDP). It enters the repayment phase next year, and again the signs are that the banks will repay in full with interest.

    3) the government also owns majority stakes in RBS and LBG. It’s true that at some point, it’ll make some money from privatising these. However, with RBS’s current market cap at GBP29bn and LBG’s at GBP53bn, this seems distinctly unlikely to raise more than GBP100bn.

    So the PCS’s stats are meaningless. But (like Murphy in the other post – hmm, pattern emerging) they do point to some real dishonesty on the other side.

    The Coalition are pretending that the GBP200bn of the national debt which supports the SLS, which is secured against financial assets, and which is being repaid by the banks at to a fixed schedule at a profit to the government, is the same as the rest of the national debt (which, obviously, isn’t).

    When looking at the UK’s debt sustainability, we should net off the SLS loans (at least, to the extent that we expect them to be paid back), and also the expected future value of HMG’s RBS and LBG shares. Indeed, that’s *exactly what the rating agencies do do*, because they’re not idiots. When Dave and Gideon make speeches citing the gross debt figures, they’re misleading the public to justify their cuts agenda.

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