FT not fooled

"If it walks and quacks like a bail-out, is it a bail-out? With an injection of up to £37bn into Royal Bank of Scotland and Lloyds Banking Group, the UK Treasury says 'likely costs to the taxpayers and the risks [to] the public finances have been reduced'. That is an admirable feat of redescription."

So starts the editorial of the FT today, echoing the instant reaction here 24 hours earlier. If Mr Darling can be said to have achieved anything in his career, it must be that he managed to make a statement to parliament on the "restructuring" of UK government owned banks without mentioning the seemingly trivial matter of the £37 billion of tax payers money that he was "investing". After all what is £37 billion these days?

It takes an extraordinary perversity of logic (for that read "level of dishonesty") to claim that future costs to the tax payer have been reduced by taking the steps that had been taken, without actually mentioning the costs that had been incurred in taking those steps.

The other pink'un also picked up on the pint made here 24 hours ago that the RBS position is largely smoke and mirrors.

"The APS will still cover assets owned by RBS – although a smaller pool, and with a greater share of potential losses borne by the bank before the insurance kicks in..... Yet taxpayers are offloading less risk than meets the eye. Risk-sharing with private investors in RBS can only be minimal with the government’s economic interest at 84 per cent."