The editorial page of The Wall Street Journal Europe rips into the Asset Protection Scheme the government announced yesterday:
“It’s little surprise that U.K. financials rallied yesterday on the news that the British state will guarantee more than £500 billion of the banks’ toxic assets. It’s like getting car insurance after having crashed the vehicle into a wall.
The “Asset Protection Scheme” is a great relief for everyone around — shareholders, managements, creditors — except for the people who share no responsibility for the mess: taxpayers. In a sign of how bad markets believe this deal will be for taxpayers, prices for U.K. government bond futures initially slid more than a full point on Thursday. If and when the losses on those poisonous assets materialize, the government will have to issue a lot of debt.” A bad bank would be a far better idea than all these schemes that the government keeps pushing through.
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