Germany is to guarantee all private savings in German banks, although the detail of their proposal remains undefined. This action by one of the big European powers in following the direction of Ireland to secure its financial system is thought likely to propel the UK Chancellor into the same position very shortly. In the face of pretty concerted calls for action, Alastair Darling has now said that he’s now prepared to ‘take some pretty big steps’ to stabilise the banking system.
The last few days have seen concerted anger by the major Euriopean powers directed first at Ireland and then at Greece as both small countries safeguarded their financial systems by offering full guarantees of bank deposits. Ireland was reported by the British Bankers’ Association (BBA) to the EU for investigation under EU Anti-competition laws. Fred Goodwin, CEO of the Royal Bank of Scotland (RBS), reportedly ‘furious’, directly asked the FSA to reprimand Ireland. Ireland passed its action into law and offered to consider other banks with significant numbers of Irish customers for the guarantee, on applcation and on a case by case basis. Interestingly – and logically, this olive branch was first extended to a subsidiary of RBS, the Ulster Bank. HBOS then announced that it was to apply for consideration to be included in the Irish guarantee.
Saturday’s emergency finance summit of European leaders heard a lot of huffing and puffing about the unilateral action taken by Ireland and Greece, about the need for a common line on rescues and safeguards – but no agreement for a Europe-wide rescue fund. Angela Merkel, the German Chancellor, was one of those notably grumpy with Ireland.
Now Germany – unilaterally – and announced by none other than Angela Merkel, is to take the Irish line and guarantee deposits in German banks. Other governments, including the UK, will have little option but to tag along.
The German decision was accelerated by its second biggest commercial property lender, Hypo Real Estate, running into trouble after the failure of a £27.2 billion rescue plan.
Yet another example showing how much the government, or perhaps the ‘administration’ of the UK really cares about the people of the nation. Yet another instance of this government being shamed by others into living up to their moral responsibilities. In general as a nation we are the worlds worst at looking after our own. And we’re mean – not to outsiders of course – but within our own boundaries. (I’m talking about ‘government’ here, not real people.)
It’s about time the UK stopped wafting about trying to be important in the rest of the world and got on with helping its own people by relieving the huge tax burdens all that largesse has created. Taxes which are dragging more and more people into poverty.
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Ireland and Germany did the honorable thing and stepped up to the plate in these trying times. They also created a sense of banking stabilization within their respective countries. If former customers of the UK banking system moved their funds to Irish banks to insure the safekeeping of their funds, good for them – smart move. They certainly weren’t getting what they needed at home. The UK banking system has long taken advantage of the resident population. It’s time the abusers within UK banking system quit whining and playing games, and take care of their customers in a moral and legitimate way. It’s a sad statement knowing the only reason they will do so is because there is no other choice in the matter.
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