I have become increasingly infuriated over recent weeks by the naked ambition of the Labour government, and its apologists and hangers-on, to bring about the effective nationalisation of much of the banking sector of the UK. This was made excruciatingly obvious at the end of last week by the strident criticism of Barclays Bank in 'daring' to spurn the capital funding offered by the government and instead to make its own arrangements to procure the required capital funding to boost its capital ratios to the levels now required by the FSA - there were even idiotic and disingenuous comments that it was somehow 'unpatriotic' for Barclays to be seeking funding outside the UK. Stuff and nonsense! The Labour government tells us regularly that it believes in the 'free market', but the past few weeks have revealed what I have always believed - that given half a chance they would revert to their 'socialist' roots and seek to take even more of the productive parts of the economy into public ownership - there to stifle all initiative and creative activity. Just look at what has happened to Northern Rock since it had the misfortune to fall into the State's hands. The bickering over the merger of HBOS with Lyoyds TSB, complicated because of the desire by some to see theoretical 'management' stay in Scotland (as if that has really existed ever since Bank of Scotland merged with Halifax some years ago) has thrown this ulterior motive into sharp relief, and in order to achieve this the 'socialists' (in both the Labour and Scottish National Parties) would rather see Bank of Scotland fall even more blatantly into the hands of the State.
Fraser Nelson has an excellent article in the Coffee House at the Spectator which reproduces a letter from Barclays Chief Executive John Varley to staff about what the Board has decided is best for the company's future.
As a small shareholder in several of the British banks involved in the current government bail-outs, as well as a couple of those which have, thankfully, been able to avoid this fate (including Barclays), I have to state clearly that I applaud Barclays' actions. My own investment portfolio has suffered badly in recent months (to the tune of several tens of thousands of pounds), as has everyone else's as a proportion of their overall holdings I expect, but I am very clear that I would rather that the companies I invest in remain free of even partial government ownership - the criticism of some lenders for not passing on base rate reductions to borrowing customers is clear enough evidence that the government's claims that it would not try to interfere in the management of the banks it has managed to get its claws into is just so much empty rhetoric. As a saver I have also suffered a reduction in the rates I am being paid - all in the cause of the banks trying to maintain and increase their margins. It is true that some banks have behaved very foolishly - but they have been prevented from suffering their just fates (bankruptcy) because of the desire of the government to 'protect' depositors and mortgage borrowers - I put 'protect' in quotes because what the government is really doing is trying to protect its own voter base at the next election, NOT the longer-term interests of either depositors or mortgage borrowers. Pain averted now is merely a greater pain delayed until the future by the distortion of the markets in which the government has indulged.