Saving the World...?

The catastrophe of Gordon Brown's response to the recession is becoming clearer by the day. It now looks as if his recuse of the British banking system - which saved the world, let's remember - is falling apart. The papers are reporting that another bail-out is being considered, and this one might involve a 'bad bank' which would take the toxic assets of the bank's balance sheets. Like the original Paulson plan, that makes a lot more sense. You need to drain the toxic assets out of the system before the banks can get back to normal. Brown's plan just pumped more capital into them without fixing the problem - and may well end up with a nationalised banking system, which will just make the problem even worse.

The real problem for the UK is that it was pumped up on a wave of foreign capital, and that has now fled. The botched bank rescue and, even worse, the destruction of the public finances, has scared foreign capital away, and looks likely to push the UK into deep recession.