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A Good Wedge Off The National Debt...?

Maybe Ally Dally and GB are cleverer than some people thought.  I know it's early days, but it's possible that the recovery of bank share prices could ultimately save the country descending into bankruptcy.  Would the public then pat the bankers on the back...?  I thought not...

Take RBS as an example.  Buying £12 billion of shares at 65.5. and seeing them appreciate to 70.1p at tonight's close equates to a paper profit of £800 million already.  Not bad for a start.

Now, if they could only refrain from interfering in the inner workings of the bank and let them get back to making loads of profit (and start paying dividends), then maybe in a few millennia we could see the share price get back to something like normality.  For instance, if the share price got to £4.50 (yes, I know, the blue pigs just flew past my window), HMG would only have the task of offloading such a huge number of shares, and it would realise a hefty £82 billion in income (£70 billion in profit).  £6 a share (the pigs are fairly jetting past now) sees that rise to nearly £110 billion (£98 billion profit).  Those returns would do nicely to reduce the National Debt in the future, or maybe they could decide not to impose some of the tax increases they've trailed...I don't think so.  Either that, or it's a hell of a spending spree at some time.  More new schools n' hospitals, anyone?  Lots more non-jobs in the public sector?

What with the usurious preference share rates of 12% yielding a gross £600m a year, it seems to me that HMG has backed a winner here.  And I haven't even looked at the Lloyds/HBOS deal (too complicated for me at this time of an evening).

Or maybe what it does illustrate is the extent to which HMG exerted its strong bargaining power at the time to sell existing shareholders short.  And they say the banks are being unfair with consumers and businesses...


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