Alistair McDarling has announced details of his master plan to save the banking sector. He’s going to loan them 50% of the GDP of the UK.
I kid you not. The taxpayer is stumping up £50bn now for the eight biggest banks and building societies and another £200bn is being given to the Bank of England for short term loans. That’s a quarter of a trillion pounds in cash now. Then a company is going to be set up – presumably along the lines of the DTI’s Small Firms Guarantee – to offer guarantees on £250bn of loans to banks and building societies.
Half a trillion pounds. In 2006, the purchasing power parity GDP of the UK was $1.93 trillion – just under a trillion pounds at todays prices. The Chancellor is loaning 50% of the Gross Domestic Product of the whole country to the banking sector.
Official national debt is £512bn. The Centre for Policy Studies says that if Northern Rock liabilities and state pension liabilities (they’re taking money to pay into the state pension, it should be reasonable to expect it to be paid out) are added to the official figure then it’s more like £1.3 trillion or 103.5% of GDP. Add this half a trillion on top and national debt is more like £1.8 trillion. Count the zeroes – 1,800,000,000,000. That’s 180% of GDP, 22% higher than Japan at the height of recession when banks were failing every few days and they were knocking zeroes off the Yen every couple of months.
What was it El Gordo said about not magicking money out of thin air?
But you know, when it comes to public spending you can’t just wave a magic wand to conjure up the money – not even with help from Harry Potter.
Quite. So where the fuck did you find half a trillion pounds to give to the banks, eh? Just to put a piggy bank-raiding session into perspective – half a trillion £1 coins weighs 2,090,000,000lbs. That’s a seriously big piggy bank.