RBS & The Stupid Club

 

Talking of stupid people, oh look there's RBS back on the radar again. Just when you thought the circle of insanity couldn't possibly strain credulity any more than it has over the last couple of years, we learn yet again how laughably naive it is to underestimate the capacity of this organisation to undershoot even the most modest expectations.

In this instance, we learn via David Malone of an article in the Irish Independent that RBS are thought to have lent financial basket case Bank of Ireland €2.9bn in fresh short-term funding.

As Malone points out, (here), "of course RBS is owned by you and me. So a British bank which was nationalised to save it from insolvency, is now lending to an Irish bank to save it from insolvency and being nationalised."

Importantly, Malone goes on to speculate, " we have to entertain the possibility that RBS is lending to cover larger losses if BoI was to fail. RBS is one of the British banks I have long suspected was heavily exposed to Ireland. I think RBS is trying to save itself via this deal. The banks call it a loan. I see it as a bail out. The two states are using private banks as cover."

Now the common or garden taxpayer, he's the majority owner of RBS and convenient backstop when RBS blow up again, knows little about any of this; he ought to, a few more alert people on the Outrage Bus just might help restrict some of these activities. 

The same common or garden taxpayer, that would be you and me, are the very individuals that RBS are enthusiastically charging up to 17% APR for personal loans which, by any standard, borders on usury when the Base Rate is 0.5%.

George Osborne and David Cameron can wring their hands about growth as much as they like but the economy will not grow when it is being strangled at birth. Lending to barely solvent Irish banks at 2.76% above LIBOR while charging much better risk individuals 17% is just stupid. Add penal tax rates, galloping inflation in essentials, (food, energy, travel etc), and cash in short supply and you have all the ingrediants for big political swings not just here but across the EU. With youth unemployment mushrooming across many member states, and apathy reigning amongst the older generations, cash in very short supply, conditions are moving rapidly towards those in Germany in the 1930s.

As for RBS, they ought to be firmly in the business of derisking and breaking themselves up into their constituent parts, none of which was particularly special on their own before but my goodness 2+2 didn't make 4 never mind 5 when added up by Goodwin. Separating investment banks from retail banks is about the only crusade that Vince Cable has got right. 

We can only hope then, that there are no more rocks out there for................ oh bugger!