What should the government do?

I was pleased to be invited to submit some articles to the Parliamentary Brief over the past few months.  At the very least I hope that it gives us some conduit into the corridors of Whitehall.

The trouble is that it's hard to write something.  After all it is far easier to critique the government's actions and not be constructive.  So the focus of my brief was to be constructive and, not being too sure what to write about, it seems to have narrowed into a rallying cry for the government to provide shareholder guarantees for those with holdings in our banks.

Originally, this was to provide some incentives to buy into future bank rights issues but this would not work today, as illustrated by HSBC's $17 billion rights issue this week.  HSBC discounted the share value by almost a half, valuing shares at £2.54p against £4.91p at close on Friday.  If the strongest banks are that uncertain about getting investors, what the hell are RBS and Lloyds Banking Group going to do if they need more capital?

And this was the question I posed in my latest article, e.g. if the Government's insurance scheme doesn't turn around this situation, what do they do next?

The article's summary gives away the tone of the thesis:

“I was recently interviewed about the banking system, with the opening
question: ‘you’ve been critical of the government’s handling of the
crisis. Why?’ I responded that it was due to a lack of an overall
vision. The interviewer then asked: ‘What’s your vision then?’ My
answer was: ‘nationalise the system for a temporary period, and then
refloat’.”

Feel free to read if you want to see more.