Political Lipstick On a Pig

Source: Guardian/Observer

The spin doctors are feverishly applying lipstick to RBS, so it can be 're-privatised' in time for the next election. No matter that the bank is still short of capital after five long years of public ownership, that the Exchequer is sitting on a £19bn loss and that the bank continues to lend less and less to the productive economy while soaking up the subsidies.

Renowned for 'group-think', the IMF also seems to have seized on the election as an opportunity to get the politicians to 'clarify the plan' for continued state ownership. Duly emboldened, the Chancellor has dismissed calls by other departments and members of the Banking Standards Commission for the bank to be broken up as not being achievable within the electoral time frame.

Of course the election won't wave a magic wand over RBS's inability to operate without massive public subsidy, or its failure to align with the interests of its customers. It will always have cheap ISA money to fall back on, and it's obvious by now that no one will force it to lend more to small businesses. It even recently announced heavy overdraft charges, on top of its many previous expressions of contempt for those it is supposed to serve.

Instead, the government sees the 're-privatisation' as a sweet opportunity to enhance its electoral standing, sexing-up its plans to 'give away' some RBS shares as a sign of its commitment to 'protecting' or 'maximising value' for taxpayers. It's as if laying the blame for the astronomical cost of the bailout at Labour's door somehow resets the counter to zero...

Promising RBS shares to every taxpayer is of course a standard political ploy, designed to prey on middle class greed (the rich couldn't care less, and the paper will be slim comfort to those on lower incomes). On this occasion, however, the proximity of the election might also lead some to describe it, rather aptly, as 'porkbarrelling'.

But the very reason the government wants to foist RBS shares on you is the very reason you shouldn't want them. Free of its chains, this porcine monster will be eager to get its snout back amongst the big, speculative assets as quickly as possible, and your shareholding will be taken as a personal vote in its favour. Some might even naively cheer the beast on, dreaming that their stake in the mystical 'upside' from its activities will somehow compensate them for getting fleeced on the bailout in the first place, and all the disasters that have followed.

Meanwhile the rest of us will wait forlornly - along with the inert, beleaguered customers - until the government finally pours another bucket of publicly funded swill into the banking trough.