Wednesday, January 14, 2009

Business Lending Package: Fawkes Declares Labour Smarter

Paul Staines aka Guido Fawkes aka Mr GuF has more idea about business and the economy than dare I say Iain Dale or Do Nothing Dave Cameron. Neither of these have even been personally bankrupt as far as I know, never mind shorted bank stocks, raised money and friends for Central African despots, or tricked fascists that he was one of theirs.

While GuF suggests the business lending package may be too little too late - at least as far as the small business element goes - he can not only see the substantive differences between the unfunded and unreal Tory plan and the funded and real Labour one, but he thinks the Labour Plan is Smarter. To be fair and give this context let's have his full analysis on the main package:

Guido's main concern about the Tory plan to insure bank-to-business lending was that it would encourage risky lending in a failing economy. The lenders would not really have to worry too much about the risk because the taxpayer would pick up the tab. The government's scheme will provide banks with guarantees covering 50% of the risk on existing and new working capital up to £20 billion. It shares the risk between the banks and the taxpayer, encouraging the banks to lend for the same profit for half the risk. This is in some ways smarter than the Tory plan.

In other words the Osborne-Cameron £50 Billion might as well have been burnt by the KLF on a remote offshore island; for all the responsible lending and continued trading it might achieve.

It will be interesting to see how Dale scores PMQs today. It seemed pretty even to me, Clegg rather irrelevant, and I think Brown will have edged it for most neutrals.

Brown 7 - Cameron 6.5 - Clegg 4 - Corbyn 5 for pluck

GuF by the way was less complimentary about the small business component. Blaming Mandelson, without any evidence, for delaying it for political reasons.

One thing I noticed in today's PMQs minutae was Brown's declaration that he believes the banks with the significant taxpayer stakes ARE lending to business and home buyers at more or less the required rates and that this is being monitored weekly.

If that is so, and why would he say it so directly if it isn't, it gives the lie to a large part of the media feeding frenzy. Though it does not mean these two banks are extending their lending as some businesses may well wish, just maintaining it.

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