Mostly Bollogs, I'm afraid

But occasionally, a glimmer of truth.
If you find one, please let me know.



Monday 19 April 2010

Bob

BBC Business Editor Robert Peston said, apparently, that the government will probably have to bail out a couple of airlines.

They won't have to bail out BA, because BA have a line of credit, and a few bob under the bed, and they can lay their hands on four billion pounds if they need to.

The banks cocked up on an almighty scale a couple of years ago. It now turns out that this cockup was engineered by a couple of chaps who decided that selling Bad Loans and then betting that they would be Really Bad was a Good Plan. For them. Sod the rest of the world. So the government bailed them out. Handed them, on a plate, several billion pounds of YOUR money.

Now, I am having a few problems with this bailing-out.

Firstly, the government isn't in a position to bail anything out. They're borrowing five grand a second which, to my tiny mind, is a lot - the five grand, obviously; a second is NOT a lot. And they have no plan whereby this amount gets any smaller - indeed, because of the way the world has worked for a very long time, the amount increases at a heck of a rate and the only winners are the people who lent it. These will be people with oil, I suspect.

Secondly, the government isn't in a position to bail anything out, because they don't have any money, apart from that which they forcibly take from people who work.

Thirdly, people who run businesses should be aware that the value of investments can go down as well as up. The volcano nestling in Iceland, the one nobody can pronounce (apart from Icelanders), has been there for quite a long time. It erupts now and again. There are quite well-defined geological reasons for this, so it shouldn't be a surprise. I suggest that if the business you run can be easily affected by volcanoes then you should maybe put some cash aside for the Rainy Day which has clearly arrived, and which is rapidly turning into a Rainy Week.

Let me test the water here by giving a couple of examples of why the government MUST not bail out these poor hard-done-by airlines.

I put some cash on a horse in the Grand National. I guessed, incorrectly, that the horse in question was fit, had four legs, and a jockey with some commitment to win. At least some of these turned out to be wildly inaccurate guesses, and I was eighty of your earth pounds lighter. I do not expect the government to bail me out. I was not intending to give them any of the thousand-odd pounds which I was destined to win, had I won.

And now, just in case I am not alone here, let me stick out my neck further. Some people buy houses. There is, according to people whom I know in the world of finance and banking (spits) a situation (for want of a better word) known as "undermortgaged". Undermortgaged is the state of earning more than the size of your mortgage permits. So, if you are happy living in a house whose mortgage consumes about five percent of what you earn, you "should" buy a bigger one. If you don't want a bigger one, you "should" buy some others and let them out. Fine, if that's what you want to do. You may be lucky, you may have good health, you may not live to 115. Then you can leave this "property" to your kids. They can do what they like. But perhaps you will be unlucky. Your horse may not win. The six numbers you chose may be a bit duff. A volcano might erupt. You may, in fact there is an odds-on chance you WILL, pick up at least one of the very many disabling illnesses such as Alzheimer's or Parkinson's, or worse. Or you may just get old, and your body is only a machine which, whether or not you eat five fruit and veg portions per day or drink ten pints of beer and smoke twenty fags, is very unlikely to perform as well as it did when you were a lad, or a lass. Fact.

At the moment, and I know this for a fact (although I needed a lot of evidence to believe it), the government will bail you out. If you have paid for some sensible insurance, you can use that to pay, or help pay, for someone to do some cooking, gardening, etc. If you have shoved every last penny into a Very Big House in the Country, you can keep it. All of it. Your kids can have it or, if you prefer, a cats' home.

Someone will be able to point out to me that this is the way things are supposed to be.

In the meantime I propose that the word "bail" should be applied to those things on the top of wickets.

Shit happens.

1 comment:

Mrs Rigby said...

Bailing them out is a means of getting control.

The other day somebody told me that 'true Labour' would nationalise every business in the country.

This person truly believed it would be a good idea.