It’s crunch time

Oct 3 2008 by Roseanna Cunningham MSP

SHANE O’RIORDAIN is the Communications Manager for HBOS. I've just watched him being interviewed on television. The principal thing he managed to communicate was his smug and patronising 'crisis, what crisis' approach to what is currently taking place. Deliver us for goodness' sake from the line that there was no emergency decision made about the future of HBOS. That was all perfectly reasonably worked out and was in the best possible interests of the bank. Not the slightest sign that their decision making processes may have been flawed.

Oh no, didn't want to talk about anything leading up to the fateful day. Not the slightest hint of what the future might bring. Oh no, didn't want to deal with 'what ifs' and hypotheticals. All is for the best in the best of all possible worlds.

Try telling that to the tens of thousands of employees now wondering if they will have jobs this time next year. There's overlap between the two banks in Perth and even in Crieff (population: 6000). There are back office jobs. There are businesses worrying about their credit lines. The teeniest bit of self-effacement on the part of the senior management of HBOS might be in order. But not a bit of it.

Over the last few months we have become familiar with hedging and short selling. Securitisation and collateral debt obligations. Monoline insuring and all the myriad of 'products' and processes that turned out to be about as secure as the thin air they all seem to have comprised of and disappeared into.

In the 1970s the right used to have a refrain they used constantly: 'there's no such thing as a free lunch'. That was to warn against government support and anything that seemed to detract from the free market, which would deliver the promised land.

Now we are in a world where the self same individuals who parroted that so loudly are at the front of the queue for government finance to bale them out. Of course that means our money. Money which miraculously becomes available for this when it wasn't available to recompense all those Farepak customers a few years ago. Remember that? Ordinary folk, in Perthshire and elsewhere, doing the responsible thing by saving for Christmas, not going into debt and when the whole business collapsed there was no mega million pound rescue for them.

The worst thing of all though is knowing that the government rescue packages, expensive as they are, are probably necessary whether we like it or not. You can bet your boots that if they've come to that conclusion in the USA of all places, then there probably isn't much of an alternative.

Not that there is any guarantee this will work anyway.

I don't know where this is going. Self-evidently neither do the experts currently parading across our screens. What is evident though is that there may not have been any such thing as a free lunch, but neither is there a free market. It is costing us plenty right now.