Dithering Darling Is Out Of His Depth

Darling sits on the horns of a dilemma. Does he nationalise the banks or face the dire consequences. Or does he pray for an economic miracle. What is becoming increasingly clear is that he's out of his depth. 

The stock market plunged deeper into the red today, punishing dithering Darling's commons non-statement. Here is a man without an economic plan - or if he has one, he's keeping it very close to his chest. 

As markets crashed round his ears, Darling was clutching at straws, making a worthless and totally uninspiring commitment "to do everything necessary to solve the crisis." 

He needs to be bold. He needs to be decisive. He needs to restore confidence and stability otherwise the economy is doomed. Sadly, not words we associate with the chancellor or his prime minister.

The High Street banks could go bust. Without government help they may fold. Darling's decision boils down to whether to nationalise the whole banking system. 

The chancellor and prime minister Brown are under increasing pressure to guarantee depositors' money, as in Ireland and elsewhere. 

But protecting the bank's liabilities in this way, means putting them under state control. Putting government money into the banks means the taxpayer, not the bank shareholders, would be taking all the financial risk. 

Shareholders would still own the banks which would be free to make huge and risk-free profits, as well as paying themselves handsome dividends.

With smoke and mirrors accounting, no-one knows the true scale of bank debt. It must runs into trillions of pounds. Adding such a sum of money to the precarious national balance sheet would be unimaginable. Printing more money is fraught with danger for the whole economy.

And saving the banks comes at a cost. How can the treasury hope to to raise sufficient funds on international money markets to pay our national debts. 

In the US, the much-vaunted $700 billion Paulson bail-out was the final desperate act of the Bush administration and it looks as though all of that taxpayers' money made no difference.

Over the last 12 months, Brown and Darling, have been caught out and exposed as just a couple of sharp whizz kids, riding on the back of the economic boom but unable or unwilling to cope with the bust. 

A chancellor and prime minister who take risks with the economy and people's livelihoods, by using taxpayers money to prop up their pals in the banking system, are heading for political suicide.