Not Just A Bail-Out, A Mandy Bail-Out

When is a car bail-out not a car bail-out? When it's announced in the Lords by Brown's deputy Mandelson. It must be galling for MPs to hear about the latest government "loans for cars" scandal from the BBC but hey, that's democracy for you. 

Business secretary Mandelson is due to outline his latest wheeze for UK carmakers in a statement to the House of Lords because he's not allowed to face the music from elected MPs. 

But you can read all about it on Brown's BBC 'news' website, courtesy of Robert Peston's blog, in a glorious technicolour dreamworld, with all the government spin in place. 

Car manufacturing has been among the first big industries to be hit as the recession turns into a US-style Great Depression and people face fear and anxiety over jobs. 

But the government continues its reckless policy of throwing good money after bad. That didn't work in the US in the 1930s and it won't work here now. 

So what's the cunning plan for a nation crippled with debt? Get us all into more debt by enticing customers to take out whopping loans for new cars. Er, aren't we supposed to be trying to kick the habit of a debt culture that cause all the problems in the first place? And who can afford a new car in these harsh days of recession?

The widely-reported package for carmakers is supposed to help with jobs. But allowing car manufacturers to apply for credit, which they can use to provide loans to new car buyers, is  all part of the wonderful world of borrow now pay later. 

Downing Street has been bending over backwards to shout out that Mandy's measures were not a "bail-out". So exactly where does the cash come from and whose pocket does it go into?

With 80% of cars in the UK produced by overseas firms and the vast majority bought on credit, the government's 'loans for cars' plan, will go straight into the pockets of the overseas firms and the City finance houses. Nice work if you can get it. 

There is a solution, a short-term fix which would end once and for all the ridiculous taxpayers subsidies and borrowed cash for bail-outs which is drying up as overseas investment banks say No. 

That's to take the big strategic industries into short-term full public ownership. But that wouldn't go down well with the government's foreign pals, industry bosses or the City. 

UPDATE 3.45pm: Mandelson played the old 'green card" as he outlined a £2.3 billion package of car industry loan guarantees  including £1.3 billion from Europe and a government guarantee of a further £1 billion. He said the package was "not a bail-out" but would "reinvent" the industry "for a low carbon future". The Orange Party thinks it stinks and even a £2 billion loan guarantee is a pittance to help with jobs. But maybe that's all the government can now beg and borrow?