Following on

I was planning yesterday to have put the whole thing to bed, but some emails that I have had today about yesterday's post are worth discussing.

Firstly, there is a point to clarify: when I say that it is a good thing if banks are able to go to the wall occasionally, I do not mean this because I and all capitalists are evil. I mean it because that reinforces the incentive that the management have to guard against the risk of their bank collapsing. If banks could never collapse (which is looking like a danger under Brown), then there is much less incentive for them to manage their risks prudently. This would harm shareholders (many of which are your pensions, not just evil capitalists) as well as customers (through less competitive and more reckless banks).

Secondly, a former colleague of mine was laughing about the idea of the FSA supervisor of NR ensuring that the last liquidity return was appropriately filed in triplicate, and not noticing the glaring holes in the figures. I would love to have been a fly on the wall in that week's one-to-one with their line manager. My ex colleague also admitted that he had shares in Northern Rock - well done, old friend, more cash down the pan. Maybe you should put yours under the mattress.

Finally, the implications for Gordon Brown are serious. Over this, and the economic climate generally, he is now being found out as a con artist over his claim to be the prudent manager of the economy. With levels of disposable income now lower than before Labour went into power, the economy's growth predictions being slashed and taxes still going up, the picture is looking far from rosy.

So, to finish, a basic lesson in economy management for the badger. When the economy is taking a nose-dive, putting taxes up in order to increase spending will worsen, not improve, that cycle. If you would like any further advice Mr Darling, you can email me on Major Gripe at Googlemail dot com.